Slow and steady: Lessons from MNREGA

  • Blog Post Date 10 November, 2014
  • Notes from the Field
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Anindita Adhikari

Centre for Policy Research

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Inayat Sabhikhi

Ministry of Rural Development

As the new government in India is considering changes to MNREGA, it is timely to reflect on its implementation trajectory so far. In this note, Adhikari and Sabhikhi discuss five aspects of programme delivery under MNREGA pertaining to management information systems, financial inclusion, fund management, state capacity and participatory planning. In their view, the programme has made massive strides in strengthening public service delivery.

The Prime Minister has announced that two key principles of his government are ‘minimising government and maximising governance’ and moving from ‘good governance to effective governance’. However, there are few indications of what these terms really mean in the context of public welfare. Given the weight of the mandate thrown behind these terms, it will be useful to unpack them and identify existing good practices for direction.

The Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), which has delivered the right to work to 280 million workers across the country over the last nine years, provides several examples of pioneering initiatives in public service delivery. While daunting challenges in programme implementation continue and need to be actively addressed, what is largely undocumented are the massive strides the programme has made in changing the way welfare programmes are delivered. Administrators across the country have worked hard to implement and improve the first such rights-based law on a globally unprecedented scale. It is this iterative aspect of strengthening public service delivery which rarely gets much attention. Based on our experience of working as consultants with the Ministry or Rural Development as well as interactions with civil society groups, workers and functionaries on the ground, we discuss five aspects of programme delivery to lay out the reform trajectory of MNREGA so far.

Management Information System: Public scrutiny and reduced leakages

One of the first innovations introduced under MNREGA was the setting up of its comprehensive Management Information System(MIS), which is remarkable given the sheer quantum of data and records related to MNREGA that are publicly available. This online portal contains real-time reports and records for over 700,000 villages, work and payment details of 130 million households, 280 million workers and 8.4 million works. In addition to the online portal which is still out of reach for most, efforts have also been made to move towards Janta1 Information Systems which include wall paintings and public reading of records.

The culture of transparency brought in through the availability of official records and reports is now paying dividends. From local village youth holding their sarpanch to account to elected representatives asking tough questions in Parliament, data from the website has been minutely scrutinised by the public to demand greater accountability in implementation. It is the enforcement of these transparency mechanisms that has exposed leakages and corruption, which is the first step towards redressal. Recent studies2 have shown that leakages have reduced over the years which can be partially attributed to increased public scrutiny.

While this democratisation of access to information is laudable, it is not enough. To strengthen the link between information and action, stronger accountability structures need to be in place to act on the discrepancies raised.

Financial inclusion: Jan dhan3, half done

Another early contribution towards large-scale financial inclusion in the country was the shift of MNREGA payments from cash to banks and post offices in 2008. Additionally, in 2009, the Reserve Bank of India (RBI) recognised MNREGA job cards as a valid ‘Know Your Customer (KYC)’ document. This has brought millions of rural workers into the banking fold, with a total of 103 million bank accounts and post office accounts of MNREGA workers open across the country.

Further, wage payments are made into individual accounts of workers; this hashad a tremendous impact on the financial inclusion of women. 57 million or just over half of the mapped bank accounts opened under the programme are that of women. This figure is far above the national banking sex ratio of 394:1,0004.

A number of innovation in payments systems such as aadhaar5-enabled payments (AEP), Business Correspondents (BCs)6 and micro-ATMs7 have ridden on the scale and reach of financial inclusion achieved by this programme with mixed results. Given the extensive network on MNREGA accounts, the feted Pradhan Mantri Jan DhanYojana, with its goal of increasing the access of low income households to financial services, can benefit from using this network to channel proposed benefits such as life insurance.

Electronic Fund Management System: Doing more with less

With the largest budgetary allocation under the Ministry of Rural Development, improving its financial management system has been a key prerogative for the programme. A big step in this direction was the introduction of an electronic Fund Management System (e-FMS) in 2012.

E-FMS has done two things; first, it has mapped all gram panchayat accounts on to the system so that electronic transfers (rather than the manual system of cheques) can be made between various administrative levels and directly to beneficiaries. Second, it works on a system of ‘zero balance’ and ‘direct pull’. This means that there will be no parking of funds in different accounts and instead funds will automatically be drawn from a central account at the state level as and when expenditure is incurred and filed electronically.

This is one of the few public finance management systems in the country which theoretically makes possible real-time viewing of expenditure details and fund movement. This has led to greater transparency in fund transfers and increased efficiency for implementing and payment authorities.

This is not to say that the system was rolled out without issues; there have been problems of lack of understanding at lower levels of administration and exclusion of workers due to technical glitches. However, just as this system is beginning to stabilise and result in last-mile improvements in payments, the programme is faced with a fund crunch leading to inordinate delays in wage and material payments, overshadowing the positive developments made in payment systems.

Strengthening the frontline: Building state capacity

Faulty targeting has been blamed for the skewed figures that show lower employment in poorer states compared to more developed states7. However, this is an incorrect assertion and the real story is not a targeting design flaw but one of state capacity. Researchindicates large unmet demand for MNREGA work and weak implementation capacity in poor states. In light of this, a number of measures have been introduced to strengthen the institutional base of implementing authorities.

Another initiative in building capacity at the frontline is the deployment of close to 26,000 technical assistants at the panchayat level. This cadre of technical professionals has substantially strengthened the capacity of panchayats to execute works and monitor quality of MNREGA works for improved outcomes. In addition, it is recommended that states appoint ‘barefoot engineers’. Typically, these are youth with basic educational qualifications such a high school certificate and belong to the families of MNREGA workers. Often, states face shortage of adequate qualified staff with degrees and diplomas. A pilot of this initiative is being run in the states of Jharkhand and Odisha and will be scaled up to other states. During this pilot, an intensive, short-term training was conducted which equipped young men and women with basic arithmetic skills, with the ability to make detailed cross-section designs of different MNREGA works ranging from boulder checks to ponds.

While the programme for India’s skill development policy may have addressed industry needs, it fails to provide a roadmap for skill sets required by the government as an employer. MNREGA has taken the lead in developing a skill development module for barefoot engineers as a pilot towards developing a ‘Government Sector Skills Council’. This aims to improve outcomes of the programmes and also increase the employability of village youth.

Participatory Planning: Towards improving quality of assets

Although MNREGA has made a concerted effort to put panchayats at the heart of planning and implementation, decisions on development works to be taken up are still largely made at the desk of the District Collector. While gram sabhas are mandated to take place on 2nd October every year to identify and prioritise works, this too is largely an exercise on paper. The need to strengthen participation of workers in the process of planning works and facilitating more informed choices for decentralised planning to be meaningful was widely acknowledged.

Taking a step in this direction, this year the Ministry of Rural Development has launched an Intensive Participatory Planning Exercise in 2,500 backward blocks across the country where 250,000 village-level volunteers have been trained to use participatory tools (example, resource mapping and social mapping)to develop village plans based on principles of integrated watershed management. Estimating demand of the most vulnerable groups such as women-headed households is also an integral part of this exercise, to arrive at a realistic measure of the need for employment in these areas. In some states like Gujarat, it will also be possible to layer plans and maps prepared by people to those that have been created through remote sensing, thereby using the best of technology and people’s participation to improve the quality of plans. Results of this exercise are awaited on whether better planning improves quality of assets.

Two recent amendments on improving asset quality are worth noting here. The first change to the Law makes it mandatory for 60% of works to be directly linked to agriculture and allied activities10 putting to rest a misplaced view that the programme has an adverse impact on agriculture. Secondly, outcome mapping has been made mandatory at the planning stage. The feasibility and effectiveness of this provision can now be verified though reports on the official website which indicate expected and actual outcomes and variation between the two.

As the programme is plunged into a debate on the next set of appropriate reforms, it is both timely and worthwhile to reflect more deeply on its policy and implementation trajectory so far. There are very few examples in public service delivery, internationally and in India, which can offer the range and depth of experience in managing complexity, implementing on scale, responding reflexively, empowering citizens and strengthening state capacity. Building on the substantial systems in place might not make for a grand reform announcement but is actually what is needed the most and is far more likely to yield results.


  1. Janta is Hindi for ‘public’.
  2. The ‘Public Evaluation of Entitlement Programmes’ survey by the Indian Institute of Technology (IIT) Delhi (conducted in Bihar, Chhattisgarh, Himachal Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Orissa, Rajasthan, Tamil Nadu and Uttar Pradeshin 2013-14)finds that the number of days worked on the programme, as stated by respondents, largely tallies with official records, being 22 and 24 respectively, on average. The full report by Jean Dr?ze and Reetika Khera can be found here.
  3. Jan Dhan is Hindi for ‘people’s wealth’. This is in reference to a recently launched government scheme on financial inclusion.
  4. For every 1,000 deposit accounts in banks opened in the name of men, there are 394 deposit accounts in the name of women.
  5. Aadhaar is a 12 digit individual identification number issued by the Unique Identification Authority of India (UIDAI) to residents on behalf of the Government of India which serves as a proof of identity and residence through the country.
  6. Business Correspondents (BCs) are essentially ‘last mile banking agents’ appointed by banks. These local bank representatives take banking to the doorstep of people in remote areas across the country.
  7. Micro-ATMs are handheld devices that are operated by Business Correspondents (BC) of banks. Transactions such as cash withdrawal, cash deposit, balance enquiry and remittance can be undertaken through Adhaar-enabled micro-ATMs.
  8. This argument, made in a recent article by Arvind Panagariya and Jagdish Bhagwati,quoted figures from a brief compiled by Accountability Initiative. However, this assertion is contradicted by figures in the same brief which illustrate that 82% of all those who worked on MNREGA belong to the bottom 30% income group.
  9. Dutta et al (2012) point to low state capacity as one of the primary constraints in Bihar, making it unable to absorb funds and implement MNREGA at the same pace as, say, a state like Andhra Pradesh.
  10. It is relevant to point out that official data shows that 63% of total expenditure on average is already being incurred on works that directly contribute to increasing agricultural productivity.
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