Academics Urge Indian Government to Retain MGNREGA Amid New Employment Bill

Open Letter from Academics

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

Legislative Changes in Parliament

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 pending presidential approval.

Background of MGNREGA

Introduced in 2005 by the Congress-led United Progressive Alliance, MGNREGA was designed to enhance livelihood security for rural households, guaranteeing 100 days of unskilled work annually for those who seek it, across all districts in India.

While the Union government covers the wage bill, states are responsible for material costs and administrative expenses.

Proposed Changes in the New Bill

The new legislation suggests increasing the guaranteed workdays from 100 to 125 and raising the states' financial contribution to 40%.

Describing MGNREGA as a pivotal piece of legislation, the academics urged the Modi administration to reaffirm its commitment to the Act, which they believe is a crucial policy for ensuring a legal right to employment.

Concerns Over Funding and Implementation

The academics expressed concerns that chronic underfunding and delayed payments have hindered the effective implementation of the employment guarantee scheme. They warned that the current shift to state-level management without adequate fiscal support jeopardizes the scheme's viability.

They highlighted a troubling scenario where states are legally obligated to provide employment while central funding is reduced, creating a precarious situation for poorer states that may limit project approvals, thus stifling job demand.

Political Misuse and Funding Issues

The letter pointed out that the unexplained withdrawal of funding to West Bengal over the past three years illustrates potential political misuse of the scheme. In March 2022, the Union government halted MGNREGA funding to West Bengal, citing alleged irregularities in the state's implementation of the program.

Despite receiving Rs 7,507 crore in the 2021-’22 financial year, West Bengal has not received any funds in the subsequent three years.

Impact on Rural Infrastructure and Local Economies

The signatories emphasized that MGNREGA not only provides wages but also contributes to essential rural infrastructure, such as wells and roads, thereby stimulating local economies. They warned that making projects financially unfeasible for states would extinguish these positive effects.

Legislation's Implications for Workers' Rights

On Friday, the Right to Food Campaign, a coalition of activists focused on food and nutrition, criticized the VB-G RAM G bill as a significant rollback of established workers' rights. They described the bill's passage as a bleak moment for labor rights, arguing that repealing MGNREGA undermines the right to work and the principles of decentralization and community involvement.

Concerns Over Centralized Control

The activists contended that the new legislation does not reform employment guarantees but dismantles them, transforming a demand-based legal right into a centralized scheme controlled by the Union government. They asserted that employment is no longer guaranteed by law but is subject to annual allocations and political considerations.

Call for Strengthening MGNREGA

Activists argued that instead of undermining MGNREGA, the government should focus on strengthening it by increasing wage rates, eliminating mandatory digital attendance, and empowering local communities. They criticized the bill for being introduced without public consultation, violating democratic norms.