ECONOMIC SURVEY ON MGNREGS (Syllabus: GS Paper 3 – Economy)

Context: The Economic Survey presented by the Finance Minister in the Lok Sabha highlighted that demand under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) reflects institutional capacity and other factors rather than solely indicating rural distress.

Key Findings of Economic Survey

• Tamil Nadu's Share of Funds: Despite having less than one percent of the country's poor population, Tamil Nadu received nearly 15% of all MGNREGS funds released in FY-24.
• Kerala's Fund Usage: Kerala, with only 0.1 percent of the poor population, utilized almost 4 percent of the MGNREGS funds according to the survey report.
• Contrast with Bihar and Uttar Pradesh: Bihar and Uttar Pradesh, which together account for about 45 percent of the poor population (20% and 25% respectively), received only 17% of MGNREGS funds (6% and 11% respectively) and generated 53 crore person-days of employment.
• Correlation Between Poverty and Fund Usage: The correlation coefficient between state-wise multidimensional poverty index and person-days generated is 0.3, suggesting that MGNREGS fund usage and employment generation are not proportional to poverty levels.
• Ad-Hoc Minimum Wage Fixation: Minimum wage fixation in the MGNREGS is ad-hoc and not aligned with per-capita income or poverty headcount ratios. 
• States like Haryana, Kerala, Tamil Nadu, and Karnataka have relatively high wage rates compared to their per capita incomes, affecting state-wise MGNREGS fund usage, with the wage component fully covered by the Central Government.

Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)

• About: MGNREGS is a demand-driven scheme, that seeks to provide guaranteed 100 days of wage employment per year to every rural household whose adult members volunteer to do unskilled manual work.
• Objective: To provide at least 100 days of guaranteed wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work.
• Features: Legal right to work, a time-bound guarantee of work and unemployment allowance (within 15 days), Decentralised planning – i.e., Gram Sabha recommends work, demand-driven scheme.