The National Rural Employment Guarantee Scheme (NREGS), launched under the National Rural Employment Guarantee Act (NREGA), completed two years in March 2008. In its third phase, the scheme covers the rural population of the entire country. It also replaces all other central government wage employment schemes.

This two-part backgrounder analyses the performance of the scheme under various important parameters. The first part covers:

• Coverage of the scheme
• Central government compliance
• State legislation and formation of councils
• Resource support
• Planning
• Demand for work
• Employment provided
• Types of works undertaken
• Implementation of works

(For answers to basic NREGS-related questions click here. Read a summary of guidelines here.)

Coverage

The NREGS was formally launched in February 2, 2006, in 200 districts of the country. An additional 130 districts were notified under Phase II with effect from May 15, 2007. From April 1, 2008, all rural districts in the country were covered under Phase III of the scheme.

Information provided on the central governments NREGA website (http://nrega.nic.in) shows that till June 2008 work had not started uniformly in the Phase III districts. For example, in Maharashtra, over 20,000 job cards had reportedly been issued in Latur district, whereas in Pune, Solapur, Jalgaon, Sindhudurg and other Phase III districts, less than 10 job cards had been issued. A PACS Programme campaign conducted in June 2008 revealed that in Phase III districts of the state, like Beed, hardly any government effort had been made to publicise the programme (see related story here).

In Phase I and Phase II districts, coverage of the scheme in terms of registration of households is impressive, with government figures for 2006-07 suggesting that over 70% of rural households in these districts have been registered. However, a PACS Programme study for the period (see Second NREGA monitoring report) covering 600 villages of 283 panchayats in 39 backward districts of the country showed less than 50% registration of households.

Surveys conducted earlier, in July 2006, under PACS Programme NREGS Week, showed very poor registration figures in states like Maharashtra. In 30 villages surveyed in six blocks of Aurangabad district, with a total of 30,002 households, only 8,881 or 28% of all eligible households were found to have been registered (see Status of NREGS in Maharashtra). However , June 2008 government figures for the district indicate that around 65% of eligible households have been registered.

What this indicates is that registration in some Phase I and Phase II districts like Aurangabad has been done in stages. A PACS Programme village campaign conducted in Maharashtra in June 2008 (see related story here) showed that in some villages of Aurangabad, registration was done only a few months previously -- a full two years after the NREGS was made operational in the district.

During the village campaign it was also noted that some people claimed they didn't have job cards but that on further enquiry and discussion with village leaders it turned out that they did -- they simply didn't know it by that name, they didn't know what it was for, and they had never used it. This could account for discrepancies in CSO assessments of registration and government figures.

Lack of knowledge about job cards has been highlighted by one of the architects of the NREGS, economist Jean Dreze who studied the performance of the scheme in the Kodarma and Palamu districts of Jharkhand recently. Dreze observed: "Continuous monitoring revealed that only 26% of villagers in these districts know about a job card and the benefits that come with it."

The moot question about the NREGS is not how many people register for job cards --though this is the first prerequisite for availing of benefits -- but how many people demand work under the scheme. It is the latter data that must be used to assess the schemes coverage.

Central government compliance

Under the NREGA, the Union government has to constitute a Central Employment Guarantee Council (CEGS) that is supposed to submit an annual report to Parliament on the NREGS.

The CEGS was constituted in September 2006, a year after the Act came into force. While it duly submitted the annual report for 2005-06, a Comptroller and Auditor General (CAG) audit observed that, in November 2007, the annual report for 2006-07 was still under preparation. The CEGSs annual reports are not available on the central governments website. From September 2006 to June 2008, the CEGS held five meetings.

State legislation and formation of councils

After the passage of the NREGA in Parliament, each state government had to formulate a rural employment guarantee scheme under Section 4 of the NREGA, within six months. Each state has to pass appropriate legislation and frame its own rules. States also have to set up a mandatory State Employment Guarantee Council (SEGC) to frame guidelines, work as an advisory body, and appoint state rural employment guarantee commissioners.

Following considerable delay in some states like Uttar Pradesh, all states have passed appropriate legislation to notify employment guarantee schemes. The maximum delay was in Karnataka.

The CAG audit report found that till March 2007, 14 states including Maharashtra, Jharkhand, Chhattisgarh and Uttar Pradesh had not formulated rules relating to implementation of the NREGS. Four states had not formed SEGCs. While the SEGC is supposed to be an independent watchdog with participation from NGOs and panchayats, most state councils constituted so far are dominated by government officials. The SEGC in Uttar Pradesh, CAG notes, had only officials as members. SEGCs meet infrequently; the SEGC in Tamil Nadu met only once in 2006-07.

Resource support

Every state government is required to appoint block-level programme officers with necessary support staff to implement the NREGS. States are advised to appoint gram rozgar sevaks, or employment guarantee assistants, in each gram panchayat and one technical assistant for every 10 gram panchayats. States have to constitute panels of accredited engineers at the district and block levels to assist in the estimation and measurement of works. States have to also appoint a technical resource support group at the state and district level to assist in the planning, design, monitoring, evaluation and quality audit of the scheme.

However, the CAG audit report, which surveyed 513 gram panchayats in 28 blocks of the country where the scheme was being implemented, showed that:

• Full-time programme officers had not been appointed in nearly 80% of the surveyed blocks till March 2007. Existing block development officers were appointed as programme officers and given additional charge, which severely affected implementation. Administrative assistants were also not appointed in 80% of the surveyed blocks, and technical assistants were not appointed in 40% of the blocks.
• In 18 states, including Maharashtra, Chhattisgarh, Jharkhand and Uttar Pradesh, gram rozgar sevaks had not been appointed in over half the surveyed panchayats. This severely affected maintenance of basic records at the gram panchayat level. Without a gram rozgar sevak it is impossible to verify employment demand and the allocation of work for each household.
• Technical support groups at the state/district level were not set up in 23 states including Maharashtra, Jharkhand, Chhattisgarh and Uttar Pradesh. NREGS work plans were routed through the existing staff of other departments who are already overburdened. This led to delayed sanctions and slow progress on the ground.

It must be remembered that while panchayats are the primary planning and implementation agency for the NREGS, they are overburdened. There are more than 200 central schemes for rural areas and panchayats have to implement over three-fourths of them. Additionally, the Bharat Nirman programme has a component to be implemented through panchayats. The Backward Regions Grant Fund (BRGF) is also to be implemented by panchayats alone. In a sample study done in Madhya Pradesh and Karnataka, the World Bank found that, on average, a village sarpanch or official has to keep track of 470 accounts and deal with 17 line departments involving 50 officials!

Planning

NREGA operational guidelines stipulate the preparation of a five-year district perspective plan (DPP) based on annual plans made by each gram panchayat, which, in turn, are to be based on recommendations of the gram sabha that has to be specially convened for this purpose. The annual plans of gram panchayats are to be discussed at the block panchayat level and forwarded to the district programme coordinator who has to consolidate all the block plans and make an annual district plan, specifying for each NREGS project (a) the timeframe (b) person-days of employment to be generated (c) the full cost.

CAG noted that:

• In 20 states, including Maharashtra, Chhattisgarh and Uttar Pradesh, DPPs were not prepared in over 60% of the 68 surveyed districts, till March 2007. Perspective plans made under the National Food for Work Programme were adopted without revision.
• Many district annual plans did not specify the timeframe and full cost of projects. There were no block-wise shelf of projects in some states like Uttar Pradesh.
• In 14 states, including Jharkhand, Madhya Pradesh and Uttar Pradesh documented gram panchayat plans had not been made. Gram sabha meetings were not widely publicised in over half the panchayats surveyed, including panchayats in Maharashtra, Madhya Pradesh, Chhattisgarh, Jharkhand and Uttar Pradesh. As CAG observed, lack of gram sabha participation goes against the basic principles of peoples participation and transparency, and affects the creation of productive assets for the community.

CAG also noted several specific violations such as:

• In Maharashtra, no estimate was made of demand for work.
• In Hazaribagh district, Jharkhand, the annual plan was not prepared gram panchayat-wise. It did not specify works to be taken up, person-days to be generated, prioritisation of works, etc.
• In Ranchi district, the annual plan provided for only 2,209 works, whereas 5,918 works were taken up.
• In Mohanpur block, Bihar, 242 NREGS works valued at Rs 8.72 crore were taken up during 2006-07 though they were not in the annual plan.

Demand for work

Demand for work can be gauged by comparing the number of total eligible persons (from registered households) with the total number of persons who demanded work. If one goes by figures given on the central government NREGA website under the MIS section, the picture is generally dismal. (The MIS figures suffer several shortcomings; these will be discussed in the second part of this backgrounder.)

Low demand could partly be attributed to the fact that most states do not implement the NREGS during the monsoon period. However, this is not the main reason, as the following table shows. The table displays government figures for the financial year 2007-2008, from 10 randomly selected backward districts covered by the PACS Programme, for which figures are available. (Note: Many persons would have applied for work more than once; it is not clear how the government data takes this into account.)

Demand for employment in selected backward districts (2007-08)

Even the above figures are suspect on one important count. As CAG observed, the norm is that written applications for work are not on record. Either workers demand work verbally or officials offer work to eligible persons -- many of whom quite likely do not know under which scheme the work is being offered. This possibly explains why government figures show that there is practically no gap between demand for employment and employment provided. In many cases, the demand was most probably recorded after the provision of work; it did not arise formally from the workers themselves.

Taking into account the paucity of verified, written and dated demands for work, one cannot really say how much real demand there is for the NREGS. Real demand will arise, and can be gauged, only after all eligible persons are aware that they can and should demand work under the NREGS in writing, as a right.

Employment provided

In 2007-08, when the scheme covered 330 districts, around 34 million rural households demanded and were provided employment, according to Ministry of Rural Development figures. Total person-days of employment generated was 1,416 million. Each family thus got an average of 42 days of employment in the year -- much less than the maximum promised 100 days.

Even this record is probably an exaggeration. The ministry's figures are based on figures supplied by the states and some states inflate figures. This is clearly seen in the case of Jharkhand in 2006-07. In 10 districts, where there were a total of 0.70 lakh households, 6.10 lakh applicants were reported to have been provided employment, which implies that there were around nine working adult members per household, all of whom demanded and were given employment. This is plainly absurd

On close verification employment figures fall drastically. A CAG review of employment provided, according to monthly progress reports of March 2007, in 465 gram panchayats, in 111 blocks of 26 states revealed that the average employment provided to each registered household in the year was only 18 days. Only 3.2% of registered households received 100 days or more of employment. The average person-days of employment generated in a year, in the surveyed gram panchayats, was as low as two in West Bengal and seven in Jharkhand.

Even in Rajasthan, which is considered one of the best performing states under the NREGS, while 10.94 lakh households (73% of registered households) demanded employment, 100 days of employment were provided to only 2.39 lakh households.

Types of works undertaken

NREGA guidelines specify the kind of work to be undertaken using guaranteed employment. Out of nine preferred areas of work, seven focus on water and soil conservation. The following are works to be undertaken in the order of priority:

• Water conservation and water harvesting.
• Drought proofing (including afforestation and tree plantation).
• Irrigation canals (including micro and minor irrigation works).
• Provision of irrigation facilities to land owned by households belonging to scheduled castes and scheduled tribes or to the land of beneficiaries of land reforms or that of beneficiaries under the Indira Awas Yojana.
• Renovation of traditional waterbodies (including de-silting of tanks).
• Land development.
• Flood control and protection works (including drainage in waterlogged areas).
• Rural connectivity to provide all-weather access.

In the first year of the NREGS (February 2006 to March 2007), 7.65 lakh works were taken up according to government figures. Out of this, 3.15 lakh works, or around 41% of total works, related to water conservation and renovation of traditional waterbodies. Rural connectivity comprised around 23% of total works.

According to a suo moto statement made in Parliament on April 30, 2008, by Union Minister for Rural Development Dr Raghuvansh Prasad Singh, in the year 2007-08, water conservation accounted for 49% of works undertaken under the NREGS. Figures announced by the minister showed that roads accounted for around 17.5% of works.

The national-level figures are quite misleading, as pointed out in the report NREGA: Opportunities and Challenges brought out by the Centre for Science and Environment (CSE) in 2008. The report points out that in 2006-07, Andhra Pradesh alone accounted for 66.87% of total water conservation works undertaken under the NREGS in the country. As many as 22 states had negligible allocation towards water conservation under the NREGS.

Further, as the guidelines show, roads have to be given lowest priority. Yet, at the national level they account for around 20% of all works undertaken. The priority given to roads becomes exaggerated when one considers that there is a separate programme for this purpose, the Pradhan Mantri Gram Sadak Yojana (PMSY).

This bias towards roads can be explained by the following reasons:

• Roads have more political value than water conservation structures. Typically, awareness about the need for the latter is low in rural areas. The impact of such structures is also not quickly and easily visible.
• Roads are relatively easy to plan and build.
• Roads offer greater scope for the use of materials -- which gives scope for pilferage and corruption. During 2006-07, CAG noted that in West Singhbhum, Jharkhand, of the 4,326 works executed at a cost of Rs 52.13 crore, 2,373 were roads where the material component was as high as 81%-76%, against the norm of 40%.

This explains why even in Bundelkhand, Uttar Pradesh, which was reeling under a drought for four consecutive years, the majority of works undertaken under the NREGS related to road construction and tree planting -- the latter is also an area where material costs can be shown to be high and evidence of work completion can be disguised (trees can and do die).

The CAG scrutiny also revealed the building of cremation grounds, panchayat bhavans, school buildings, playgrounds and community centres, though these are not listed among the NREGA's priorities.

As regards water conservation works, there are many worrisome facts:

• Community-wide water conservation and water harvesting schemes require a high level of peoples participation and involvement at all stages, from selection of location to management of benefits. The record of gram sabha involvement in the NREGS, as discussed earlier, does not indicate the presence of such a level of participation.
• In rural areas, water conservation or harvesting cannot be done successfully without soil conservation measures. It is not clear whether this is taken into account in all related NREGS works.
• In the absence of the above two factors, much of the money spent will simply be washed away. This is what happened in Maharashtra. Between 1991-92 and 2005-06, the state government spent, through its own or centrally-sponsored schemes, over Rs 4,000 crore on watershed development projects, and by no measure is the impact commensurate with the investment. (See PACS Programme publication Combating Drought in Maharashtra.)
• Many states do not have enough experience in implementing and executing water conservation works on a large scale.
• Almost 70% of works under the NREGS are works in progress, with water conservation accounting for the maximum number of ongoing works. Tracking such a large number of works in progress, over years, is a huge task fraught with scope for fraud and manipulation. Many works in progress may have been abandoned and are impossible to complete.
• Water conservation and harvesting structures require regular maintenance; the NREGA does not allow maintenance work.
• It is impossible to build many water conservation structures within the limit of 40% for material costs.

Implementation of works

The NREGA operational guidelines stipulate that projects in low-wage areas, where demand for work at a minimum wage is likely to be large, must be formulated on a priority basis. Administrative and technical sanction must be obtained for all works in advance, by December of the previous year. Use of machinery as well as contractors is prohibited. A wage-material ratio of 60:40, or higher, has to be ensured. Worksite facilities have to be provided.

CAG found that:

• Low-wage areas were not identified in 22 states including Maharashtra, Uttar Pradesh, Jharkhand and Bihar.
• The wage-material ratio of 60:40 was not maintained in 15 districts of six states including Chhattisgarh, Jharkhand and Uttar Pradesh.
• Worksite facilities were not provided in 202 of the 513 surveyed panchayats.

Blatant use of contractors as well as machinery in some instances has been reported by PACS Programme CSOs in Uttar Pradesh and Jharkhand (see related story here).