Academics Urge Indian Government to Preserve MGNREGA Amid Legislative Changes

A group of ten academics, including Nobel laureate Joseph Stiglitz, has issued a warning to the Indian government regarding the potential dismantling of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). They argue that replacing this landmark legislation with the new Viksit Bharat Bill could have dire consequences for rural employment and economic dignity. The letter highlights the importance of MGNREGA in providing job security and stimulating local economies, while also addressing concerns over funding and implementation challenges. As the bill awaits presidential approval, the academics urge the government to reconsider its approach to rural employment guarantees.

By Narendra Chaudhary Dec 19, 2025, 13:57 IST

Open Letter from Renowned Economists

On Thursday, Nobel Prize-winning economist Joseph Stiglitz, along with nine other scholars, addressed an open letter to the Indian government, cautioning that the potential dismantling of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) would represent a significant mistake.

This letter coincided with the Lok Sabha's approval of the 2025 Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) Bill, which aims to replace MGNREGA. The Rajya Sabha also passed the draft legislation on Friday, despite opposition protests, and it is now awaiting the president's approval.

Background of MGNREGA

MGNREGA was launched in 2005 by the Congress-led United Progressive Alliance, with the goal of improving livelihood security for rural households. The program guarantees 100 days of unskilled work annually for every rural household that requests it, covering all districts across India.

While the Union government covers the wage expenses, states are responsible for the costs of materials and administrative overhead.

Proposed Changes and Concerns

The new bill suggests increasing the guaranteed workdays from 100 to 125 and raising the states' financial contribution to 40%. The academics described MGNREGA as a 'landmark legislation' and urged the Modi administration to reaffirm its commitment to the Act, which they believe is crucial for ensuring economic dignity as a fundamental right.

They highlighted that the initial years of MGNREGA saw remarkable growth in rural wages and emphasized the program's positive impact on economic productivity, countering claims of inefficiency.

Funding and Implementation Issues

The letter pointed out that chronic underfunding and delays in payments have hindered the effective implementation of the employment guarantee scheme. The academics warned that the current shift to decentralize the scheme to states, without adequate financial support, jeopardizes its future, as states lack the financial resources of the central government.

They expressed concern over a new funding model that places legal responsibilities on states to provide employment while reducing central financial support, which could lead to poorer states limiting project approvals and stifling job demand.

Political Implications and Historical Context

The academics criticized the potential for 'structural sabotage' through discretionary powers that could suspend the scheme, rendering the employment guarantee ineffective. They cited the unexplained defunding of West Bengal over the past three years as an example of political misuse.

In March 2022, the Union government halted MGNREGA funding to West Bengal, alleging irregularities in the state's implementation of the scheme. Despite receiving Rs 7,507 crore in the 2021-22 financial year, the state has not received any funds in the subsequent three years.

Future of MGNREGA and Legislative Provisions

The signatories of the letter included notable figures such as Olivier De Schutter, the UN special rapporteur on extreme poverty, and Thomas Piketty, co-director of the World Inequality Lab. They emphasized that MGNREGA not only provides wages but also contributes to essential rural infrastructure, such as wells and roads, which stimulates local economies.

The proposed legislation outlines that the Union government will determine state-wise allocations based on objective criteria and that only it can designate rural areas for the scheme's implementation. Additionally, the bill maintains that individuals are entitled to a daily unemployment allowance if work is not provided within 15 days of application, with the cost borne by state governments.