Efficiency and Efficacy of MGNREGS – The Economic Survey Report

Among the issues covered by the Economic Survey this year are the gains arising out of technological intervention in MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme). The scheme has received even greater push with the technological interventions such as direct benefit transfer (DBT), Aadhar and more recently, Geo-tagging of assets. Even though MGNREGS has generated substantial controversies ever since its launch and continued debate on its benefits, its impact on rural economy cannot be ignored. Here is a look at the scheme based on the economic survey report.

MGNREGS was launched in February 2006 as a measure to provide job security to rural households and reduce distress. The scheme envisages guaranteed employment of 100 days to any individual seeking the same. The scheme got an impetus with the focus on use of technology to reduce inefficiencies, much like in other government sponsored projects. These involved increasing the penetration of banking channel in rural India and deliver the benefits directly in the hands of the beneficiary. The thrust led to total banking outlets in rural India rising from around 1.15 lakh at the end of Fy14 to almost 5.7 lakh by end of FY18, as per the survey. (However, the need to bring rural India into the mainstream banking is not a new objective. Nationalization of banks, 50 years ago, was done precisely to expand banking to rural India, focused largely on urban India until then).

The expansion of banking network and opening of bank accounts was accompanied by linking the payments to Aadhar card in 2015. Other than eliminating ‘ghost workers’, it also helped reduce the payment cycle as central government could directly transfer funds to the bank account of the worker. This contrasted with the earlier system where funds moved from centre to state to district to block to panchayat and then, to the workers, thus leading to delays. As a result, e-payment has risen from 77% in FY15 to 99% in FY19. Out of the total 11.6 crore active workers, Aadhar data for about 88% of the workers have been seeded in MGNREGS database. (DBT has not only helped reduced leakages in this scheme but several others such as LPG and food subsidy. As per the DBT Bharat portal, central government has made estimated savings of over Rs 1.4 lakh crore on disbursement of over Rs 7.6 lakh crore through DBT so far).

Other than improving the delivery mechanism, technology is being used to verify the quality of assets being created through the scheme through geo-tagging. Geo-tagging, started in Sept’16, uses space technology to develop database of assets created under MGNREGS through mobile based photo geo-tagging and GIS based information system. As per the survey, nearly 3.6 crore projects out of 4.44 crore completed projects are already geo-tagged and available in the public domain. (However, the author was prompted to identify himself as related to MGNREGA in some capacity while searching for nearby projects through the app).

Even though the scheme was targeted to build productive capacity of the rural economy, it has lately evolved into individual beneficiary schemes (IBS); which serve the needs of individual instead of the entire community. (A significant part of Pradhan Mantri Awaas Yojana – Gramin (PMAY-G) is also being taken up through MGNREGS). The share of IBS has increased from about 21% in FY15 to over 66% in FY19.  The emphasis on IBS has improved the outcome substantially with improved quality of assets as well as higher income for the beneficiaries. However, it would be premature to state whether it is a desirable trend in the longer run.

While improvement in payment efficiency or quality of assets created is welcome, what distinguishes the scheme is its role in reducing the distress in rural households. The survey points to two studies to make this point. In the first, it segregates rural blocks into two categories – those affected by drought as indicated by the level of rainfall and others. As per the survey, while enrolment increased by 19% in the blocks that were not affected by drought during a year, it increased by an enormous 44% in the blocks that were affected by drought. In another survey, it makes a pair of two adjacent blocks and based on their consumption expenditure, identifies local distress. (If ratio of consumption expenditure is high, one of the blocks is assumed to be facing distress). The survey shows that those blocks where consumption expenditure is low relatively to its neighbor, the demand for MGNREGS is high. It also showed that after the implementation of Aadhar linked payment, the demand for work rose by as much as 76% in the distressed area (as against 18% in non-distressed area). This indicates increasing recourse to MGNREGS in cases of distress; that being the ultimate objective of the scheme.

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