In 2005, India made a rare and morally consequential policy choice. It recognised work as a right rather than charity. The National Rural Employment Guarantee Act, later renamed the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), marked a decisive shift in the relationship between the Indian state and its rural poor. It acknowledged that poverty in rural India is not the result of individual failure but of structural unemployment, seasonal agriculture, caste system and chronic neglect.
Nearly two decades later, this foundational understanding is being quietly dismantled. What is now being advanced in the name of restructuring and reform is not a technical correction. It represents a fundamental rollback of the economic logic, federal design, and ethical core of MGNREGA. If carried through, it will weaken one of the most successful anti-poverty programmes in the world and signal a retreat from India’s constitutional commitment to dignity and social justice.
MGNREGA was introduced in 2005 under the Congress-led United Progressive Alliance government, when Manmohan Singh was Prime Minister. In 2009, the programme was expanded and renamed after Mahatma Gandhi, underscoring its ethical foundation: dignity of labour, decentralised decision-making, and empowerment of the poorest citizens. The Act guaranteed rural households up to 100 days of paid employment each financial year, a promise tailored to an agrarian economy that remains deeply dependent on monsoons. When cultivation halts, livelihoods collapse. MGNREGA intervened precisely at this fault line.
Yet, from its inception, MGNREGA was never conceived as a mere wage-disbursing mechanism. It was designed as a dual-impact intervention that would provide immediate income support while simultaneously building durable rural assets. This combination made it both a social protection programme and a development strategy, something few welfare initiatives manage to achieve.
Over the years, the programme delivered outcomes that reshaped rural India in measurable ways. It raised rural wage floors by creating a guaranteed alternative to exploitative labour arrangements. By reducing workers’ dependence on landlords and contractors, it strengthened bargaining power across rural labour markets, even outside the scheme. It also reduced distress migration, allowing families to survive lean agricultural seasons without breaking apart and moving to cities under precarious conditions.
MGNREGA played a particularly transformative role for women. Equal wages for men and women were not aspirational language but a legal guarantee. In many states, women constituted more than half the workforce under the programme, a rare achievement
in rural employment initiatives. This had ripple effects on household decision-making, nutrition, and children’s education.
Perhaps the most underestimated contribution of MGNREGA lies in its impact on rural infrastructure and ecological resilience. Across thousands of villages, programme funds were used to build roads, desilt tanks, restore ponds, dig irrigation channels, conserve water, and regenerate degraded land. These were not cosmetic projects. They addressed long-standing ecological constraints that kept rural productivity low and vulnerability high.
Between 2014 and 2019, MGNREGA was converged with state-level land and water management initiatives in nearly 50,000 villages. Independent studies documented rising groundwater levels, increased water storage capacity, higher crop intensity, and a revival of defunct wells and handpumps. A national evaluation by the Institute of Economic Growth in 2018 confirmed that MGNREGA’s natural resource management works led to improvements in productivity, incomes, fodder availability, cultivated area, and groundwater recharge. In policy terms, the programme succeeded in converting public employment into long-term productive capacity.
It is precisely because of these outcomes that economists and social scientists are alarmed by the recent attempts to dilute the scheme. The original design of MGNREGA reflected a clear principle: employment guarantee is a national responsibility, while implementation must be local. Accordingly, the Union government bore the full cost of wages, shared material costs with states, and limited the administrative burden on state governments. This structure enabled uniform implementation across the country while respecting local priorities.
The proposed new framework overturns this logic. States are now expected to bear 40 percent of total costs, with the Union government contributing only 60 percent. Any expenditure beyond centrally determined “normative allocations” must be entirely funded by states. This shift does not represent decentralisation; it is cost-shifting masquerading as reform. States retain responsibility without authority, while the Centre retains authority without responsibility.
This restructuring strikes at the heart of cooperative federalism. MGNREGA worked because planning was decentralised. Gram Panchayats, in consultation with local communities, identified what their villages needed. The people who lived with the consequences of poor planning were the ones empowered to make decisions. The new framework centralises decision-making while devolving financial risk. The Union government will decide what kinds of works are permissible, while states are left to mobilise funds. This hollowing out of state autonomy disconnects development from local ecological and economic realities.
The fiscal consequences of this shift are severe
“Increasing notional workday limits without allocating funds is not reform. It is political theatre. Without adequate budgets, higher ceilings remain symbolic and meaningless. The reality is that reduced funding and increased state burden will shrink employment further, not expand it.”
and uneven. If recent expenditure levels are taken as a reference, state contributions would rise dramatically. Tamil Nadu’s annual spending would increase several-fold, as would Andhra Pradesh’s. Opposition-ruled states such as Tamil Nadu, Kerala, Jharkhand, and West Bengal face a disproportionately higher burden, while states governed by BJP, and its allainces experience relatively lower stress. This asymmetry is not incidental. Fiscal federalism in India has increasingly been used as an instrument of political differentiation.
The claim that the programme is being expanded by increasing the number of guaranteed workdays from 100 to 125 collapses under scrutiny. MGNREGA allocations peaked during the COVID-19 crisis in 2020–21, when the government itself relied on the scheme as an economic lifeline. Since then, funding has steadily declined by more than a third. Employment trends mirror this contraction. After reaching a high during the pandemic, the number of workers has fallen sharply. Despite statutory guarantees, the average household continues to receive only around 50 days of work.
Increasing notional workday limits without allocating funds is not reform. It is political theatre. Without adequate budgets, higher ceilings remain symbolic and meaningless. The reality is that reduced funding and increased state burden will shrink employment further, not expand it.
The renaming of MGNREGA must also be understood in this broader context. Removing Mahatma Gandhi’s name from the programme is not a neutral administrative decision. Gandhi symbolised moral politics, inclusive nationalism, and an unwavering focus on the poorest. For ideologies uncomfortable with these values, Gandhi has always been inconvenient. Erasing his name weakens the programme’s association with rights-based welfare and allows it to be reframed as a discretionary scheme rather than a legal entitlement.
Replacing Gandhi with religious symbolism reflects a deeper political project. It seeks to substitute constitutional citizenship with cultural identity and transform rights into acts of benevolence. As long as the programme carried Gandhi’s name, it evoked a legacy of social justice and reminded citizens that employment was guaranteed by law, not granted by grace.
What is ultimately at stake is not merely an employment programme but the future of rural India’s social contract. If states are unable to bear the increased financial burden, they are effectively encouraged to scale down or opt out. When employment dries up, responsibility will be shifted onto states, even as central control tightens. Rural infrastructure development will slow, distress migration will rise, bargaining power of labour will weaken, and women’s participation in the workforce will decline. Most dangerously, millions will lose one of the few programmes that treated them not as beneficiaries but as rights-holders.
MGNREGA is not without flaws. But few programmes anywhere in the world have combined scale, legal enforceability, decentralisation, and ecological sensitivity so effectively. Weakening it through financial strangulation, administrative centralisation, and symbolic erasure is not reform. It is abdication.
A nation that aspires to global economic leadership cannot dismantle the one programme that gave economic dignity to its poorest citizens. Development that abandons rural India is not development. It is exclusion by design. MGNREGA must be strengthened, not hollowed out. Its spirit must be renewed, not erased. History will remember which choice BJP led NDA made
