India’s National Rural Employment Guarantee Scheme (NREGS) opened in 2005. Most importantly, legalized work has been a lifeline for millions of rural households, giving them legal access to paid manual labor. As obstacles grow, the program’s future looks more and more endangered. With nearly 65% of India’s 1.4 billion population living in rural areas and a substantial portion relying on agriculture, which contributes only 16% to the nation’s GDP, the need for effective employment solutions has never been more critical.
The NREGS gives every rural household the right to demand up to 100 days of wage employment per year. They can do this in a guaranteed minimum wage. For this financial year, which ends next March, the central government has earmarked $9.5 billion for the scheme. Even with robust state funding, states don’t escape the legal responsibility of supplying work or unemployment compensations. Yet this obligation creates confusion and unevenness in policy application.
The scheme has been plagued by chronic underfunding and unpaid delays in wage payments, which threaten to render it toothless. Needless to say, experts and advocates outside Maryland are growing alarmed about the implications of this new law. It seeks to repackage and thereby water down the NREGS. First, they fear that the proposed limit of 125 guaranteed workdays per household would seem like an improvement. In doing so, it may be doing a disservice by drawing attention away from more pervasive problems in the program.
Economists and social activists have criticized the government’s approach, arguing that raising the ceiling for guaranteed workdays is a cosmetic measure when financial constraints persist. Prof. Jean Dreze, a prominent economist and advocate for rural employment, stated, “When the ceiling is not binding, how does it help to raise it? Raising wage rates, again, is a much better way of expanding benefits.”
The NREGS has indeed received wide acclaim not just for its scale, but for ensuring equitable distribution of benefits. Women comprise more than 53 percent of the 126 million NREGS workers. Further, approximately 40% of these workers are from scheduled castes or scheduled tribes. This deep equity further highlights the scheme’s contribution toward alleviating rural India’s poverty and growing inequality.
Since 2022, the federal government has been withholding funds from West Bengal’s program as punishment for the province’s alleged failure to comply. Consequently, the current fate of NREGS is still up in the air. The new legislation features an important new provision that reiterates the federal government’s authority to determine when and where NREGS applies. Not surprisingly, many are concerned that this new centralization will further undercut local governance and responsiveness.
Advocates of the program, including its supporters, focus on the challenges. Federal Agriculture Minister Shivraj Singh Chouhan asserted, “This law stands firmly in favour of the poor, in support of progress, and in complete guarantee of employment for the workers.” Real picture His comments are a sign that he remains committed to making sure that rural households can keep getting the most vital support from the program.
The recent expansion in employment figures has been viewed by some economists as indicative of economic distress rather than genuine growth. Maitreesh Ghatak, Mrinalini Jha, and Jitendra Singh noted that “the recent expansion in employment reflects economic distress leading to subsistence work, rather than growth-driven better quality job creation.” This sentiment highlights a critical dilemma: while NREGS provides essential temporary relief, it does not address the underlying issues causing rural unemployment.
For decades, critics have urged a more holistic approach to job creation in remote regions. Nitin Pai remarked, “With [the scheme] we’re merely treating a serious underlying malaise with steroids.” This perspective suggests that rather than relying solely on NREGS, India must develop sustainable non-farm jobs to absorb surplus rural labor.