What is wrong with MG-NREGA?

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published Published on Nov 10, 2010   modified Modified on Nov 10, 2010

Can we afford to leave MG-NREGA alone? Why is the civil society crying foul? Are the rural activists demanding too much? Is the UPA-II trying to take back what UPA-I gave before the elections?

Let us face it, the MG-NREGA is in a big crisis. NAC members like Aruna Roy and Jean Dreze have alleged (See links below) that the present remuneration of rural workers is declining by the day and it violates the statutory minimum wages. The civil society is crying foul because a powerful lobby led by the RD Minister is attempting to reduce the labour component of the scheme and increase the material component which they feel will facilitate the redistribution of poor people’s wages to the contractors kept out of the scheme so far. They are also up in arms against the new amendment in the mandatory Social Audit clause—Section 13 (b), which in effect authorizes the Gram Sabha to audit their own work. (For more details on how sarpanches have been trying to subvert the NREGA in Rajasthan see another Inclusive Media news alert i.e., http://www.im4change.org/news-alert/the-biggest-mnrega-sca

The MG-NREGA is one of India’s most innovative social sector schemes and it is doing wonders wherever it has a chance of working. In the past few years over 9 crore bank accounts have been opened. So far about 12 crore job cards have been issued and men and women get equal wages. At places of relatively better implementation, the MG-NREGA has made a minor dent in stopping distress migration and starvation. (For details see:


An inherent flaw in the scheme is that there is no mechanism to prevent the workers’ wages from declining because of the high food price inflation. Why can’t we link the wages to the Consumer Price Index for Agricultural Labourers (CPIAL), just as we have linked the salaries of government employees with inflation? In the past two years, just about every category of salary/wage earners, including ministers, MLAs, Sarpanches and MPs, have got salary hikes whereas the MG-NREGA workers’ wages have consistently declined due to high inflation. The following table (displayed at an ongoing Mazdoor Haq Yatra and dharna site in Jaipur) compares the wages of all categories of workers since 2008. The figures expose the anomaly even though they seem to be only indicative:
Monthly salaries



Another simple table, prepared by an enterprising rural activist, displayed at the same venue, shows the price rise in the same period of the commodities, which matter most for the agricultural workers:  




While these facts show that the workers are able to buy just about half the amount of ration from their stagnant wages in 2010, the legal dimension is equally stark. An open statement from 14 eminent jurists of India, including chief justices of High Courts and the Supreme Court, have observed (See the whole text in the links below) on the issue of MG-NREGA wages that the payment of less than minimum wages is indeed violation of the statutory provisions:

“The Minimum Wages Act (1948) established powers of the State Governments and the Government of India to fix minimum wages for scheduled employments. The Act holds that minimum wages should be revised at intervals not exceeding 5 years. The 15th Indian Labour Conference (1957) put forward a “needs based” formula for fixing minimum wage that is based on minimum food requirements, clothing requirements, cost of living and fuel costs. These recommendations were made binding by the Supreme Court in the case of Unnichoyi vs. State of Kerala (1961), and enhanced in the Workmen vs the Management of Raptakos Brett and co Ltd (1992).

Further, the Supreme Court, in three separate rulings, has held that non payment of minimum wages is tantamount to ‘forced labour’ prohibited under Article 23 of the Constitution. Further the Supreme Court holds that ‘forced labour’ may arise in several ways, including “compulsion arising from hunger and poverty, want and destitution”. Consequently the notification of 1st January 2009 itself has been set aside as unconstitutional by the Andhra Pradesh High Court, but the Central Government has persisted with invoking it across the country.” (for full text see the link below)

Economist Jean Dreze points out that the government has been trying to undermine the scheme by altering the nature of the employment guarantee part of the act. At a recent press conference at the IWPC, New Delhi he said that the Government decision to construct the Bharat Nirman Rajiv Gandhi Sewa Kendra at every village under NREGA would be a wrong priority. This is so because almost 90 percent of the expenditure in this would be on material costs and this would also allow backdoor entry to contractors in the NREGS. Dreze regretted the fact that the Ministry has intentionally delayed the payment of minimum wages under the NREGA by referring the matter to another committee (Dr Pranab Sen Committee). Jean Dreze’s recommendation: Immediately link the NREGA wages to the Consumer Price Index for Agricultural Labourers (CPIAL).

Ms. Aruna Roy charges that the mandatory social audit has been diluted by giving the authority to conduct social audits to the very sarpanches/ Panchayats whose work is to be examined by the audit. In mid 2009 an executive order was “quietly” made in the Act to add this to the list of permissible works. In her view, such social audits are neither social nor audits. Roy also warned against an attempt to weaken the process, perhaps to promote Conditional Cash Transfer System. She said instead of reducing corruption, as claimed by some politicians, the mechanism would undermine the dignity of labour and the poor. She conceded at the IWPC meet that the Central Employment Guarantee Council (CEGC) which is supposed to oversee the working of NREGA at the national level has become dysfunctional and has failed to fulfil its mandate. The hallowed committee rarely met, never constituted an Executive Committee, and did not submit any of the annual reports it was supposed to prepare for the Parliament. Roy said while the sarpanches have formed their unions, the MGNREGA workers are being denied their democratic right to form unions in Rajasthan even though such unions are functioning in UP and Gujarat. 


For more information please go through the following links:



Media invited to witness the real dance of democracy, http://www.im4change.org/news-alert/media-invited-to-witne

Centre to step in Rajasthan Mnregs wage row by K Balchand, The Hindu, 10 October, 2010, http://www.hindu.com/2010/10/10/stories/2010101063261100.htm

Mazdoor Satyagrah demands accountability panel, The Times of India, 9 October, 2010, http://timesofindia.indiatimes.com/city/jaipur/Mazdoor-Sat

Activists to send low wage feat' to Guinness, The Times of India, 7 October, 2010, http://timesofindia.indiatimes.com/city/jaipur/Activists-t

NREGS: Activists demand action on anomalies, The Times of India, 6 October, 2010, http://epaper.timesofindia.com/Default/Scripting/ArticleWi

Less than min wages for NREGA workers unconstitutional: Govt by Anindo Dey, The Times of India, 5 October, 2010,

Ensure minimum wages to NREGA workers: Activists by Anindo Dey, The Times of India, 4 October, 2010, http://timesofindia.indiatimes.com/city/jaipur/Ensure-mini

No guarantees anymore by Sowmya Sivakumar, The Hindu, 3 October, 2010,

Labourers go on indefinite strike, press for demands, The Times of India, 3 October, 2010,

The mass job guarantee by Aruna Roy & Nachiket Udupa, Himal Magazine, October, 2010,

Cong, activists at loggerheads over NREGA by Sreelatha Menon, The Business Standard, 23 September, 2010, http://www.business-standard.com/india/news/cong-activists

'Systemic reform to root out corruption still needed' by Bharat Dogra, The Times of India, 13 September, 2010, http://timesofindia.indiatimes.com/home/opinion/edit-page/

NAC members blast execution of NREGA, call it 'anti-labour', The Financial Express, 28 September, 2010,

MNREGA workers peeved at being paid Re. 1 by K Balchand, The Hindu, 28 September, 2010, http://www.hindu.com/2010/09/28/stories/2010092862850800.htm

States fail on dole for jobless-Unemployment allowance to handful, The Telegraph, 28 September, 2010,

Rajasthan refuses to recognise NREGA workers' union by Sreelatha Menon, Sify News, 30 September, 2010, http://sify.com/finance/rajasthan-refuses-to-recognise-nre

Let’s build on the positives, The Hindustan Times, 29 September, 2010,


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