Rural Unemployment (MGNREGA)

Boggarapu Nikhil
Nagavikashnee.K
Nandhini Priya.A
Madhan.A
Priya Darshan.S

Team 2

14MBA097
14MBA111
14MBA112
14MBA109
14MBA116

11/26/14

Economics for Business

Rural Unemployment (MGNREGA)

Assignment No: 2
Rural Unemployment (NREGA)

Team No: 02

Rural Unemployment (MGNREGA)

Rural Unemployment (NREGA)

Unemployment
Unemployment occurs when a person who is actively searching for employment is unable to find
work. Unemployment is often used as a measure of the health of the economy. The most frequently
cited measure of unemployment is the unemployment rate. This is the number of unemployed
persons divided by the number of people in the labor force. Economists and socialists have
classified unemployment into various types. Generally unemployment can be classified into
following types:

Seasonal Unemployment
Normally when we talk of employed people we mean those who have work
throughout the year. But this may not possible for all. In agriculture, work is seasonal
even though agricultural activities are performed throughout the year. During the
peak agricultural seasons (when the crop is ready for harvesting) more people are
required for work.

Voluntary Unemployment
People who are unwilling to work at prevailing wage rate and people who get a
continuous flow of income from their property or any other sources and need not to
work, such people are voluntarily unemployed.

Frictional Unemployment
Unemployment attributable to the time required to match production activities with
qualified resources. Frictional unemployment essentially occurs because resources,
especially labor, are in the process of moving from one production activity to another.
Employers are seeking workers and workers are seeking employment, the two sides
just haven't matched up.

Causal Unemployment
Cyclical unemployment is based on a greater availability of workers than there are
jobs for workers. It is usually directly tied to the state of the economy. Lower demand
for products due to lack of consumer confidence , disinterest, or reduction in consumer
spending results in the workforce cutting back on production. Since production is

Rural Unemployment (MGNREGA)

reduced, companies that retail such products may also cut back on workforce, creating
yet more cyclical unemployment.

Disguised Unemployment
There are also instances where we find too many people working when so many are
not required. In agriculture we may find that all members of the family work. It is
possible that 3-4 people can do a given work in the farm, but we find that the whole
family of say 10 people doing the job. This may be because the excess people are not
able to find employment elsewhere, so rather than remain unemployed they prefer to
do the work along with others. This is known as disguised unemployment.

Causes and consequences of unemployment in India

The major cause of unemployment in India is the slow pace of development. As GDP growth rate
is still slow even after sixty five years of independence. The major causes which have been
responsible for the wide spread unemployment can be spelt out as under.

Rapid Population Growth

It is the leading cause of unemployment in Rural India. In India, particularly in rural
areas, the population is increasing rapidly. It has adversely affected the unemployment
situation largely in two ways. In the first place, the growth of population directly
encouraged the unemployment by making large addition to labour force.

Limited Land
Land is the gift of nature. It is always constant and cannot expand like population
growth. Since, India population increasing rapidly, therefore, the land is not sufficient
for the growing population. As a result, there is heavy pressure on the land. In rural
areas, most of the people depend directly on land for their livelihood.

Seasonal Agriculture
In Rural Society agriculture is the only means of employment. However, most of the
rural people are engaged directly as well as indirectly in agricultural operation. But,
agriculture in India is basically a seasonal affair. It provides employment facilities to
the rural people only in a particular season of the year.

Rural Unemployment (MGNREGA)

Fragmentation of Land
In India, due to the heavy pressure on land of large population results the fragmentation
of land. It creates a great obstacle in the part of agriculture. As land is fragmented and
agricultural work is being hindered the people who depend on agriculture remain
unemployed. This has an adverse effect on the employment situation. It also leads to
the poverty of villagers.

Backward Method of Agriculture

The method of agriculture in India is very backward. Till now, the rural farmers
followed the old farming methods. As a result, the farmer cannot feed properly many
people by the produce of his farm and he is unable to provide his children with proper
education or to engage them in any profession. It leads to unemployment problem.

Decline of Cottage Industries

In rural India, village or cottage industries are the only mans of employment
particularly of the landless people. They depend directly on various cottage industries
for their livelihood. But, now-a-days, these are adversely affected by the
industrialization process. Actually, it is found that they cannot compete with modern
factories in matter or production.

Defective education
The day-to-day education is very defective and is confirmed within the class room.
The present educational system is not job oriented, it is degree oriented. It is defective
on the ground that is more general then the vocational. Thus, the people who have
getting general education are unable to do any work.

Lack of transport and communication

In India particularly in rural areas, there are no adequate facilities of transport and
communication. Owing to this, the village people who are not engaged in agricultural
work are remained unemployed. It is because they are unable to start any business for
their livelihood and they are confined only within the limited boundary of the village.

Rural Unemployment (MGNREGA)

Inadequate Employment Planning

The employment planning of the government is not adequate in comparison to
population growth. In India near about two lakh people are added yearly to our existing
population. But the employment opportunities did not increase according to the
proportionate rate of population growth. As a consequence, a great difference is visible
between the job opportunities and population growth.

Uemployment Rate
Unemployment, total (% of total labor force) National
Estimate
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0

Source: World Bank Indicators

MGNREGA
There exists a labor market with demand and supply of labor and a wage rate. Even if wages are
competitively determined, it may not be adequate for the poor household to reach their target
income. Due to all of the reasons government implemented NREGA. The major provisions of
MGNREGA are,

Every household in the rural area of India shall have a right to at least 100 days of
guaranteed employment for at least one adult member.

The state council prepares a list of permissible and preferred works under this act

Rural Unemployment (MGNREGA)

This program also provides for the training and up-gradation of the skills of
unskilled laborers.

Wages may be cash or by taking in to account

Employment may be provided with a radius of 5 km of the village where the

applicant resides at the time of applying

In case where at least 20 women are working on a worksite a provision shall be

made for one of them to be deputed to look after any children under the age of 6
who may be brought to the worksite. The person deputed for child minding shall be
paid statutory wages.

A proportion of the wages not exceeding 5% may be deducted as a contribution to

welfare schemes organized for the benefit of laborers employed under the process.

Overview of the Village

Somayampalayam is a village located in the Periyanayakkanpalayam Taluk of Coimbatore district,
TamilNadu. The total population in Somayampalayam is 14,787 as per the survey of census by
Indian Government. There are 4,063 House Holds with 7,416 males and 7,371 females .Scheduled
cast are 1,588 and the total scheduled tribes are 21. The total number of literates and illiterates in
the village are 11,213 and 3,574 respectively. There are totally 6,232 workers out of which 5,618
are regular workers and 614 are irregular workers and the remaining 8,555 are non workers. . The
native language of Somayampalayam is Tamil and most of the village people speak Tamil.

Demographic profile
The latitude 11.044005 and longitude 76.8651903 are the geo co-ordinate of the
Somayampalayam. Chennai is the state capital for Somayampalayam village. It is located around
436.8 kilometers away from Somayampalayam. The other nearest state capital from
Somayampalayam is Bangalore and its distance is 228.2 KM. The other surrounding state capitals
are Bangalore 228.2 KM., Thiruvananthapuram 273.4 KM., Pondicherry 338.1 KM. The
surrounding nearby villages and its distance from Somayampalayam are Chinna Thadagam 4.3
KM , 24.veerapandi 4.6 KM , Pannimadai 7.1 KM , Kurudampalayam 8.9 KM , Naickenpalayam

Rural Unemployment (MGNREGA)

13.8 KM , Periyanayakkanpalayam 13.9 KM , Nanjundapuram 16.2 KM, Bilichi 22.4 KM ,

Asokapuram.

The nearest railway station in and around Somayampalayam

The nearest railway station to Somayampalayam is Gandhipuram which is located around 12.4
kilometer distance. The following table shows other railway stations and its distance.
Gandhipuram railway station 12.4 KM.
Pedanayakanpalayam railway station 14.5 KM.
Periyanaikanpalayam railway station 14.5 KM.
Peelamedu railway station

14.9 KM.

Podanur railway station

16.2 KM.

Rural Unemployment (MGNREGA)

Analysis and Interpretation

The people of the village were randomly chosen and a few questions regarding the MNREGA
(Mahatma Gandhi National Rural Employment Guarantee Act), the 100 days job scheme were
asked and their responses were recorded.

Table 1: Wages
Resp. No.

Gender

Wages

100

100

100

100

100

100

100

100

100

10

100

The Table 1 Explains the wages paid to the labours in Somayampalayam Village under the Scheme
Mahatma Gandhi National Rural Employment Guarantee Act. The Wages Paid to The labors is
Rs.100/- per day.

Rural Unemployment (MGNREGA)

Table 2: Owning Agricultural Land

Resp. No.

Own Agricultural Land

10

The Table 2 Exhibits Owing Agricultural Land, This Explain that whether the Respondents have
any Agricultural Land and do any Cultivation in the land.
Table 3: Debt Amount
Resp. No.

Debt Amount

10000

12000

7000

11000

5500

6725

3000

10

The Table 3 Indicates the Their Financial Position in such a way that they have any loans or not.

Rural Unemployment (MGNREGA)

Table 4: Expenditure/ Month

Resp. No.

Basic Needs Education Health

2000

1500

1500

1000

2000

1500

2500

1000

2000

1000

2500

1000

3000

1500

2000

1000

2500

1000

10

2000

1000

The Table 4 exhibits The Expenditure statement of the Respondents and it also States how they
are spending their Income for one month.

10

Rural Unemployment (MGNREGA)

Table 5: Wages paid to labours (in Percentage)

Resp. No.

100

100-50

Less than %50

10

The Table 5 Shows the Wages Paid to Labours in Percentage under the 100 days Employment
Scheme Mahatma Gandhi National Rural Employment Guarantee Act.

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Rural Unemployment (MGNREGA)

Table 6: No. of Days Worked

Resp. No.

No. of days worked

26

18

26

15

25

27

25

13

10

25

The Table 6 Shows How many days the labors are working under the 100 days employment
guarantee act Mahatma Gandhi National Rural Employment Guarantee Act.

Table 7: Overall Performance

PARTICULARS

AGREE

DONT BORROW

DIASGREE

RESP.NO

Daily Consumption

Education

Health

The Table 7 States the overall Performance of the Respondents which Includes their Daily
Consumption Needs, Health and Education.

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Rural Unemployment (MGNREGA)

Consolidated Responses

QUESTIONS

RESPONSES

What is the minimum wage given for a

The minimum wage allotted per day to the

work allotted under MNREGA?

employees under this scheme is Rs.100

Do the wages vary according to the work

No the wages are fixed for the entire working

provided?

period of 100 days irrespective of the work

undertaken.

Do women have any special allowances

Yes. One among the three laborers allocated to

during MNREGA work time?

perform the work under this scheme are women

and also special care is provided to their kids
when they are at work.

What are the other similar government

Various schemes such as

schemes as NREGA?

Jawahar Rozgar Yojana (JRY),

Employment Assurance Scheme (EAS),
Food for Work Programme (FWP),
Jawahar Gram Samridhi Yojana (JGSY)
Sampoorna Grameen Rozgar Yojana (SGRY),
National Rural Employment Programme
(NREP)
Were in existence until the implementation of
MNREGA.

Are the wages sufficient to meet needs of No the wages are not sufficient to meet the daily
those people / family?

needs of the people or family.

The main objective of the Act is to enhance livelihood security in rural areas by providing at least
100 days of guaranteed wage employment in a financial year to every household whose adult
members volunteer to do unskilled manual work. The minimum wages allotted per day to both
men and women in the recent times is Rs.150. The wages are fixed for the entire working period
of 100 days irrespective of the work undertaken or allotted to the employee.

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Rural Unemployment (MGNREGA)

The employee can choose among the work which they are interested to do. Prior to the
enactment of Mahatma Gandhi NREGA, India had no program in rural areas that promised
employment as a legal right, although employment generation through rural works had a long
history in India dating back to the 1960s. Since 1960, the government had been merging old
schemes to introduce new ones while retaining the basic objective of providing additional wage
employment involving unskilled manual work, creating durable assets, and improving food
security in rural areas through public works with special safeguards for the weaker sections and
women of the community.

It took 30 years of government experimentation to launch major schemes like Jawahar

Rozgar Yojana (JRY), Employment Assurance Scheme (EAS), Food for Work Programme (FWP),
Jawahar Gram Samridhi Yojana (JGSY) and Sampoorna Grameen Rozgar Yojana (SGRY) that
were forerunners to Mahatma Gandhi NREGA. Later these schemes were revamped, renamed and
merged with the MNREGA scheme. The daily wages paid to the employee during his working
period of 100 days is inadequate to take care of their regular family needs.

Learnings from Rural Visit (MNREGA)

The Act was notified in 200 districts in the first phase with effect from February 2nd 2006 and
then extended to additional 130 districts in the financial year 2007-2008. The remaining districts
have been notified under the NREGA with effect from April 1, 2008. Thus NREGA covers the
entire country with the exception of districts that have a hundred percent urban population. To
enroll under this scheme a person should be above 18 years. The following are the procedures
entitled to this scheme:
Adult members of a rural household, willing to do unskilled manual work, may apply for
registration in writing or orally to the local Gram Panchayat.

The Gram Panchayat after due verification will issue a Job Card. The Job Card will
bear the photograph of all adult members of the household willing to work under
NREGA and is free of cost.

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Rural Unemployment (MGNREGA)

The Job Card should be issued within 15 days of application.

A Job Card holder may submit a written application for employment to the Gram
Panchayat, stating the time and duration for which work is sought. The minimum days
of employment have to be at least fourteen.

The Gram Panchayat will issue a dated receipt of the written application for
employment, against which the guarantee of providing employment within 15 days
operates.

Employment will be given within 15 days of application for work, if it is not then
daily unemployment allowance as per the Act, has to be paid liability of payment of
unemployment allowance is of the States.

Work should ordinarily be provided within 5 km radius of the village. In case work is
provided beyond 5 km, extra wages of 10% are payable to meet additional
transportation and living expenses.

Wages are to be paid according to the Minimum Wages Act 1948 for agricultural
labourers in the State, unless the Centre notifies a wage rate which will not be less
than Rs. 60/ per day. Equal wages will be provided to both men and women.

Wages are to be paid according to piece rate or daily rate. Disbursement of wages has
to be done on weekly basis and not beyond a fortnight in any case.

At least one-third beneficiaries shall be women who have registered and requested
work under the scheme.

Work site facilities such as crche, drinking water, shade have to be provided.

The shelf of projects for a village will be recommended by the gram sabha and
approved by the zilla panchayat.

At least 50% of works will be allotted to Gram Panchayats for execution.

Permissible works predominantly include water and soil conservation, afforestation

and land development works.

A 60:40 wage and material ratio has to be maintained. No contractors and machinery
is allowed.

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Rural Unemployment (MGNREGA)

The Central Government bears the 100 percent wage cost of unskilled manual labour
and 75 percent of the material cost including the wages of skilled and semi skilled
workers.

Social Audit has to be done by the Gram Sabha.

Grievance redressal mechanisms have to be put in place for ensuring a responsive

implementation process.

All accounts and records relating to the Scheme should be available for public
scrutiny.

Drawbacks of MNREGA
A recent survey conducted by the rural development ministry revealed that only one crore
(10 million) out of the 12 crore job cards registered under the Mahatma Gandhi National Rural
Employment Guarantee Scheme (or NREGA) were officially classified as poor during 2010-11.
Further, it stated that only 36 lakh (3.6 million) so-called BPL families have worked for at least 15
days during 2010-11 compared with 366 lakh families classified as above the poverty line (APL).
This ratio remains little changed this year too, so far in 2011-12, some 20 lakh BPL families are
shown to have worked for at least 15 days compared with 202 lakh APL families. Conceived and
enacted as a job guarantee scheme in 2005, the NREGA, which guarantees 100 days of
employment to its beneficiaries, became one of the trophy schemes of the Congress-led UPA,
giving it a pro-poor halo and helping it land a second term in office after the 2009 elections.
Spending under this scheme steadily rose to Rs 39,377 crore in 2010-11 from Rs 8,823 crore in
2006-07. For 2011-12, the government has budgeted Rs 40,000 crore for NREGA. While talk of
fraud and misuse has bedeviled the scheme for years, these have become more common in recent
months.
States such as Tamil Nadu and Madhya Pradesh have in the last two years taken action
against hundreds of elected representatives respectively for misappropriating NREGA funds. The
irregularities include forming musters of ghost workers leading to payments into ghost accounts,
delayed and nonpayment of wages and preferential treatment to some farmers. A clutch of
influential ministers and economists have also lately blamed NREGA for rising inflation and acute

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Rural Unemployment (MGNREGA)

farm labour shortages in the hinterland. If the rural development ministry's numbers in its note to
state governments are to be believed, it means that APL beneficiaries have monopolised the
scheme at the expense of the poor. But ministry officials say this is not correct, noting that data
underpinning the numbers was highly unreliable because most states did not correctly mark the
BPL status of registered families.

Findings and Suggestions

Findings
The employees can choose their work of interest among the various jobs allocated to them and
also they can choose the number of days they want to work in a month before the 100 days job
scheme expires. Taking into account the field conditions in TamilNadu, the priority of the job
provided is as follows:

Formation of new ponds.

Renovation of existing ponds, kuttais, kulams, ooranies, temple tanks etc.

Desilting of channels.

Desilting and strengthening of irrigation tanks.

Formation of new roads

Other activities such as water conservation, soil conservation and flood protection
measures etc.

The minimum wages allotted per day to both men and women in the recent times is Rs.150.
The wages are fixed for the entire working period of 100 days irrespective of the work undertaken
or allotted to the employee. The employee can choose among the work which they are interested
to do. Prior to the enactment of Mahatma Gandhi NREGA, India had no programme in rural areas
that promised employment as a legal right, although employment generation through rural works
had a long history in India dating back to the 1960s. Since 1960, the government had been merging
old schemes to introduce new ones while retaining the basic objective of providing additional wage
employment involving unskilled manual work, creating "durable" assets, and improving food
security in rural areas through public works with special safeguards for the weaker sections and
women of the community. It took 30 years of government experimentation to launch major

17

Rural Unemployment (MGNREGA)

schemes like Jawahar Rozgar Yojana etc that were forerunners to Mahatma Gandhi NREGA. Later
these schemes were revamped, renamed and merged with the MNREGA scheme. The daily wages
paid to the employee during his working period of 100 days is inadequate to take care of their
regular family needs.

Suggestions

Govenrmentof India should increase the Central allocation for the scheme so that
number of workdays can be increased to 200 and per day wage can be increased to
Rs. 300.

Jobcard to be issued for everyone who demands job, failing which, after 15 days
employment benefits should be given with appropriate wages.

Below Poverty Line families and Above Poverty Line families should be registered
properly inorder to reduce the misuse of the benefits of this scheme.

Minimum wage act should be strictly implemented and the delay in wage payment
should be resolved.

MGNREGA should be extended to urban areas also.

Gram Sabhas should be strengthened to monitor proper implementation of the scheme

and also to check corruption.

Government should take steps to see to that the funds allocated for this scheme are
utilized only for the welfare of the people.

Conclusion
Mahatma Gandhi National Rural Employment Guarantee Act(MGNREGA), is an Indian labour
law and social security measure that aims to guarantee the 'right to work' and ensure livelihood
security in rural areas by providing at least 100 days of guaranteed wage employment in a financial
year to every household whose adult members volunteer to do unskilled manual work The
objective of the Act is to enhance livelihood security in rural areas by providing at least 100 days
of guaranteed wage employment in a financial year to every household whose adult members
volunteer to do unskilled manual work. This scheme came into existence in the year 2005.

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Rural Unemployment (MGNREGA)

References
Roy-Chowdhury, J. (2010). Right to information and national rural employment guarantee acts--an attempt towards more accountable and transparent governance. Global Media JournalIndian
Edition.
Singh, K., & Datta, S. K. Determinants of NREGA Employment and Its Distribution across Space
and Time: An Inter-District Analysis of West Bengal in India.
Badodiya, S. K., Kushwah, R. S., Garg, S. K., & Shakya, S. K. IMPACT OF MAHATMA
GANDHI NATIONAL RURAL EMPLOYMENT GUARANTEE ACT (MNREGA) ON
POVERTY ALLEVIATION.
Sudarshan, R. M., Bhattacharya, R., & Fernandez, G. (2010). Women's Participation in the
NREGA: Some Observations from Fieldwork in Himachal Pradesh, Kerala and Rajasthan. IDS
Bulletin, 41(4), 77-83.
Sahayika, N. R. E. G. A. (2008). State Institute of Panchayat and Rural Development. Panchayats
andRural Development Department, GoWB.

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