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RIGHTS TO WORK PROGRAMME

Introduction: The Rights to Work programme evolved out of the concept that human beings have a right
to work and to productive employment, which cant be prevented by anyone. In India, the Mahatma
Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005 has been a landmark step towards
the realization of the Right to Work. The act basically ensures livelihood security by guaranteeing at least
a hundred days of wage employment to any rural household where adult members are willing to do
unskilled labor work. It was the first time that the spirit of the right to work was embodied in the form of
a legal right. The Act is expected to create a sustainable improvement in peoples livelihood by
systematically enhancing the economic and social infrastructure in rural areas.
How it is supposed to help: A rights to work programme, like the one envisaged through the MGNREGA
Act can have several benefits, including, but not restricted to the following:
Creation of durable assets leading to greater social protection and ensuring livelihood security.
Improving soil conservation, water supply and land productivity thereby strengthening drought
proofing and helping flood management.
Improving the condition of the marginalized communities, and empowering women.
Ensuring a more transparent governance and deepening democratic rights at the grass root level
by giving greater power to the local governments in the form of Panchayati Raj Institutions
(PRIs)
Thus, we can explore the benefits of the rights to work programme in India under the following
headings:
1. Impact on Income and Livelihood Security: Since its inception in 2006, MGNREGA has provided
around Rs. 110700 cr as worker wages till FY 2012. This transfer payment has had a positive
effect in terms of poverty alleviation in the country through an increase in household income
and per capita expenditure, besides having a significant influence on food security, health and
savings. Poverty leads to malnutrition, which in turn leads to low productivity and further
malnutrition. MGNREGA strikes at the very root of this cause, and seeks to ensure a higher
availability of food and also greater food security. The participation of the marginalized
communities is high under MGNREGA, with almost 40-50% participation from the SCs and STs.
1200 cr man-days have been generated so far under MGNREGA in terms of employment. The
average wage per laborer in a day has gone up by 81% with variations across different states.
2. Helping gender and social empowerment: Women are participating in large numbers in the
programme as is reflected by a high participation rate of 47%. The MGNREGA is a great
opportunity for women to get employed, especially those who couldnt find work elsewhere. It
has also reduced the difference between wages of men and women. The average wage for men
under the scheme was Rs. 90.9 per day, while for women, it was around Rs. 87. This empowered
woman to a large extent both in terms of social and economic status, besides helping them start
repaying debts of the family and even paying for their childrens education.
3. Sustainable asset creation: Research shows a positive return on investment for assets under
this scheme. Sustainable assets are created which generate livelihood resources for rural areas.
The work completion rate has also gone up to around 60% since the inception of the MGNREGA
scheme. Another noteworthy aspect is the increase in work on private land, which has gone up
to 12% in FY 2012. MGNREGA assets have been used for multiple purposes, those increasing
their potential as a livelihood security.
4. Environmental services and agricultural productivity: Initial studies have shown that MGNREGA
works have ecological and environmental benefits, including a rise in groundwater level,
improvement in soil quality and lessening the effects of climate on production systems. Another
study shows that the programme has to potential to generate carbon sequestration. In terms of
agricultural production and productivity, MGNREGA has helped in a large extent, where it has
been properly implemented.
5. Labor market and migration: The rural labor market has been affected by MGNREGA in a
variety of different ways, which are not necessarily straightforward always. Firstly, the scheme
has raised the rural labor participation rate. But the main problem as noted in certain studies is
that it has eaten away a large chunk of the pie with respect to the old labor market. However,
there are other researches which show that reduced labor force in agriculture is a trend, the
genesis of which dates back to pre MGNREGA times. So, putting the blame on MGNREGA for this
doesnt stand much ground. With the increase in average wages through MGNREGA, there has
been an increase in the bargaining power of the labor force in general and an opening up of a
variety of options in front of them as far as choice of works are concerned. Distress migration
has also reduced thanks to MGNREGA.
6. Governance and process challenges: There is a low awareness about MGNREGA among
potential beneficiaries. As a result, they are unable to benefit fully under the act. Also, around
19% of the rural households wanted to get employed under this scheme but did not get a
chance. This could have a number of reasons, including stopping of work by the state
government during certain seasons.

MACROECONOMIC ANALYSIS OF RIGHT TO WORK PROJECT
The Right to Work Project (NREGA) mainly leads to increase in government spending and is transforming
into a sink hole contributing to the mounting fiscal deficit of the country. The macroeconomic analysis of
NREGA can be done using the Keynesian Economics.
Keynesian Economics: Effect of increase in government spending:
The Government had to take expansionary fiscal policy to apply NREGA. The expansionary fiscal policy
leads to increase in government spending.



Increase in government spending leads to increase in output depending upon the multiplier. Now, in
India the two main tools of fiscal policy are the changes in government expenditure and level of
taxation. Increase in government expenditure exceeding the tax revenue is involved in case of
Expansionary Fiscal Policy. It is obvious that government spending increases under the NREGA Project,
but the resources are limited. There is always a gap of 1 between the government spending multiplier
and the tax multiplier, and that is why although the aggregate demand is increasing due to government
spending, due to tax effect the increase in income is proportionately less. Thus the Project NREGA is one
of the major drivers of escalating fiscal deficit in the country.
Aggregate Demand (AD) and Aggregate Supply (AS) Curves:
By demand and supply analysis, we can analyse the implications of implementation of Project NREGA.
Project NREGA is largely implemented in the rural India. Rural markets are much inefficient and hence
the rural aggregate supply curve (AS) is steeper. Thus shifting the rural aggregate demand curve by
creating some source of income through Project NREGA will only lead to increase in price, but not in the
real income and consumption. And as it has been implemented for a considerable amount of time,
NREGA is the one that essentially assumed to be responsible for downward turn of public finances. Thus


Z=C+I+G1+NX
Z=C+I+G2+NX
Z=Y
Y1 Y2
most of the increase in output is absorbed by the price. And this in turn leads to an accelerating rate of
inflation.


From the AS-AD Model, it is obvious that due to the steep AS curve in the rural economy, an increase in
output leads to a larger change in price. So the Project NREGA implemented in rural India though
increases the aggregate demand, it leads to an increase in price i.e. most of the income is absorbed by
the price.

Y
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What has been the impact of such programmes? Use statistical models to
analyze.
The report by Comptroller and Auditor General (CAG), published in 2008, after the completion of two
years of implementation of NREGA, presents a balanced view of the impact of NREGA on the country.
The CAG audit covered 200 districts where NREGA was implemented in the first phase.
From FY 2006 to FY 2011-12, NREGA has spent approximately Rs 1,10,700 crore on worker wages.
Many positive impacts are expected on the household income, monthly per capita expenditure, food
security and health of the beneficiaries.
The major aim of the scheme is poverty alleviation.
Well now describe how various factors have been impacted by this scheme
1. Household income
By providing extra work opportunities and income to the poor in the rural areas, MNREGA is expected to
increase the household income levels. The share of income from MNREGA in the household income of
the rural people in the country has now become as high as around 17% in some of the states. In
Rajasthan, it was 10%. Many rural households have indicated that their incomes have increased after
this scheme as more members of the same household are able to earn now. Also there have been
studies which indicate that the income from MGNREGA is usually used by the people to start their own
ventures.
The importance of income from this scheme is seen to be more in the households with women workers,
because earlier they were housewives and now they contribute as much as 15% to the household
income.
The following graphs show the number of households that have been given employment in this scheme.
This indicates an improvement in the overall income levels.



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2. Per capita expenditure
If the increase in income from this scheme is translated into increase in expenditure in essential items
then the impact can be said to be positive. In some states like Maharashtra the increase in the food
consumption expenditure has been around 10%. Expenditure on non-food items has been around 23%.
Expenditure on transportation has come down due to the employment within 5 km of the residence of
the participant. The wage earners mainly spend the income of food (50%), clothing (20%), education
(10-15%), and healthcare (10%). This has also increased the asset accumulation.

3. Health
MGNREGA contributes to higher intake of food in the rural households, and also food availability. The
people working in the scheme gave up fewer meals per week. There have been studies to show
significant reduction in the number of reported incidences of depression and other mental health
indicators.
4. Household Savings
The scheme has increased the probability of savings by upto 21%, providing the households the ability to
withstand economic shocks and inflation. Also, the employment is provided in the lean season which
helps in providing income when no work is available. Also, the wages that are paid through bank
accounts contribute more to the household savings.
5. Market wages
The Right to Work programs such as MGNREGA can push the prevailing market wages upwards. This
could help in reducing the economic divide. In this way MGNREGA can be effective in improving the
welfare of the poor. The wages under the program have also increased since 2006. The increase in the
wages has been in favour of the unskilled labour. The MGNREGA wages are higher than the market
wages in almost all the states.
Data from the Ministry of Statistics and Program Implementation shows that there has been a significant
increase in the rate of growth of market wages with the advent MGNREGA.

Studies have shown that the scheme has caused the agricultural wages to increase by 5.3%
The following graph depicts the trend of average agricultural wages in the country over the years 2006-
07 to 2013-14.

The following graphs show the percentage of total expenditure that is spent on the wages of the
workers in the years 2012-13 and 2013-14.
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6. Inflation and Fiscal Deficit
Due to the increase in the household incomes, the demand has increased, because of a steeper supply
curve; this has led to an increase in the price levels, thereby, increasing the rate of inflation (especially
the food inflation).

As seen from the graph above, there is a substantial increase in the CPI inflation rate after 2006-07, due
to an increase in the expenditure levels. Although this increase can be attributed to various factors,
increase in government expenditure due to MGNREGA is a major contributor to it.
The graph presented below shows the trends in the food and non food inflation rates over the years.



Post MGNREGA, the government expenditure has increased over the years, but the tax revenues have
not gone up. This has caused an increase in the fiscal deficit. The following data from the Planning
Commission website gives the details of the government revenues and expenditure over the years.


7. Participation of women in labour force
Labour market inequality has always been an issue in India. However, MGNREGA has brought about a
change in this. Many women in the rural households go to work and the participation rate of women in
the labour force has improved considerable in some states. Southern states of the country like Kerala,
Andhra Pradesh and Tamil Nadu showed a higher rate of participation than the rest of the country.
Women person-days of employment were more than 50%in some of the states. Women are
participating more actively in this employment scheme than any other. There are several factors that
contribute to this fact fixed working hours, employment near the place of residence, favourable
working conditions. These women would have stayed at home otherwise. There is an increase in the
non-skilled wages for women in rural areas post-MGNREGA. Real wages increased more rapidly for
female workers than for the male workers. Hence, MGNREGA has increased the participation of women
in the labour force. The following graphs show the percentage of women person-days in the states in
the year 2012-13 and 2013-14.




Research suggests that welfare costs of economic crises and weather shocks are disproportionately
large for the poor who lack the means to protect themselves from adverse income and employment
shocks. This could further reinforce existing inequalities, create persistent poverty and hurt the pace of
poverty reduction. Through its impact on income, consumption, food security and employment,
MGNREGA appears to be helping in protecting the poor and vulnerable.

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Percentage of Women person-days (2013-14)
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Challenges in MNREGA
Though MNREGA has been a radical departure from the other employee guarantee schemes yet the
implementation and governance of the scheme has imposed many problems. A summary of the
problems is given below:
1. It is demand-driven and rights-based and uses a bottom up approach for wage determination as
compared to the earlier allocation based schemes. Hence the main challenge is how it is
implemented.
2. According to the Sameeksha, the states which have a better administration system would
benefit more from the scheme and the states that are poorer and have more demand for work
and less capacity under MNREGA will face more problems and benefit less.
3. The participation of women is low in some states
4. Low capacity of Gram Panchayats
5. The quality of assets and durability is low
6. Work completion rate is not up to mark
7. Duplicate and non-genuine Job Cards
8. Low awareness among prospective beneficiaries with regard to the provision in the scheme. This
hinders the implementation of the scheme in rural areas. Moreover, awareness in critical for the
implementation. According to NSSO, there is low awareness regarding the following provisions
Provision Awareness Level State
Unemployment Allowance 10% Andhra Pradesh, Rajasthan
Work on demand 29% Andhra Pradesh
Grievance Redressal Mechanism 16% Rajasthan

On the other hand, Maharashtra has higher than 75% awareness. The main source of information for
the respondents of the survey was Gram Panchayats. This was because The Panchayati Raj Institutions
have high level of awareness.
9. Constraints in planning and prioritization at Gram Sabha
a. GSs are not frequent
b. Inadequate Participation - CAG Audit found that 80 GSs have not gathered for the
process of planning
c. Demand and priorities dont determine the work selection process
d. Mandate that says that at least 50% of the total cost should be undertaken by GPs is
not followed in 11 surveyed districts according to CAG report
10. Irregular or seasonal Demand for work Some states have consciously stopped work either due
to the seasonal nature of the work or because of other reasons which has undermined the
poverty alleviation capacity of NREGA. Most work is concentrated in the first two seasons before
the commencement of monsoon. It is difficult to undertake construction projects during
monsoon.
11. Demand forecasting and high level of unmet demand Due to traditional social structures and
inadequate delivery systems, some households are not given work even though they are seeking
for work. This accounts for 19% of total rural households.
Reasons of rationing
a. Proportional of demand is large
b. Operational capacity does not match demand
c. Awareness is low among women and illiterates
d. Worksite was not open due to inadequate institutional capacity
e. Work was not available though the site was open - due to traditional hierarchies
12. Discrepancy in data Data from NSSO and MIS is not consistent
a. In the NSSO survey, workers were asked to recall their demand for 365 days i.e. if they
have sought demand in the last 365 days. They may not be able to give accurate
information.
b. The time period of 365 days did not match with the financial year or the calendar year.
Whereas the MIS calculates on the basis of financial year.
c. Only 35% of the total households have job cards according to NSSO but the number is
53% according to MIS.
d. The rate of denial of work and job cards has not been determined.
13. Every household that applies for the scheme should be given a dated receipt and they should
get work within the prescribed period. This condition in the NREGA scheme was vital for
ensuring social security to the poorest. But it is difficult to verify whether the provision of timely
work has been followed or not. In many states, dated receipts were not provided because it was
a mandate to provide unemployment allowance to those who are not given work within 15 days
of demand. Currently, the MIS monitors the delay in provision of employment and provision of
unemployment allowance.
14. Wage is calculated according to the total output per day. Due to non-revision of the piece rates,
wages are not consistent in all states and the average wage rate is less than the notified wage
rate.
15. Non uniform distribution of groups, large proportion of women and older men, irregular
supervision has led to low productivity.
16. There is a shortage of staff
17. Transparency and Social Audit
a. Social audits are not being conducted on a regular basis
b. There are no active vigilance committees
c. Social audits are not recorded
18. There is poor maintenance and monitoring of ICT systems
19. Wage payments are delayed because of the following reasons:
a. Gaps between work and measurement
b. There is a shortage of funds at the block level
c. Lack of financial inclusion banks and post offices are not present in all villages
d. Fudging of Muster rolls Ghost workers are shown
Several states have tried to action on the points stated in the CAG report. They have tried to promote
transparency in implementation and minimize procedural deviations. For instance, all data was made
public using the Management Information System (MIS). The new initiatives are part of the MNREGA 2.0
scheme.
Recommendations
Some of these recommendations have been incorporated as guidelines of MNREG 2.0 scheme.
1. Awareness can be increased by displaying the provisions of NREGA on the walls on the GP. Also
as the GP undertakes 50% of the cost this would be effective. This has been already
implemented in Rajasthan.
2. Awareness can also be increased by the Social Audit Units about the provisions and the rights.
They can also verify records of primary stakeholders and work sites.
3. Setting up MNREGA Help Centres at the GP and the block level so that people know what are
the basic processes and procedures and entitlements
4. Expansion of List of permissible works
Reasons of expansion
a. Increase synergy between allied livelihoods and agriculture
b. Response to the demand of the states for an increase in location specific flexibility
c. Improving ecological balance in villages
Given the conditions that need to be followed under MNREGA, more livestock and watershed
related works can be added to the scheme.
5. Setting systems to gauge demand One way is to make it mandatory to accept demands and
issue date receipts. Another is keeping the window open on a continuous basis for accepting
applications for work. Ward members, workers at angaanwadis, teachers, SHG members can be
provided the work to accept the applications.
6. Workers should be able to register though mobile phones and this should be integrated with the
MIS.
7. If demand is not met within 15 days, the workers should automatically get unemployment
allowance.
8. The MIS should also capture information about households that have been denied work
purposefully due to reasons like presence of social structures.
9. Door to door survey can be undertaken by district administration to estimate quantum of work
as well as timing.
10. The surveys should be aggregated as Labour Budget, submitted to GOI and funds should be
allocated before the start of the financial year. This will facilitate work providers as it will
synchronise the pattern of migration with the opening of work and the work demanders would
not migrate in distress.
11. Available employment and timing of employment should be communicated to work-demanders
by GPs before the kharif harvest season so as to prevent distress migration.
12. Deployment of human resources to aid monitoring and supervising work at the GP level
13. A full time PO (programme officer) must be appointed at each block and BDOs (block
development officers) should not be burdened with additional responsibility.
14. Appoint 3 member cluster facilitation teams for the blocks with specialists in earthen
engineering, mobilization of communities, hydro-geology to facilitate professional planning in
development of land using watershed approach.
15. Each process closure of MR (muster rolls), measuring capacity and disbursement of wages to
workers should be monitoring using the MIS so that there are no delays in the system.
16. The current MIS does not capture data entries on real time basis. So a new e-governance
solution should be introduced phase-wise.
a. Electronic Fund Management wage disbursement is done in 24 hours
b. The delay in provision of employment and payment of allowance to the unemployed
should be tracked at all levels
c. Electronic Muster Rolls to prevent misappropriation and fake entries
d. AADHAR can be used instead of Job Cards
e. Electronic transfer of data files facilitate the movement of cheques and wage lists
17. For equal opportunity, resource agencies and CSOs (civil society organizations) must be
employed to identify the disabled and vulnerable people.
18. CAG should conduct a performance audit in addition to a financial audit
19. Vigilance cells with a Chief Vigilance Officer, an engineer and an auditor must be set at state
level to proactively detect the irregularities in the system.
20. The administrative expenses are 6% of the total expenditure of the state. Out of this 6%, it
should be mandatory that 2/3
rd
should be used at block level and lower levels. The
administrative costs should not be dispensed in booking new vehicles, ACs and remuneration of
officials who are not directly linked to the NREGA scheme.

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