India jobs guarantee scheme
Background: NREGS and Rural Livelihoods in India:India jobs guarantee scheme
India is home to one of the world’s most ambitious social programs — a jobs guarantee that provides every rural household the legal right to paid work. Launched in 2005 by a Congress party government, the National Rural Employment Guarantee Scheme (NREGS) entitled rural households to demand up to 100 days of paid manual work per year at a statutory minimum wage.
This program is crucial in a country where roughly 65% of the population lives in rural areas, and nearly half depend on farming, which contributes only 16% to India’s GDP. By offering unskilled public work across nearly all rural districts, the scheme has become a backbone of rural livelihoods, cushioning households during economic shocks.
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The scheme has consistently targeted equity: over half of its 126 million workers are women, while around 40% belong to scheduled castes or tribes — historically marginalized communities in India.
The Recent Reforms and Renaming
Last week, the Indian government introduced a new law that repeals and rebrands the scheme, removing Mahatma Gandhi’s name altogether. While NREGS was renamed MGNREGA in 2009 to honor Gandhi, the latest iteration — known informally as G RAM G — brings key structural changes.
Notable updates include:
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- Annual employment guarantee increased from 100 to 125 days per rural household.
- Workers not provided employment within 15 days continue to be entitled to an unemployment allowance.
- Shift in funding: from 90:10 federal-state share to 60:40, increasing the financial responsibility of states.
Despite the increase in guaranteed workdays, critics argue that financial and administrative constraints may reduce the program’s effectiveness.
Economic Significance and Past Impact
During crises like the COVID-19 pandemic, NREGS played a critical role in sustaining rural consumption and reducing poverty. Economists credit the scheme with boosting school attendance, increasing private-sector wages in rural areas, and stabilizing livelihoods amid migration shocks.
A study by Karthik Muralidharan, Paul Niehaus, and Sandip Sukhtankar found that the program increased beneficiary households’ earnings by 14% and reduced poverty by 26%. Yet, structural issues remain: agriculture’s slow growth (around 3% annually since 2001–02) cannot absorb surplus labor, leaving millions dependent on low-paying manual work.
Concerns Over the New Funding Model
Critics, including economists, academics, and opposition leaders, argue that the new centralisation of funding and higher state contribution risks weakening the legal right to employment. Jean Dreze, a development economist, notes that raising guaranteed days may be a “red herring” if the financial ceiling remains restrictive, as only 7% of households actually received the full 100 days in 2023-24.
Key concerns include:
- States legally responsible for unemployment allowances may face budgetary pressure.
- Central government retains discretion to allocate funds, potentially limiting access in some states.
- Risk of diverting funds from regions with higher poverty to relatively wealthier states.
Political and Expert Reactions
The government frames the reforms as a modernized, corruption-free, and more effective program aimed at empowering the poor. Federal agriculture minister Shivraj Singh Chouhan stated: “This law stands firmly in favour of the poor, in support of progress, and in complete guarantee of employment for the workers.”
However, critics warn that discretionary allocation and capped funding may undermine the scheme’s global reputation. An open letter led by Olivier De Schutter, UN special rapporteur on extreme poverty, urged the government to preserve the original design, calling it a historic error to dilute its legal guarantee.
State governments and advocacy groups continue to highlight disparities in implementation. For instance, Tamil Nadu, with less than 1% of India’s poor, received nearly 15% of scheme funds, while Kerala, with just 0.1% of the poor, received almost 4%. Administrative capacity is key: states with trained staff can process work requests more efficiently, directly affecting employment outcomes.
Challenges Beyond the Scheme
Persistent challenges remain:
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- Delayed wage payments and underfunding in certain states, such as West Bengal.
- Limited impact on long-term rural productivity and non-farm employment generation.
- Rising labor participation often reflects economic distress rather than better-quality job creation.
Economists Maitreesh Ghatak, Mrinalini Jha, and Jitendra Singh highlight that increases in labor force participation largely involve low-productivity roles like unpaid family helpers and self-employed workers. In this context, the jobs guarantee scheme remains a vital social safety net, preventing deeper poverty even as structural reforms are debated.
Conclusion: The Future of India’s Jobs Guarantee
India’s jobs guarantee program has become a global model for poverty alleviation and rural employment. While the government seeks to modernize and centralize its administration, concerns persist over funding allocation, legal entitlements, and equitable access across states.
Whether the revamped scheme strengthens livelihoods or diminishes its impact will depend on careful implementation, robust monitoring, and state capacity. For millions of rural Indians, the jobs guarantee remains central to survival and dignity, highlighting the enduring importance of social safety nets in addressing structural employment challenges.
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By The News Update — Updated December 25, 2025
