Skip to content
GK24
GK NotesIndian EconomyRural Development and MGNREGA

Rural Development and MGNREGA: Acts, Schemes and Wages

Complete notes on rural development and MGNREGA: the 100 day guarantee, deadlines, cost sharing, social audit, PMGSY, PMAY-Gramin, DAY-NRLM and PYQs.

By · Published · 5 min read

Rural Development and MGNREGA: Acts, Schemes and Wages — GK24 title card
Rural Development and MGNREGA: Acts, Schemes and Wages — GK24 title card

Rural development is the part of the Indian economy syllabus where a handful of numbers decide the marks: how many days of work are guaranteed, in how many days the work or the allowance must come, how far from home the work may be, and what share of the cost the Centre bears. The Ministry of Rural Development runs the programmes, and the Mahatma Gandhi National Rural Employment Guarantee Act is the only one of them that gives a legal right rather than a benefit.

MGNREGA: the legal guarantee

The National Rural Employment Guarantee Act was passed by Parliament in 2005 and came into force on 2 February 2006 in 200 of the poorest districts, the first launch being at Bandlapalli in the Anantapur district of Andhra Pradesh. It was extended to 130 more districts in 2007-08, to all rural districts from 1 April 2008, and renamed the Mahatma Gandhi National Rural Employment Guarantee Act on 2 October 2009. It remains the largest employment guarantee programme in the world.

ProvisionWhat the Act says
GuaranteeAt least 100 days of unskilled manual wage employment in a financial year to every rural household whose adult members volunteer for it
Nature of the schemeDemand driven: work follows an application, so the budget follows the demand and is not a fixed target
Job cardIssued to a registered household, carrying the names and photographs of the adult members
Deadline for workEmployment within 15 days of the application, failing which the State pays an unemployment allowance
Deadline for wagesWages to be paid within 15 days of the closure of the muster roll, with compensation for delay
DistanceWork within 5 kilometres of the village; beyond that, an extra 10 per cent of the wage rate is paid
WomenPriority such that at least one third of the beneficiaries are women; equal wages for women and men
Worksite facilitiesDrinking water, shade, first aid and a creche where there are five or more children below six years
Wage and materialThe cost of wages to material in the works taken up must be at least 60:40, and contractors and labour displacing machinery are banned
Social auditSection 17: the Gram Sabha monitors the works and conducts the social audit; the Gram Panchayat executes at least half the works by cost

The money is shared by rule. The Centre bears the whole of the unskilled wage cost and 75 per cent of the material cost including the wages of skilled and semi-skilled workers, while the State bears the remaining 25 per cent of the material cost and the whole of the unemployment allowance. Administrative expenses are capped at a small share of the outlay. Wage rates are notified by the Central Government under Section 6 of the Act and revised, so the number itself changes from year to year and from State to State; what the examiner tests is the rule, not the rate.

The machinery and the works

  • The District Programme Coordinator, usually the District Collector or the chief executive of the Zila Parishad, and the Programme Officer at the block level run the scheme; an Ombudsperson in each district hears grievances.
  • The Central Employment Guarantee Council and the State Councils advise on and monitor the Act.
  • Schedule I lists the permissible works in four categories: natural resource management such as water conservation and afforestation; individual assets for the poorest households such as wells, cattle sheds and farm ponds; common infrastructure for self help groups under the livelihoods mission; and rural infrastructure such as roads, drains and playfields.
  • Payment is made into bank or post office accounts by direct benefit transfer, and attendance is captured through a mobile monitoring application, which is why questions on transparency measures mention Aadhaar-based payment, geo-tagging of assets and the public muster roll.

The other rural development programmes

ProgrammeYearPurpose
Pradhan Mantri Gram Sadak Yojana25 December 2000All weather roads to unconnected habitations, generally those above 500 persons in the plains and 250 in hill, tribal and desert areas
Pradhan Mantri Awas Yojana Gramin2016A pucca house with basic amenities for the rural homeless and those in kutcha houses, with higher assistance in hill, north-eastern and difficult areas, plus 90 days of MGNREGA wage support
Deendayal Antyodaya Yojana - National Rural Livelihoods Mission2011Self help groups of rural women, with revolving fund, community investment fund and interest subvention; restructured from the Swarnajayanti Gram Swarozgar Yojana
Deen Dayal Upadhyaya Grameen Kaushalya Yojana2014Placement linked skill training for rural youth
Sansad Adarsh Gram Yojana11 October 2014Members of Parliament adopt and develop model villages; the date is Jayaprakash Narayan's birth anniversary
Shyama Prasad Mukherji Rurban Mission2016Urban amenities in clusters of villages, the idea of rurban growth centres
National Social Assistance Programme1995Old age, widow and disability pensions and the family benefit scheme for the rural poor

What came before MGNREGA

Rural employment programmes have a long line of ancestors, and questions on firsts often come from it. The Community Development Programme of 1952 was the first integrated effort, followed by the National Extension Service of 1953; the Balwant Rai Mehta Committee of 1957 recommended democratic decentralisation and led to panchayati raj. Then came the Integrated Rural Development Programme at the end of the 1970s, the National Rural Employment Programme of 1980, the Rural Landless Employment Guarantee Programme of 1983, the Jawahar Rozgar Yojana of 1989 which merged the last two, the Employment Assurance Scheme of 1993, the Sampoorna Grameen Rozgar Yojana of 2001 and the National Food for Work Programme of 2004, whose districts became the first MGNREGA districts. The 73rd Constitutional Amendment of 1992, which added Part IX and the Eleventh Schedule with its 29 subjects, gave the panchayats the constitutional standing that lets them execute these works today.

Exam Point of View

Almost every question is a number or a pairing. The numbers are 100 days of work, 15 days for providing work and 15 days for paying wages, 5 kilometres of distance with 10 per cent extra beyond it, one third women, 60:40 wages to material, and the Centre's share of 100 per cent of unskilled wages and 75 per cent of material cost. The dates are 2 February 2006 for coming into force, 1 April 2008 for full coverage and 2 October 2009 for the renaming, with Anantapur in Andhra Pradesh as the first district. The pairings are Section 17 with the Gram Sabha and social audit, the Ministry of Rural Development as the implementing ministry, and scheme to purpose: PMGSY for roads, PMAY-Gramin for houses, DAY-NRLM for self help groups, DDU-GKY for skills and SAGY for model villages. A frequent trap is to call MGNREGA a supply driven scheme; it is demand driven, and a second trap is to make the Centre pay the unemployment allowance, which is the State's liability.

Important Facts

Guarantee100 days of unskilled manual work per rural household in a financial year
Act passed and in forcePassed 2005; in force 2 February 2006 in 200 districts
First launchBandlapalli, Anantapur district, Andhra Pradesh
Full coverageAll rural districts from 1 April 2008
RenamedMahatma Gandhi NREGA on 2 October 2009
Unemployment allowanceIf work is not given within 15 days; paid by the State Government
Payment of wagesWithin 15 days of the closure of the muster roll
Distance of worksiteWithin 5 km, else 10 per cent extra wage
Share of womenAt least one third of beneficiaries
Wage to material ratioAt least 60:40
Social auditGram Sabha, under Section 17 of the Act
Cost sharingCentre 100 per cent of unskilled wages and 75 per cent of material cost
Implementing ministryMinistry of Rural Development
PMGSYLaunched 25 December 2000 for all weather rural roads
First rural development programmeCommunity Development Programme, 1952

Practice MCQs on this topic

Q1.Indian EconomyAsked in: Uttar Pradesh · 30 May 2019, Shift 2Easy

Enacted on 7 September 2005, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in India entitles, by demand, every rural household to a minimum of _______ of paid work each year at minimum wage.

  1. A.120 days
  2. B.150 days
  3. C.180 days
  4. D.100 days
Show answer
Correct answer: D. 100 days

Explanation

The correct answer is D, 100 days. Section 3 of the Act obliges the State Government to provide at least one hundred days of unskilled manual wage employment in a financial year to every rural household whose adult members volunteer for such work, and the guarantee belongs to the household, not to each member. A is wrong because 120 days is not the statutory figure, although the Central Government can allow extra days in areas hit by drought or natural calamity. B is wrong because 150 days has been proposed in debates on amending the Act but has never been the guarantee. C is wrong because 180 days would be half the year and no employment guarantee programme in the country promises that. Remember the three figures together: 100 days of work, 15 days to provide it or pay an allowance, and work within 5 kilometres of the village.

Q2.Indian EconomyMedium

The National Rural Employment Guarantee Act came into force on which date?

  1. A.2 October 2005
  2. B.2 February 2006
  3. C.1 April 2008
  4. D.2 October 2009
Show answer
Correct answer: B. 2 February 2006

Explanation

The correct answer is B, 2 February 2006, when the Act came into force in 200 of the poorest districts of the country, the first launch taking place at Bandlapalli in the Anantapur district of Andhra Pradesh. A is wrong because the Act was passed by Parliament in 2005 and notified in September of that year, but it was brought into operation only in February 2006. C is wrong because 1 April 2008 is the date from which the Act covered all the rural districts of India, after an intermediate extension to 130 more districts in 2007-08. D is wrong because 2 October 2009, Gandhi Jayanti, is the date on which the Act was renamed the Mahatma Gandhi National Rural Employment Guarantee Act. All four dates appear in the options of such questions, so learn the sequence rather than a single date.

Q3.Indian EconomyMedium

On which date was the National Rural Employment Guarantee Act renamed after Mahatma Gandhi?

  1. A.2 February 2006
  2. B.15 August 2008
  3. C.2 October 2009
  4. D.2 October 2014
Show answer
Correct answer: C. 2 October 2009

Explanation

The correct answer is C, 2 October 2009. The Act was renamed on Gandhi Jayanti in 2009, and from then it has been known as MGNREGA, the Mahatma Gandhi National Rural Employment Guarantee Act. A is wrong because 2 February 2006 is the date the original Act came into force in the first 200 districts. B is wrong because no step of the scheme is dated 15 August 2008; the expansion to the whole of rural India took effect from 1 April 2008, the start of a financial year. D is wrong because 2 October 2014 is the day the Swachh Bharat Mission was launched, and the Sansad Adarsh Gram Yojana was launched in the same month, on 11 October 2014. Keep the two Gandhi Jayanti dates apart: 2009 for the MGNREGA renaming and 2014 for Swachh Bharat.

Q4.Indian EconomyEasy

Under MGNREGA, an unemployment allowance becomes payable if work is not provided within

  1. A.7 days of the application
  2. B.15 days of the application
  3. C.30 days of the application
  4. D.45 days of the application
Show answer
Correct answer: B. 15 days of the application

Explanation

The correct answer is B, 15 days. If employment is not provided within fifteen days of the application, or of the date from which work is sought, whichever is later, the applicant becomes entitled to an unemployment allowance, which the State Government pays from its own funds. This liability is what turns the scheme into a legal guarantee. A is wrong because seven days is not the statutory period, although panchayats are expected to act as quickly as possible. C is wrong because thirty days would defeat the purpose, since the demand for work usually arises in the lean season when a family cannot wait a month. D is wrong for the same reason. Note the symmetry that examiners test: fifteen days to give the work, and fifteen days from the closure of the muster roll to pay the wages.

Q5.Indian EconomyMedium

Under MGNREGA, work has to be provided within what distance of the applicant's village?

  1. A.2 kilometres
  2. B.5 kilometres
  3. C.10 kilometres
  4. D.There is no limit on distance
Show answer
Correct answer: B. 5 kilometres

Explanation

The correct answer is B, 5 kilometres. The Act requires that work be provided ordinarily within five kilometres of the village of the applicant, and if the worksite is farther away, the worker is paid an extra ten per cent of the wage rate to meet the cost of travel and living. A is wrong because two kilometres is too narrow a radius to find works for all applicants and is not in the Act. C is wrong because ten kilometres is a distractor built from the ten per cent extra wage, a favourite trick of paper setters. D is wrong because leaving distance open would make the guarantee useless for a labourer with no transport. Along with the distance rule, remember the worksite facilities: drinking water, shade, a first aid box, and a creche where five or more children below the age of six are present.

Q6.Indian EconomyMedium

What is the minimum share of women among MGNREGA beneficiaries required by the Act?

  1. A.One fourth
  2. B.One third
  3. C.One half
  4. D.Two thirds
Show answer
Correct answer: B. One third

Explanation

The correct answer is B, one third. Priority has to be given to women in such a way that at least one third of the beneficiaries are women who have registered and asked for work, and the Act also requires equal wages for women and men for the same work. In practice the share of women in person days has usually been well above this floor. A is wrong because one fourth is the figure some older employment programmes used, not MGNREGA. C is wrong because one half is not a statutory requirement, although many States report higher participation by women than by men. D is wrong because two thirds has never been prescribed. Note that the reservation of one third for women in panchayats comes from the 73rd Amendment, a different provision that is often mixed up with this one.

Q7.Indian EconomyHard

Under which section of MGNREGA does the Gram Sabha conduct the social audit of works?

  1. A.Section 3
  2. B.Section 6
  3. C.Section 17
  4. D.Section 27
Show answer
Correct answer: C. Section 17

Explanation

The correct answer is C, Section 17, which makes the Gram Sabha responsible for monitoring the execution of works within the panchayat and for conducting a regular social audit of all the projects taken up under the scheme, with every record open to public inspection. A is wrong because Section 3 contains the guarantee itself, the hundred days of employment to every rural household that demands work. B is wrong because Section 6 empowers the Central Government to notify the wage rate, which is why MGNREGA wages are not always the same as the State minimum agricultural wage. D is wrong because Section 27 allows the Centre to give directions to a State and even to stop the release of funds where the Act is not implemented properly. Section 17 and the Gram Sabha make one of the most repeated pairs from this topic.

Q8.Indian EconomyMedium

What wage to material ratio has to be maintained in works taken up under MGNREGA?

  1. A.40:60
  2. B.50:50
  3. C.60:40
  4. D.75:25
Show answer
Correct answer: C. 60:40

Explanation

The correct answer is C, 60:40. At least sixty per cent of the cost of the works must go on wages and not more than forty per cent on material, so that the scheme remains an employment programme rather than a construction programme. The Act also bans contractors and the use of machinery that would displace labour. A is wrong because reversing the ratio would turn the scheme into a material heavy public works programme with little employment. B is wrong because fifty-fifty is not prescribed anywhere in the Act or its schedules. D is wrong because seventy-five is the Centre's share of the material cost in the funding pattern, a different number that the options deliberately mix in. Keep the two apart: 60:40 for wages to material, and 100 and 75 per cent for the Centre's share of wage and material cost.

Q9.Indian EconomyMedium

The Pradhan Mantri Gram Sadak Yojana, meant for all weather rural roads, was launched in which year?

  1. A.1996
  2. B.2000
  3. C.2005
  4. D.2014
Show answer
Correct answer: B. 2000

Explanation

The correct answer is B, 2000. The Pradhan Mantri Gram Sadak Yojana was launched on 25 December 2000 to connect unconnected habitations with all weather roads, generally those with a population above five hundred in the plains and above two hundred and fifty in hill, tribal and desert areas, and it later added the upgradation of existing rural roads in further phases. A is wrong because 1996 is not associated with any rural roads programme of this kind. C is wrong because 2005 is the year of the National Rural Employment Guarantee Act and of the National Rural Health Mission. D is wrong because 2014 belongs to the Sansad Adarsh Gram Yojana and the Deen Dayal Upadhyaya Grameen Kaushalya Yojana. Pair each scheme with its purpose: roads, houses, livelihoods and skills are four separate programmes.

Q10.Indian EconomyMedium

Which rural development mission organises rural women into self help groups for livelihood support?

  1. A.DAY-NRLM, also called Aajeevika
  2. B.PMAY-Gramin
  3. C.DDU-GKY
  4. D.SPMRM
Show answer
Correct answer: A. DAY-NRLM, also called Aajeevika

Explanation

The correct answer is A, DAY-NRLM, the Deendayal Antyodaya Yojana National Rural Livelihoods Mission, launched in 2011 as Aajeevika in place of the Swarnajayanti Gram Swarozgar Yojana. It organises poor rural women into self help groups, federates them at the village and block level, and supports them with a revolving fund, a community investment fund and interest subvention on bank loans. B is wrong because PMAY-Gramin provides pucca houses with basic amenities to the rural homeless and to households living in kutcha houses. C is wrong because DDU-GKY gives placement linked skill training to rural youth. D is wrong because the Shyama Prasad Mukherji Rurban Mission develops clusters of villages with urban amenities. One mission for groups, one for houses, one for skills and one for clusters.

Q11.Indian EconomyHard

Which was the first integrated programme of rural development in independent India?

  1. A.The Integrated Rural Development Programme
  2. B.The Community Development Programme
  3. C.The Jawahar Rozgar Yojana
  4. D.The Employment Assurance Scheme
Show answer
Correct answer: B. The Community Development Programme

Explanation

The correct answer is B, the Community Development Programme, started in 1952 as the first integrated attempt at rural development, followed by the National Extension Service in 1953. Its weaknesses led to the Balwant Rai Mehta Committee of 1957, whose recommendation of democratic decentralisation gave India panchayati raj. A is wrong because the Integrated Rural Development Programme came at the end of the 1970s and aimed at self employment for families below the poverty line. C is wrong because the Jawahar Rozgar Yojana of 1989 was formed by merging the National Rural Employment Programme of 1980 and the Rural Landless Employment Guarantee Programme of 1983. D is wrong because the Employment Assurance Scheme began in 1993 for the agricultural lean season in backward blocks. The chain to remember runs 1952, 1957, 1980, 1983, 1989, 1993, 2001 and then MGNREGA in 2005.

Frequently Asked Questions

How many days of work does MGNREGA guarantee?

At least 100 days of unskilled manual wage employment in a financial year to every rural household whose adult members volunteer for such work. The guarantee belongs to the household and not to each individual, and additional days can be allowed by the Centre in drought or disaster affected areas.

What happens if work is not provided within 15 days?

The applicant becomes entitled to an unemployment allowance, which is paid by the State Government out of its own funds, at a rate fixed under the Act. This liability is the reason the scheme is called a legal guarantee rather than a welfare scheme.

Who conducts the social audit of MGNREGA works?

The Gram Sabha, under Section 17 of the Act, which monitors the execution of works within the panchayat and conducts a regular social audit of all projects, with the records open to any citizen. Independent social audit units in the States now support the process.

How is the cost of MGNREGA shared between the Centre and the States?

The Central Government bears the whole of the wage cost of unskilled manual work and 75 per cent of the material cost, including the wages of skilled and semi-skilled workers. The State Government bears the remaining 25 per cent of the material cost and the entire unemployment allowance.

Which scheme builds all weather roads in villages?

The Pradhan Mantri Gram Sadak Yojana, launched on 25 December 2000, which connects unconnected habitations, generally those with a population above 500 in the plains and above 250 in hill, tribal and desert areas, and now also upgrades the existing rural road network.

Why is MGNREGA called demand driven?

Because work is provided on application by the household rather than according to a target fixed in advance, and the budget has to follow the number of people who ask for work. A scheme with a fixed allocation and a fixed number of beneficiaries, like most welfare schemes, is supply driven by contrast.

Sources

View all