The Mahatma Gandhi National Rural Employment Guarantee Act aims at enhancing the livelihood security of people in rural areas by guaranteeing hundred days of wage-employment in a financial year to a rural household whose adult members volunteer to do unskilled manual work. The National Rural Employment Guarantee Act (NREGA) was renamed after the Father of Nation Mahatma Gandhi as Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) on 2nd October 2009, commemorating Golden Jubilee of Panchayati Raj in India. It was on 2nd October, 1959 that Pt. Jawaharlal Nehru, the first Prime Minister of India had laid the foundations of Panchayati Raj at Naguar in Rajasthan.

The National Rural Employment Guarantee Act was enacted by legislation on August 25, 2005 and came into effect on February 2, 2006. It was introduced with an aim of improving the purchasing power of the rural people, primarily by providing semi or un-skilled work to people living in rural India, whether or not they are below the poverty line. The Act was brought about by the UP A coalition government supported by the left parties, in accordance with the promise the UPA had made before the 2004 general elections. Dr. Jean Dreze, a Belgian born economist, at the Delhi School of Economics, has been a major influence on this project.

In 2009-10, the Central Government outlay for scheme was ? 39,100 crore. The Act directs state governments to implement MNREGA schemes. Under the NREGA, the Central Government meets the cost towards the payment of wage, three-fourths of material cost and some percentage of administrative cost. State governments meet the cost of unemployment allowance, one-fourth of material cost and administrative cost of State council. Since the State governments pay the unemployment allowance, the Act is a heavy incentive for them to offer employment to workers.

However, it is up to the State Government to decide the amount of unemployment allowance, subject to the stipulation that it not be less than one-fourth the minimum wage for the first 30 days, and not less than one-half the minimum wage thereafter. The Act also stipulates that 100 days of employment (or unemployment allowance) per household must be provided to able and willing workers every financial year.


All adult members of a rural household, resident in the area, willing to do unskilled manual work can apply to work under the scheme. Even if a person is already employed/engaged in work, he/she has the right to demand employment under NREGA. Priority is given to women and at least one-third of the beneficiaries have to be women who have registered and requested for work under the Scheme.

The process of registration is simple. A household interested in availing of the NREGA benefits has to make an application for registration through the prescribed written form or orally. The registration form and process are free of cost and can be made to the Gram Panchayat. The Panchayat authenticates the registration by verifying whether the applicant resides in that village and is an adult. The unit of registration is the household. After verification, the Gram Panchayat issues a Job Card to the household.

A Job Card is the basic legal document, which enables the registered household to demand guaranteed employment. The Job Card is issued within 15 days of application and is valid for five years. The household Job Card has the name and photograph of each registered member. However, a Job Card does not automatically entitle a person to receive employment.

In order to get employment, the job seeker has to submit a written application to the Gram Panchayat or Programme Officer at block office. Individual members can apply for work within a households’ entitlement for 100 days, provided the demand is for at least 14 days of continuous work. The Gram Panchayat issues a dated receipt for the application. The entitlement of 100 days can be shared within the household and more than one person in the household can be employed simultaneously or at different times.


The Gram Panchayat/Programme Officer sends letters to the applicants informing them where and when to report for work. A public notice displayed at the Gram Panchayat and at the Programme Officer’s block office, also provide information on the date, place of employment and the names of those provided employment. If the job seeker does not get employment within 15 days of submitting the application or from the date when work is sought, whichever is later, a daily unemployment allowance has to be paid as per the Act. And in case, if the applicant does not report to work within 15 days of being notified, he or she will not be entitled to the unemployment allowance. The applicant can, however, re-apply for work.

Normally, work is provided within 5 km of applicant’s residence. If employment is provided beyond 5 km radius of the applicant’s residence then he/she is entitled to 10 per cent additional wages towards transport and living expenses. The Act stipulates that persons older in age and women should be given preference for work nearer to the village.

At the work sites, some facilities are to be provided which include safe drinking water, shade for children and periods of rest, first-aid box for emergency treatment of minor injuries and other health hazards connected with work. If more than five children below six years are present at the work site, a person has to be engaged to look after them.

Creation of durable assets and strengthening the livelihood resource base of the rural poor is an important objective of the Scheme. The kinds of works permissible according to priority are: water conservation and water harvesting; drought proofing, including afforestation and tree plantation; irrigation canals including micro and minor irrigation works; provision of irrigation facility to land owned by households belonging to the SCs and STs or to land beneficiaries of land reforms or that of the beneficiaries under the Indira Awas Yojana; renovation of traditional water bodies including desalting of tanks; land development; flood control and protection works including drainage in water logged areas; rural connectivity to provide all-weather access; or any other work which may be notified by the Central Government in consultation with the State Government. Work through contractors, however, is not permissible.


The work is identified and recommended by the Gram Sabha and the Gram Panchayat consolidates and sends the recommendations of Gram Sabha to the Programme Officer. In the selection of works a 60:40 wage-material ratio has to be maintained. The wages are paid every week, or in any case ‘not later than a fortnight after the date on which such work was done’. The wage is paid either as daily wage or as piece-rate. If wages are paid on a piece-rate basis, the schedule of rates has to be such that a person working for seven hours would normally earn the minimum wage.

The programme is being continuously and concurrently evaluated by both external and internal evaluators. The authority to conduct social audit is vested in Gram Sabha which sets up a village level monitoring committee to oversee each work. Moreover, any contravention of the Act, on conviction, is liable to fine which may extend to one thousand rupees. A Grievance Redressal Mechanism has also to be set up at the block, district and state level.

The programme has not been without criticism. It has been argued that the programme has to be no more effective than other poverty reduction programmes in India, with key exceptions such as Rajasthan. Another criticism is financial. Being one of the largest initiatives of its kind in the world, it is feared that the programme will end up costing 5 per cent of GDP. Further concerns include the fact that local government corruption leads to the exclusion of specific sections of society.