What’s clear is it has helped few in its current form
Activists have come down heavily on rural development minister Nitin Gadkari for attempting to restructure the MGNREGA by, among others, changing the mandatory amount reserved for labour; the number of districts that the scheme is to be used for is also to be reduced to just the needy ones. This has been done, the activists argue, to help the contractor mafia and will reduce the amount of jobs available for the poor. Gadkari, in turn, has responded by arguing that the scheme has become a source of corruption and that no productive assets are being created through it.
At the outset, it has to be recognised MGNREGA, in its current form, has hardly benefitted anyone. Just around 4% of all households registered under it have been provided the mandatory 100 days of work in a year. As a result, since it has created just around 1-2% of all jobs in the country, it doesn’t really provide any meaningful help in alleviating poverty. Even for those who get what MGNREGA promises, at R140 a day, the wages don’t even cover subsistence for a family of five.
Gadkari is, no doubt, wrong when he talks of how no productive assets were created out of MGNREGA since providing this was never its main aim; the scheme was positioned as unemployment dole. Where Gadkari is right, though, is that the scheme simply isn’t working. The minister is also right in wanting to stress on creating more irrigation facilities since it is these, along with rural roads, that really lead to the sharpest reduction in rural poverty. But what he also needs to keep in mind is that, over the past decades, India has had several wage-linked asset creation schemes, and few, if any, have worked. One solution is to simply merge MGNREGA with other government subsidies that are to be delivered to the poor through direct benefit transfers (DBT). The other, which Gadkari is attempting, is to create more rural infrastructure. This will certainly benefit more people than MGNREGA has, but it is a lot more difficult to deliver on. That doesn’t make it any less worthwhile to try, but this needs to be kept in mind. Also, if rural infrastructure is to be created, the funds available under MGNREGA are hardly near enough. The scheme needs to be merged, either with DBT or some other rural infrastructure one.