MGNREGA in India: Achievements, Challenges and the Case for Urban Employment Guarantee

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), enacted in 2005, represents a rights-based approach to employment by legally guaranteeing at least 100 days of unskilled wage employment to rural households. It aims not only at income support but also at strengthening rural livelihoods through durable asset creation and decentralised planning.

Achievements

1. Social Safety Net: It has successfully functioned as a lifeline for millions of rural households during agricultural lean seasons and economic distress (e.g., during COVID-19). It guarantees 100 days of unskilled manual work per household, providing a critical fallback option.
   1. 290.60 crore person-days generated in FY 2024–25.
2. Poverty Alleviation & Wages: It has significantly contributed to reducing poverty and distress migration. By setting a floor for agricultural wages, it has increased rural wage rates, especially for women and marginalized groups.
3. Women’s Empowerment: Over 50% of workers are women—a remarkably high participation rate for India. This has provided them independent income, enhanced their agency within households, and created spaces for participation in the public sphere.
   1. The participation of women under MGNREGA has consistently remained above 50% over the past five financial years. It has shown a steady upward trend, rising from 48% in FY 2013–14 to 58.15% in FY 2024–25 with 440.7 lakh women participating in the scheme during FY 2024–25. 
4. Asset Creation: While debated, it has created durable community assets like water conservation structures (ponds, check dams), land development, and rural infrastructure, contributing to agricultural productivity and drought-proofing.
   1. Since 2006(Till 2021), more than 30 million water conservation-related assets have been created in the country’s rural areas.
   2. More than 86.98lakh assets have been created by March 2025, reflecting the scheme’s role in strengthening rural infrastructure.
   3. Convergence with 13 Ministries supports infrastructure like Anganwadi centres, GP buildings, and border road connectivity in collaboration with BRO and others.
5. Grassroots Democracy: Its implementation through Gram Panchayats (village councils) has strengthened decentralized governance, despite implementation gaps.
6. Off-seasonal employment facilitation; acts as an insurance mechanism; supports women entry in the labour market, increasing FLFPR. E.g. Paschim Bardhhaman – Poultry shed development; supports marginalized sections SCs, STs. E.g. Project Excel Gujrat

Persistent Challenges & Criticisms:

1. Implementation Gaps: Chronic issues include delayed wage payments (sometimes by months), incomplete or poor-quality assets, bureaucratic hurdles, and manipulation of muster rolls.
   1. Unemployment allowance and delay compensation: According to the Act, applicants who do not receive employment within 15 days of application, are entitled to an unemployment allowance.  The Standing Committee on Rural Development and Panchayati Raj in 2024 observed that states including Bihar, Karnataka and Rajasthan have not provided unemployment allowances between 2018 and 2023.
2. Financial gaps in budgetary allocation: The Standing Committee on Rural Development and Panchayati Raj(on “Rural Employment through Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)- An
   1. insight into wage rates and other matters relating thereto) had noted that the budgetary allocation to MGNREGA Scheme was Rs 60,000 crore against the proposed demand of Rs 98,000 crore in 2023-24.
   2. Inadequate Coverage: The 100-day guarantee is often insufficient for annual livelihood needs and is not always met due to fund constraints or lack of work provision.
   3. Fiscal Burden & Leakage: The program is expensive (annual outlays often exceed ₹70,000 crore). While it’s a necessary expenditure, corruption and fund diversion remain concerns.
   4. Not a Pathway to Structural Change: Critics argue it provides subsistence, not a pathway out of poverty. It doesn’t address the need for skills development or formal sector job creation.
   5. Wage Rates: Wage rates linked to CPI-Agri Labour, which does  not capture comprehensive picture of inflation

   Similar Model Be Extended to Urban Areas

   Arguments FOR an Urban Extension :

   1. Rising Urban Precarity: India’s urban sector is characterized by vast informal employment (gig workers, street vendors, construction labor) with no job security, social benefits, or minimum wage compliance. An UEGS could provide a safety net.
      1. May Improve conditions of urban workers; higher wage effect can lead to more bargaining power and may facilitate shift away from informalization. Availability of steady jobs can aid in preventing the situations of mass reverse migration, as seen during covid19 pandemic. Several state has already urban employment schemes e.g. Mukhya Mantri Karma Tatpara Abhiyan, Odisha
   2. Addressing “Jobless Growth”: Urban job creation hasn’t kept pace with the growing workforce or migration. A UEGS could absorb labor during economic downturns and infrastructural transitions.
   3. Improving Urban Infrastructure & Services: Urban public works could focus on much-needed areas: sanitation, waste management, water body restoration, park maintenance, afforestation, and care work (for children, elderly, disabled)—improving livability while creating jobs.
   4. Climate Resilience: Urban works could be geared towards climate adaptation—creating stormwater drains, heat-wave shelters, and green infrastructure.
   5. Formalizing the Informal: By registering workers, providing defined wages, and using digital payments, it could be a step towards formalizing segments of the urban poor.

   Arguments & Challenges AGAINST a Direct Replication:

   1. Higher Wage Demands: Urban costs of living are higher, necessitating a higher wage rate. This would make the scheme significantly more expensive per worker.
   2. Migration Magnet: A fear exists that a generous UEGS could trigger uncontrolled rural-to-urban migration, straining cities further unless designed with residency safeguards.
   3. Space & Logistics Constraints: Urban public works face space constraints, traffic disruptions, and complex municipal permissions, unlike rural settings.
   4. Nature of Work: Rural unskilled work (digging ponds, building roads) is straightforward. Urban tasks require more varied skills and supervision. Designing “shovel-ready” projects is more complex.
   5. Implementation Issues: Urban local bodies often suffer from weak finances and limited administrative capacity, which could constrain effective implementation.

   Conclusion

   Rather than a direct copy of MGNREGA, India needs a context-specific Urban Employment Guarantee that is flexible, skill-oriented, and closely linked to urban service delivery and climate resilience. Pilot initiatives like state-level urban employment schemes can inform design choices. Strengthening funding mechanisms, leveraging technology for transparency, and integrating skilling components would be critical.