Source: The post MGNREGA remains crucial for rural economic revival has been created, based on the article “India’s rural jobs scheme is more relevant today than it may seem” published in “Live Mint” on 8th August 2025. MGNREGA remains crucial for rural economic revival.
UPSC Syllabus Topic: GS Paper 3- growth, development and employment.
Context: August 2025 marks 20 years of MGNREGA, India’s largest rural employment programme after the National Food Security Act. Enacted under UPA-I, it created a legal and rights-based framework for social protection. Despite changes, it remains central to rural livelihoods, especially for marginalized communities.
For detailed information on Rural economy shows growth but signals are still mixed read this article here
Origins and Unique Features
- Legal Backing and Rights-Based Framework: MGNREGA was passed by Parliament, giving it legal status and immunity from arbitrary government changes. It established a statutory right to work for rural households.
- Universal Applicability and Self-Selection: Its universal rural coverage and self-selection principle reduced targeting errors common in earlier schemes. The poor, particularly marginalized groups, could opt in without complex eligibility filters.
- Direct and Indirect Gains: Beyond employment and poverty reduction, MGNREGA boosted rural infrastructure, agricultural productivity, and wage growth, producing long-term economic benefits.
Impact on Rural Labour and Social Inclusion
- Participation of Marginalized Groups: Women form over half of MGNREGA’s workforce. SC and ST workers consistently make up about a quarter, exceeding their population share.
- Empowerment through Self-Selection: Marginalized communities continue to self-select into the programme, ensuring inclusion without the need for targeted quotas.
- Indirect Market Impact: From 2008 to 2013, MGNREGA helped push rural wages up by more than 6% annually in real terms, lifting incomes and stimulating rural demand.
Infrastructure and Productivity Gains
- Agricultural Enhancement: Village irrigation projects, rural roads, and soil conservation works have improved farm productivity. Many projects were on land owned by marginalized farmers, directly aiding the poorest.
- Rural Connectivity: Road construction under MGNREGA improved access to markets, boosting trade and agricultural sales.
Challenges and Decline in Effectiveness
- Falling Wage Competitiveness: Post-2011–12, wages fell below market levels in most states, with 2023 data showing gaps in 20 states.
- Administrative and Political Hurdles: Since 2014, biometric authentication, delayed payments, and other conditions have slowed implementation. West Bengal saw a two-year suspension due to Centre–state disputes.
- Stagnating Rural Wages: Administrative apathy has contributed to wage stagnation since 2013, dampening rural demand.
Reviving the Scheme for Economic Growth
- Crisis-Response Potential: MGNREGA cushioned rural distress during the 2008 financial crisis and the covid pandemic, when demand for work surged.
- Current Economic Need: With rural wages and farm incomes stagnant, MGNREGA can revive consumption and productivity, bolstering domestic demand amid global uncertainty.
- Policy Actions Needed: The scheme needs higher budget allocation, wage hikes, and removal of administrative barriers to align with its objectives.
Conclusion
MGNREGA remains vital for rural India’s economic stability. Strengthening it is not only socially just but also essential for boosting rural demand and national growth.
Question for practice:
Evaluate the role of MGNREGA in addressing rural economic distress over the past two decades.
