India is facing an acute agrarian distress and its worst unemployment crisis in 45 years. The only employment generation programme, the Mahatma Gandhi Rural Employment Guarantee Act (MGNREGA) has been steadily killed by the BJP Government.


  • The BJP government has turned MGNREGA into a supply driven programme — violating the core principles of the Act. Being a demand-driven programme, MGNREGA cannot be bound by budgetary constraints and not providing adequate funds as per demand is a violation of the law.
  • In the past few years, the Finance Minister has been lying that the allocation for the programme is the “highest ever”. The inflation-adjusted allocation for each of the last five years (and for 2019-20) is lower than the allocation of 2010-11 (which was the highest ever allocation).
  • In the last 5 years, on an average, the pending liabilities at the beginning of each financial year has been around 23 percent of the allocated budget. This yet again demonstrates a lack of intent and commitment to implement the MGNREGA in letter and spirit. The year-wise break-up of pending liabilities as a percent of the budget allocation is given in the following table.
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Pending Liability of that FY (in Rs Cr) 6,102 12,218 13,220 11,646 9,087 9773
Budget Allocation for that FY (in Rs Cr) 34,000 34,699 38,500 48,500 55,000 60,000
Liabilities as % of Budget Allocation 18% 35% 34% 24% 16% 16%
  • The allocation in the last 5 years has only been around 0.30 percent of the GDP. On the other hand, the World Bank had estimated that 1.7 percent of the GDP must be allocated for MGNREGA to run properly.
  • The projected labour budget, arrived at through a bottom-up participatory approach has been cut down using an arbitrary “Agreed to Labour Budget”. In fact, national electronic funds management guidelines issued in 2016-17 said that the MGNREGA Management Information System (MIS) “will not allow” States to “generate more employment above the limits set by Agreed to LB”. This puts a cap on funds and is thus against the spirit of the Act.
  • According to studies based around 6000 panchayats in 20 states, the employment provided this year is at least 33 percent lower than the work demanded. Unemployment allowance is rarely calculated and never paid. This is again a violation of the Act. This despite the acute agrarian and unpardonable unemployment distress.
  • Some state governments, such as the Government of Karnataka (GoK), has paid wages to the labourers upfront. The BJP led Central government owes Rs 953 crores worth of arrears to GoK from 2015-16.


The Act mandates that wages should be paid to labourers within 15 days of completion of work, failing which the workers are entitled to a payment of delay compensation.

  • According to studies based on more than 90 lakh transactions across 10 states over two financial years, around 25 percent of the payments were made on time. As a conservative estimate, the Centre alone has been causing a delay of more than 50 days in releasing wages. The Ministry of Finance acknowledged the correctness of the findings in a memorandum and clearly said that they were due to “infrastructural bottlenecks and availability of funds”.
  • According to an RTI response, the Centre’s delay in releasing wages (called stage 2 delays) is being captured in the system, but it is intentionally suppressed to avoid paying delay compensation — another violation of the Act. This is also in violation of the Supreme Court Orders based on WRIT PETITION(CIVIL) NO. 857 OF 2015, dated 18th May, 2018 where it clearly says “The wages due to the worker in terms of Stage 2 above must be transferred immediately and the payment made to the worker forthwith failing which the prescribed compensation would have to be paid. The Central Government cannot be seen to shy away from its responsibility.”
  • In 2017-18, about 86 percent of the true delay compensation payable to workers was not even calculated by the BJP government at the Centre (let alone paying), thereby violating another provision in the Act.


  • The notified wage rates for NREGA workers for 2019-20 have again exposed central government’s lack of commitment for workers’ rights. The hike ranges from Re 1 to Rs. 17 for various states and Union Territories (UTs) and workers of 6 states and UTs have no hike at all. Workers of poor states like Jharkhand and Bihar, will get an increase of Rs. 3 and Rs. 2 respectively. The average increase in NREGA wage rate across the country is a measly 2.16 percent.
  • For 33 states and Union Territories the NREGA wage rate is less than the corresponding minimum wage for agriculture, condemning its employment guarantee act workers to another year of bonded labour.
  • The recent committee of the Ministry of Labour and Employment headed by Mr. Anoop Sathpathy had recommended that the national floor minimum wage rate should be fixed at Rs. 375. It also recommended that MGNREGA wages should be linked to the CPI-RL instead of CPI-AL which would ensure higher increase in wage rates. The government continues to ignore the recommendations while calculating the wage rates for FY 2019-20.


  • According to a recent study by the Indian School of Business (ISB) in Jharkhand based on analysis of 10 million transactions through Aadhar Payment Bridge system, 38 percent of the Aadhar based payments are misdirected to completely unrelated bank accounts.
  • While non-payments and delayed payments had already imperilled the programme, the introduction of Aadhar-based payments have further damaged the payments systems.