MGNREGA needs reform but changes fray the safety net

Context & The Gist

The recent move by the Narendra Modi government to replace the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) with the Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission Grameen (VB-G RAM G) Bill has sparked debate. This is in the news due to the potential implications for rural employment and the federal structure of India. The central thesis of the article is that while the proposed Bill aims to enhance guaranteed wage employment days, its flawed fiscal design – particularly the 60:40 Centre-state funding ratio – places an undue burden on states, potentially jeopardizing its effective implementation.

Key Arguments & Nuances

• Shift in Approach: The VB-G RAM G Bill transitions from a demand-driven scheme (MGNREGA, where states estimated demand and the Centre allocated funds) to a supply-driven one, where the Centre dictates allocations based on its own parameters.
• Fiscal Burden on States: The 60:40 Centre-state funding pattern (with exceptions for North-East and Himalayan states) is a major concern, given the already strained finances of many state governments. This mirrors issues with the Pradhan Mantri Fasal Bima Yojana (PMFBY) where state contributions have hindered performance.
• Technological Integration: The inclusion of technology like biometric authentication, GPS, and AI for fraud detection is seen as a positive step.
• Increased Employment Days: The Bill proposes increasing guaranteed employment days from 100 to 125, but this is overshadowed by the funding concerns.
• Restrictions on Work Timing: The 60-day restriction on work during peak agricultural seasons is intended to avoid disruption to farming activities.

UPSC Syllabus Relevance

• GS Paper II: Polity & Governance – Centre-State relations, Constitutional provisions related to Finance, Welfare schemes.
• GS Paper III: Economy – Government policies and interventions for developing various sectors of the economy, issues related to poverty and unemployment.
• GS Paper I: Social Issues – Rural Development and Poverty Alleviation.

Prelims Data Bank

• MGNREGA: Launched in 2005, guarantees 100 days of wage employment to rural households.
• VB-G RAM G: Proposed to provide 125 days of guaranteed wage employment.
• PMFBY: Pradhan Mantri Fasal Bima Yojana – a crop insurance scheme with a 50:50 Centre-state funding pattern.
• Article 282: Grants financial assistance from the Union to the States. (Relevant to Centre-State funding patterns)

Mains Critical Analysis

The proposed VB-G RAM G Bill presents a complex interplay of potential benefits and significant challenges. A PESTLE analysis reveals the following:

• Political: The shift reflects a move towards greater central control over welfare schemes, potentially impacting state autonomy.
• Economic: The 60:40 funding ratio poses a substantial economic burden on states, especially those with limited fiscal capacity. This could lead to reduced scheme implementation and impact rural incomes.
• Social: While aiming to increase employment days, the scheme’s success hinges on adequate funding and effective implementation, directly impacting rural livelihoods and poverty reduction.
• Technological: The integration of technology is a positive step towards transparency and efficiency, but requires robust infrastructure and digital literacy.
• Legal: The Bill’s legality concerning the federal structure and financial implications could be challenged.
• Environmental: The scheme’s focus on unskilled manual labor can be directed towards environmentally sustainable projects like water conservation and afforestation.

The core issue lies in the fiscal design. The Centre’s decision to shift from fully funding MGNREGA to a shared responsibility model, without adequately considering the financial constraints of states, is a critical gap. This could lead to a situation where the scheme is underfunded and fails to deliver its intended benefits. The implications extend beyond rural employment, potentially impacting agricultural productivity and overall economic growth.

Value Addition

• Second National Commission on Labour (2002): Recommended strengthening labour laws and providing social security benefits to workers.
• National Food for Work Programme (NFWP): Precursor to MGNREGA, launched in 2002, aimed at providing food security and employment in rural areas.
• Quote: "The true measure of any society can be found in how it treats its most vulnerable members." - Mahatma Gandhi (Relevant to the spirit of MGNREGA).

Context & Linkages

This past article provides a detailed overview of the VB-G RAM G Bill, highlighting the shift from a demand-driven to a supply-driven scheme and the concerns surrounding the 60:40 funding pattern. It reinforces the argument that the Bill fundamentally alters the nature of MGNREGA, potentially weakening its effectiveness and undermining states’ interests. The current article builds upon this analysis by focusing specifically on the fiscal implications and the potential for suboptimal performance due to inadequate state funding.

The discussion around the Labour Codes and their impact on worker rights provides a broader context for understanding the government’s approach to labour welfare. Both the Labour Codes and the VB-G RAM G Bill reflect a trend towards centralizing control and potentially reducing the benefits available to vulnerable populations. This highlights the need for a holistic approach to labour and social security policies.

The Way Forward

• Reconsider the Funding Pattern: The Centre should reconsider the 60:40 funding ratio and explore options for providing greater financial support to states, especially those with weak fiscal capacity.
• Maintain Demand-Driven Approach: Retain the bottom-up approach of MGNREGA, allowing states to estimate demand and share it with the Centre for allocation.
• Strengthen Monitoring & Evaluation: Implement robust monitoring and evaluation mechanisms to ensure effective implementation and prevent fraud.
• Invest in Digital Infrastructure: Enhance digital infrastructure and promote digital literacy to facilitate the use of technology for scheme implementation.
• Ensure Transparency & Accountability: Promote transparency and accountability in all aspects of the scheme, from fund allocation to work implementation.