Assessing the Implementation and Challenges of MNREGA

The Mahatma Gandhi National Rural Employment Guarantee Act, passed in 2005, was meant to be a simple promise: any rural household willing to do unskilled manual work could get up to 100 days of wage employment in a year. Two decades on, that promise sits somewhere between a genuine lifeline and an unfulfilled guarantee. Audits by the Comptroller and Auditor General (CAG), parliamentary committee reports, and independent studies all point to the same conclusion. The scheme works on paper far better than it works on the ground. To understand whether MGNREGA is succeeding or failing, we need to look closely at what evaluations actually reveal about its implementation and the challenges that refuse to go away.

What MGNREGA promised and what evaluation measures 🔗

Evaluating any welfare scheme means comparing its stated goals against measurable outcomes. MGNREGA’s core commitments are clear: a legal right to work, employment within 15 days of demand, wage payment within 15 days of work completion, an unemployment allowance if work is not provided, and durable rural assets created through the labour. The scheme is demand-driven, meaning the government must respond when a household asks for work rather than allocating jobs from above.

These features make MGNREGA easy to evaluate, because each promise has a clear benchmark. Did households get 100 days? Were wages paid on time? Were assets actually completed? When auditors and researchers measure performance against these standards, the gaps become visible. The most authoritative of these evaluations comes from the CAG, whose performance audit findings have repeatedly exposed weaknesses in planning, fund use, and project completion.

The CAG findings: a record of implementation gaps 🔗

The CAG has audited MGNREGA at both the national and state levels, and its reports form the backbone of any serious evaluation. The findings reveal problems that span the entire delivery chain, from job card issuance to project completion.

Weak planning and incomplete works 🔗

Planning failures sit at the root of many problems. The labour budget, prepared by Gram Panchayats and consolidated upward, is supposed to estimate how much employment will be needed. The national CAG audit found significant delays at every level in submitting these plans, with Gram Panchayat delays ranging from one month to as much as 21 months. When planning is this weak, the entire scheme drifts.

The result shows up in unfinished projects. The same audit found that across 14 states and one Union Territory, works worth over Rs 1.26 lakh crore were approved, but only about 30 per cent of planned works were actually completed during the audit period. A more recent state audit in Odisha reinforced the pattern. The CAG found that of all 40 Gram Panchayats examined, not a single one prepared a proper labour budget, settling instead for a loose list of projects.

The employment guarantee that rarely delivers 100 days 🔗

The headline promise is 100 days of work per household. In practice, very few families get it. The Odisha audit found that during 2019-24, only between 6.24 and 11.26 per cent of households received the full 100 days of employment. This is not a state-specific anomaly. National data confirms it: in 2024-25, only about 7 per cent of households completed the guaranteed 100 days. The auditors concluded that the scheme had failed to meet its basic objective of livelihood security, largely because of inaccurate assessment of how much work was actually needed.

Job card irregularities and access barriers 🔗

Access to the scheme begins with a job card, and even here the system leaks. The national CAG audit found that photographs were missing on 4.33 lakh job cards across seven states, removing an important safeguard against fraud and impersonation. A 2026 audit in Karnataka found 34,499 applicants still waiting for job cards, along with cards that did not follow the required format. These may sound like paperwork issues, but for a daily wage worker, a missing or delayed job card means no legal access to work at all.

Corruption, leakage and wage problems 🔗

Beyond planning and access, evaluations consistently flag financial irregularities. These are the failures that hit workers directly in the pocket.

Delayed and unpaid wages 🔗

Wage delay is perhaps the most persistent failure. The law mandates payment within 15 days, with compensation for any delay beyond that. The reality is grim. The Odisha audit found that during 2019-24, wage payments of Rs 154.31 crore were delayed by 1.44 crore days, entitling workers to about Rs 1.03 crore in compensation. Yet only Rs 0.01 crore was actually paid as compensation.

Nationally, the picture is similar. Government data shows roughly Rs 974 crore in unpaid wages for the financial year 2024-25. A standing committee report noted that compensation approved for delays is routinely far higher than what is actually disbursed. In 2022-23, for example, around Rs 94 lakh was approved across states but only Rs 59 lakh was paid.

Siphoning of funds and fake records 🔗

Leakage takes many forms. Auditors have documented payments made to deceased persons, job cards that are not updated, and fake beneficiaries. The Odisha CAG audit explicitly flagged payments made to the dead and job cards left un-updated. Such gaps create room for middlemen and corrupt officials to divert wages meant for genuine workers. To curb this, the government has pushed direct benefit transfer and the Aadhaar-Based Payment System, but these tools have created their own problems, which we will turn to next.

Stagnant wage rates 🔗

Even when wages are paid, they are often too low to matter. MGNREGA wages are linked to the Consumer Price Index for Agricultural Labour using 2010-11 as the base year, a benchmark that no longer reflects current living costs. A parliamentary standing committee repeatedly urged the rural development department to revise the indexation, noting that wages have remained stagnant and out of line with the rising cost of living. A government committee recommended a wage of about Rs 375 a day, but actual notified rates remain well below this in most states.

Weak monitoring and the gaps in social audit 🔗

MGNREGA was designed with a powerful accountability tool: the social audit, in which the community itself verifies how the scheme was implemented. On paper, this is one of the most progressive features of any Indian welfare law. In practice, the social audit machinery is itself broken.

The CAG’s review of Social Audit Units found that these bodies were not set up in seven states and were non-functional in another eight. The Karnataka audit described the Social Audit Unit as suffering from institutional weaknesses, staff shortages, and delays in fund release. Parliamentary data shows that in 2023-24, only about 32 per cent of Gram Panchayats were actually audited. When the watchdog is understaffed and underfunded, irregularities go undetected and uncorrected.

Staff shortages and capacity deficits 🔗

A recurring theme across evaluations is the simple lack of people to run the scheme. Panchayats are expected to plan works, supervise sites, maintain records, and process payments, often with skeletal staff. Researchers point out that increasing guaranteed workdays or expanding the scheme is not feasible without deploying more personnel on the ground and giving panchayats genuine autonomy. Without trained staff, even well-funded schemes underperform.

The funding squeeze behind the failures 🔗

Many implementation failures trace back to one structural issue: inadequate and inflexible funding. The budget allocation for MGNREGA has stayed at around Rs 86,000 crore in recent years, even as demand rises. As a share of the economy, spending has shrunk from 0.41 per cent of GDP in 2021-22 to roughly 0.2 per cent in 2023-24 and 2024-25.

This squeeze creates a vicious cycle. When funds run dry around the third quarter of the financial year, wage payments stall, which in turn discourages workers from demanding employment. Research published in the Indian Journal of Labour Economics found that delays in wage payment are fundamentally an artefact of inadequate funds rather than technology design. The same study showed that one-fifth of each year’s allocation over the past five years was spent simply clearing the previous year’s pending bills.

A telling paradox: rising demand, falling work 🔗

The clearest evidence of the funding problem is a mismatch documented for 2024-25. Registered households under the scheme rose by 8.6 per cent, yet persondays of employment generated dropped by 7.1 per cent. More people are signing up for work, but the system is delivering less of it. This is the opposite of what a demand-driven guarantee should produce, and it points squarely at budget constraints suppressing the work that people are legally entitled to.

Why MGNREGA still matters despite the failures 🔗

Given this catalogue of problems, it would be easy to dismiss the scheme. That would be a mistake. Despite its flaws, MGNREGA remains one of the most important social safety nets in the country, especially after the COVID-19 pandemic when rural distress spiked. It provides a fallback income during the lean agricultural season, gives bargaining power to landless labourers, and has reduced distress migration in several regions.

The scheme has been particularly significant for women, whose participation rose from 54.8 per cent in 2019-20 to 58.9 per cent in 2023-24. Because it is self-targeting, only those genuinely in need of manual work tend to enrol, which means a large share of beneficiaries come from Scheduled Castes, Scheduled Tribes, and other marginalised groups. The assets created, including water conservation structures, rural roads, and flood protection works, add long-term value to the rural economy. A scheme this large will always have implementation problems, but its underlying purpose remains sound.

Suggestions for strengthening the scheme 🔗

Evaluations do not just diagnose problems; they also point toward solutions. Several reforms come up repeatedly across CAG reports, parliamentary committees, and academic studies.

Increase and stabilise funding: Researchers and citizen groups argue the budget should rise to at least 1.2 to 1.5 per cent of GDP so that funds do not dry up mid-year. Adequate funding is the single most effective way to reduce wage delays.

Revise wage rates: Updating the wage indexation to reflect current inflation would benefit every worker. Economist Jean Drèze has argued that raising wage rates matters more than increasing guaranteed days, since most households never reach 100 days anyway.

Strengthen monitoring: Independent, well-staffed Social Audit Units, publicly available audit reports, and real-time payment tracking would close the gaps that allow leakage and corruption.

Fix the digital systems: The Aadhaar-Based Payment System was meant to speed up payments but excluded many workers. When it became mandatory in January 2024, only about 43 per cent of workers were eligible. Reviewing these systems and adding alternate authentication methods would improve access.

Consider extending the model to cities: Urban informal workers face the same vulnerability that rural workers do, with no comparable safety net. Several states have already launched urban versions, including Kerala’s Ayyankali Urban Employment Guarantee Scheme and Himachal Pradesh’s Mukhyamantri Shahri Aajeevika Guarantee Yojana. Economist Jean Drèze’s Decentralised Urban Employment and Training (DUET) proposal suggests a way to bring skilled and unskilled work guarantees into towns and cities, building on the MGNREGA framework.

What do you think? If the evidence shows that only about 7 per cent of households actually receive the full 100 days they are promised, is MGNREGA failing its own guarantee, or is partial delivery still better than no safety net at all? And before expanding the model to urban areas, should the priority be fixing the funding and wage problems that already plague the rural scheme?

References

1. https://accountabilityindia.in/blog/highlights-from-the-cag-performance-audit-of-mgnrega/
2. https://www.downtoearth.org.in/governance/cag-audit-finds-gross-irregularities-in-implementation-of-mgnrega-across-odisha
3. https://www.downtoearth.org.in/governance/mgnrega-struggles-to-deliver-jobs-despite-surge-in-registrations-report
4. https://myind.net/Home/viewArticle/cag-audit-exposes-fraud-delays-policy-violations-in-karnatakas-mgnrega-scheme
5. https://www.indiaspend.com/data-viz/dataviz-unpaid-wages-fund-delays-persist-under-mgnregs-945157
6. https://prsindia.org/policy/report-summaries/rural-employment-through-mgnrega-an-insight-into-wage-rates-and-other-matters-relating-thereto
7. https://www.newslaundry.com/2025/02/03/low-wages-payment-delays-merely-increasing-mgnregs-work-days-is-not-enough
8. https://www.drishtiias.com/daily-updates/daily-news-analysis/delays-in-mgnrega-wages
9. https://www.downtoearth.org.in/governance/at-least-rs-39-crore-of-delayed-wages-under-mgnrega-went-unpaid-by-the-central-government
10. https://www.theindiaforum.in/article/time-right-urban-employment-guarantee-programme