Government forms Panel to look into MGNREGA’s efficacy

Prelims level : Schemes Mains level : GS-III Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.
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Why in News?

  • The Central government has constituted a committee to review the implementation of the MGNREGA scheme, especially to assess the programme’s efficacy as a poverty alleviation tool.  


  • The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was enacted in 2005, and the demand-driven scheme promises 100 days of unskilled work per year to every rural household that wishes to participate.
  • It was launched as a poverty alleviation instrument for the rural region, providing them with a safety net in the form of guaranteed work and wages. The scheme now has 51 crore active workers enrolled.
  • However, it was felt that states like UP and Bihar where there is a higher level of poverty, haven’t been able to utilise the scheme optimally.
  • The scheme has also been criticised by economists like Jagdish Bhagwati and Arvind Panagariya as an “inefficient instrument of shifting income to the poor”.

About the committee:

  • The Sinha committee (named after former Rural Development secretary Amarjeet Sinha) has now been tasked to study –
  • The various factors behind the demand for MGNREGA work,
  • The expenditure trends and inter-State variations, and
  • The composition of work.
  • It will suggest (within 3 months) what changes in focus and governance structures are required to make MGNREGA more effective.

Terms of reference of the committee:

  • It will look at the argument that the cost of providing work has also shot up since the scheme first started.
  • It will review the reasons and recommend ways to bring in a greater focus on poorer areas.
  • It will study if the composition of work taken up presently under the scheme should be changed, i.e., whether it should focus more on community-based assets or individual works.

Criticism of the scheme:

  • Lack of tangible asset creation: Bihar, for example, despite its levels of poverty, does not generate assets to make a concrete difference, while Kerala which is economically better has been utilising it for asset creation.
  • Allocation of funds is not as per the needs of the states: From the above example, while Bihar needs MGNREGA more, Kerala cannot be denied funds because of the current structure of the programme.
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