Centre Owes ₹6,366 Cr. in MGNREGA Wages: An Overview

Centre Owes ₹6,366 Cr. in MGNREGA Wages to 18 States, Union Territories


The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) salary component has a total debt to States of 6,366 crore, according to information provided to Parliament on Tuesday by the Union Rural Development Ministry.

What is MGNREGA?

  • Objective: By offering at least one adult member of every household who volunteers for unskilled manual labour at least 100 days of paid employment in a fiscal year, the MGNREGA program seeks to protect rural households’ “right to work” and increase their livelihood security.
  • Implementation: Under the UPA government headed by Prime Minister Manmohan Singh, the legislation was passed on August 23, 2005, and it came into effect in February 2006. Raghuvansh Prasad Singh, the minister for rural development, introduced it in the legislature.
  • Scope: The initiative was initially piloted in 625 districts in India before being expanded to include all districts on April 1st, 2008.
  • Gender Equality: The MGNREGA program promotes gender equality and women’s empowerment by guaranteeing that women receive one-third of the job possibilities offered by the program.
  • Asset Creation: MGNREGA aspires to build long-lasting assets in rural areas, like roads, canals, ponds, and wells, which support rural infrastructure and development in addition to offering paid employment.
  • Proximity: Employment possibilities under MGNREGA must be accessible to rural households and must be located within a 5 km radius of the applicant’s home.
  • Minimum Wages: To ensure fair recompense for labour, minimum wages are provided for work completed under the program.
  • Unemployment Allowance: As a social safety net, eligible individuals are entitled to receive an unemployment allowance if the government is unable to offer employment within 15 days of application.
  • Legal Entitlement: Employment under the MGNREGA is regarded as a legal entitlement, guaranteeing that those who qualify have a right to employment and government assistance.
  • Benefits: The program has several advantages, such as raising economic stability, lowering poverty, and promoting social justice in rural areas.
  • Environmental Protection: Because MGNREGA promotes the development of resources that support sustainable development, it is also thought to have a good impact on environmental protection.
  • Viewpoint of the World Bank: The World Bank initially opposed the act and other regulations for possibly impeding development by restricting internal migration. However, the World Bank recognized MGNREGA as a “stellar example of rural development” in its 2014 World Development Report.
  • Implementation Mechanism: Gram Panchayats, or local self-government organizations, are primarily responsible for implementing MGNREGA, assuring local participation and decision-making.
  • Protections: The act contains clauses for efficient administration and execution, outlines principles, agencies for implementation, a list of permitted works, financing patterns, monitoring, and assessment procedures, as well as steps to guarantee accountability and transparency.

What is the recent issue faced by the MGNREGA?

  • The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) salary component has a debt to the States of 6,366 crore, according to information provided to Parliament by the Union Rural Development Ministry.
  • 14.42 crore active MGNREGS employees, most of whom are women, rely on these salaries to help support their families.
  • 2,770 crore of the total debt is payable to West Bengal alone.
  • Since December 2021, the Center has prohibited payment to West Bengal for “non-compliance with directives of the Central government” totalling over $7,500 crore.

How is it going to affect the economy? 

  • Future projects are impacted if payments for the material components are delayed. The work cycle is disrupted by local vendors that sell raw materials becoming reluctant to supply goods as a result of ongoing material component payout delays.
  • West Bengal is owing $2,813 crore in material component payments from the Centre, which is followed by 777 crore from Uttar Pradesh and 634 crore from Karnataka.