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MGNREGA’s legal guarantee is under attack from all sides

MGNREGA’s legal guarantee is under attack from all sides: right, left, and centre


Governments of every political dispensation have hollowed out the Indian rural employment guarantee scheme. MGNREGA can become what it is supposed to be only through a mass movement centred on the vulnerable.


The central government has cut allocations to MGNREGA by a fourth from the revised estimates for 2021-22, resulting in a reduction in budgetary allocations for 2022-23. Just a sixth of the 9.94 crore households eligible for assistance demanded 100 days of work, and the budgeted amount would not cover it.

In the year when the pandemic struck, 7.5 crore households employed 11 crore workers under the scheme. When this figure was nearly 7.9 crore in 2019-20, it had fallen to about 5.48 crore in the pre-pandemic period. Why would the government cut allocation to a legally guaranteed program that has saved millions of lives during the pandemic; when jobs are still scarce, and five states were voting? Individuals and houses.


At the beginning of its passage, there was a deliberate attempt to undermine the act.


Although the scheme is popular, it is perceived as one more example of the Congress-BJP slugfest. Prime Minister Narendra Modi’s government has repeatedly attempted to stifle the MGNREGA, demonstrating its disdain for the program.

However, this analysis conceals the larger picture.

MGNREGA is neither an example of poorly-implemented, poorly planned, or corrupt schemes ruining the original good intentions of the programme nor the result of a turf war over the system. Attempts at undermining the law were made from the time of its passage onward.

We must go back to winter 2004 when Delhi was under heavy snowfall to understanding what was happening.


The track record of UPA

MGNREGA: Women participation in MGNREGA declines to five-year low in  2020-21: Rural development ministry - The Economic Times

Legislation guaranteeing nationwide employment has long been awaited. By 2003-04, thousands of rural workers had been mobilized across India by a broad civil society movement. Based on the experience of existing lifesaving but corrupted public works programmes in drought-prone western states, the campaign developed an initial draft for an employment guarantee act. A healthy debate ensued, and both pro and con articles were written.


It was a watered-down version of the National Rural Employment Guarantee Bill introduced in Parliament.


A rural employment guarantee, then a campaign platform for the opposition Congress during the 2004 Lok Sabha elections, was viewed as a persuasive election plank. In its manifesto, the party promised to enact legislation of this type. The United Progressive Alliance (UPA), led by Congress with Left support, became the government following the defeat of the National Democratic Alliance. The time for delivering had come.  

However, National Rural Employment Guarantee Bill was a vastly watered-down version of drafts submitted by civil society and the national advisory council. A universal guarantee would be entirely undermined by targeting, and governments could limit the scheme to certain areas and periods of their choosing. Furthermore, workers in different states were not guaranteed the prevailing minimum wages.

People’s movements mobilized and pushed back, and some dilutions were removed. However, one remained. A week before the bill was presented to Parliament, section 6(1) delinked the MGNREGA wages from the state and central minimum salaries, giving the centre the authority to set wages arbitrarily.


With a comfortable second term in power, the UPA quickly lost interest in the MGNREGA.


The section in question was found unconstitutional by at least one high court. Although a Supreme Court judgment provision from 2012 and a panel’s recommendation from 2014 recommend that MGNREGA wages are based on state minimum wages and linked to Consumer Price Index – Rural (CPI-R), the current practice remains. In 17 out of 21 central states, as of 2020, rural agricultural workers earned less than the MGNREGA wage.


Priorities are shifting

With the 2009 Lok Sabha elections, the UPA took another step backwards. In its manifesto, the government promised “at least” 100 days of work at a ‘real wage’ of Rs 100 each day, but in reality, it limited wages to Rs 100 beginning that year. At that time, inflation in India reached double-digit levels, and it was up to the states to obtain approval from the centre and shell out the extra money if they wanted to pay MGNREGA workers more.

The UPA, now in a comfortable position for a second term, lost interest in MGNREGA fast. As of 2012-13, allocations have fallen from Rs 40,100 crore in 2010-11 to Rs 33,000 crore. The centre ignored state requests under the scheme. In addition, Comptroller and Audit General reports found that the poorest could not utilize the strategy entirely between 2007 and 2012. The release of money was not transparent; records were not maintained, staff shortages were widespread and insufficient education, training, and communication expenditures. Unemployment allowances were not paid in all states.


MGNREGA allocations were practically frozen by P. Chidambaram, who often accuses the BJP of starving the scheme of funds.


The UPA’s 2014 strategy was to implement direct cash transfers linked to Aadhaar – a game-changer. It is planned that the government will transfer Rs 3–4 lakh crores of cash to the people through various schemes in 2013. The Aadhaar link has faced strong opposition.

Budget 2022: India Allocates Rs 73,000 Crore For MGNREGA

As a result of these three instances in 2005, 2009, and 2013, the finance ministry demonstrated its unprecedented power. During his tenure as finance minister, P. Chidambaram, who often mentions the BJP starving MGNREGA of funds, virtually blocked the allocations to MGNREGA to Rs 33,000 crore during the second UPA term. He pointed to wages increasing in agriculture and increased fiscal deficits as risks in his argument. Investors would abandon a sovereign if its credit rating were lowered because of a breach in budgetary deficit.

In bringing up this earlier history, we are not only pointing out how both Congress-led and BJP-led governments abused MGNREGA in similar ways. We need to appreciate this background fully to know what we are up against.


Left Behind: The ‘misplaced.’

Why weren’t the Left parties more involved in all this?

Basically: not enough. They certainly played an essential role in passing the act, and they raised concerns about low wages and demanded that the program be expanded. However, they did not successfully organize MGNREGA workers at the village level at the national level. Sporadic and localized efforts have mainly come from civil society groups to build such unions in different states.


Several states even suspended NREGA during peak agricultural seasons due to farmer union agitation.


Inaction ­- by parties that claim to mainly represent the interests of workers – concerning one of the largest rural employment schemes in the country that supports some of the most vulnerable sections of the workforce could be due to several factors. In Himanshu’s words, “it might be that rural political economy holds some answers to this puzzle.”. During peak agricultural periods, farmer unions have campaigned against NREGA.

As such, the MGNREGA was part of the Left’s concerns during the Kisan Long March organized by the All India Kisan Sabha, the peasant wing of the Communist Party of India (Marxist).

Taking this perspective, Jens Lerche ( 2021) notes, while noting the importance of a “wide-ranging political challenge to the increasingly repressive BJP government,” the lack of enduring popular alliances across caste lines, between Dalit labourers and petty commodities producers as well as agricultural capitalists from farming communities, means that he believes the farmers’ movement of 2020-21 will be similarly ineffective.

Currently, most farmers find themselves in a phase of alliance between groups that share interests enough to act together but are at odds with one another in other ways. In the aftermath of this struggle, farmers cannot be expected to stand up for demands of Dalits, Muslims, or informal workers, and much less agricultural workers.”

A big question mark can be raised over the position of landless workers seeking MGNREGA work taking centre stage in such struggles due to this inherent class-caste conflict between their interests and farmers – both causes that the Left claims to support.


The lobby of the corporate sector

Analyzing the labour market without considering capital’s more extensive operations would be incomplete. In every government, the bogeyman of a fiscal deficit is used to reduce welfare and social expenditures. Finance lobby influence extends to Wall Street behind every decision made by the finance ministry.


The corporations are threatened by any large-scale public welfare program for unprotected workers.


From the very beginning, India Inc. has resented the MGNREGA, evident from the steady flow of editorials and opinion pieces that have appeared in the Indian and foreign financial media. Generally, corporations view public welfare programs targeted at unprotected workers as a threat to their infinite supply of low-wage labour.

The situation is slightly different during slumps and crises. Since the pandemic, corporations have cut costs and laid-off workers.

MG-NREGS: 'Funds allocated for FY23 just enough for up to 21 days of work  for a rural household' | The Financial Express

They are limited in what they can accomplish. However, what will happen if demand does not recover? The MGNREGA, by placing money in workers’ hands, might allow corporations to acknowledge, if only temporarily, that it might stimulate demand in the near term.

However, that doesn’t mean they have stopped considering labour as a cost.

Costs are rising for inputs, and domestic manufacturers cannot afford a rising wage bill, especially when they are forced to compete with countries that exploit their workers more than they do. The low wages under MGNREGA are, therefore, in their interests.


Politics as a business cycle, according to Kalecki

According to the Polish economist Michal Kalecki in 1943’s classic Political Aspects of Full Employment, businesses value “discipline in the factories” and “political stability” more than profits.

Today’s “political business cycles” were predicted by “the neglected prophet.” For MGNREGA defenders and supporters, Kalecki has two essential lessons.


Because they deal with ‘the establishment’ every day, workers know what they are up against intuitively.


As long as we live in a capitalist democracy and no matter which government is in power, these cycles will continue. Two opposing forces propel them. Keeping labour costs low and keeping the workforce disciplined is a priority. Those with a vested interest in big business and gentry would limit government spending – especially on employment-related policy. The second is their acceptance of the argument that ‘something must be done (only) in times of economic weakness’ to avert mass unemployment. The document recognizes the need to reproduce labour and keep it at sustenance levels and the need for the government to appease labour in the run-up to elections.

It is also important to note that these cycles aren’t unavoidable. As they experience the ‘establishment’ every day, workers know what they’re up against intuitively. A democratically elected government will find it hard to yield to only one side of the bargain if enough workers organize to demand a living wage and entitlements under a job guarantee.


Bringing the promise back to life

4 reasons why MGNREGA is not benefitting workers - BusinessToday

MGNREGA is unique in that it is a statutory act passed by Parliament and is not just another rural development scheme. The government violates workers ‘ legal rights by not matching funds to demand, turning away job seekers, or paying below minimum wage.


When it comes to farm laws, we’ve witnessed the power of a unified, democratic collective bargaining group, and the most vulnerable have yet to see anything comparable.


In some cases, budget allocations can be increased over the year. However, this increased allocation does not reach on time, thereby putting an end to the existing demand for labour. The government takes advantage of forced labour through inordinately long wage payment delays.

To reach this point, the central question of the government should no longer be. How do we keep expenditure under control and the fiscal deficit low? However, the question must be: How do we cultivate a healthy, satisfied workforce? Collective bargaining power is demonstrated in the case of farm laws by a unified, democratic force. Among the most vulnerable, such as migrant and landless workers and those in the informal sector, we have not seen anything that comes close to it.

The legal guarantee of universal employment schemes like MGNREGA will be abused by governments of every dispensation so long as that doesn’t happen – either through a renewed Left organization or through an entirely new impetus.



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