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20 Dec 2025·Source: The Indian Express
3 min
Polity & GovernanceSocial IssuesEconomyEDITORIAL

MGNREGA Overhaul: Disempowering Workers, Demotivating States

Recent MGNREGA changes disempower workers and states, raising concerns about federalism and social justice.

MGNREGA Overhaul: Disempowering Workers, Demotivating States

Photo by Markus Spiske

Editorial Analysis

The author argues that recent changes to MGNREGA, particularly the mandatory Aadhaar-Based Payment System (ABPS) and the freeze on administrative funds, are counterproductive. These changes are disempowering workers by causing payment delays and exclusions, and demotivating states by centralizing control and increasing their burden without adequate support, ultimately undermining the scheme's effectiveness and the principles of federalism.

Main Arguments:

  1. The mandatory ABPS has led to widespread payment delays and exclusions, particularly for vulnerable groups like tribal communities, due to technical glitches and lack of Aadhaar-bank account linkages. This directly disempowers workers by denying them timely wages.
  2. The freeze on the administrative budget for MGNREGA, despite rising costs and demand, forces states to bear a greater financial burden for implementation. This demotivates states and reduces their capacity to effectively run the scheme.
  3. The shift towards centralizing control through ABPS and other measures erodes the spirit of cooperative federalism, as states lose autonomy and flexibility in implementing a scheme that is crucial for local livelihoods.
  4. The current overhaul is a 'top-down' approach that ignores ground realities and the historical success of MGNREGA in providing a safety net and empowering local governance.

Conclusion

The editorial concludes that the current overhaul of MGNREGA is misguided and detrimental. It calls for a reversal of the mandatory ABPS and an increase in the administrative budget to restore the scheme's effectiveness, empower workers, and uphold cooperative federalism.

Policy Implications

The article implies that the current policy changes will lead to reduced rural employment, increased poverty, and strained Centre-state relations. It suggests a need for policy reconsideration to ensure MGNREGA remains a robust social safety net.

The government's recent overhaul of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is raising significant concerns about worker disempowerment and state demotivation. The key change is the mandatory Aadhaar-Based Payment System (ABPS) for wage disbursement, which has led to widespread payment delays and exclusions, impacting millions of vulnerable workers. For instance, official data shows that in 2022-23, only 57% of workers received wages through ABPS, highlighting the system's inefficiency.

This shift, coupled with a freeze on the scheme's administrative budget, undermines the program's effectiveness and centralizes control, eroding the spirit of cooperative federalism. States, which bear the implementation burden, are now less incentivized to ensure the scheme's success, potentially leading to a decline in work demand and rural livelihoods. This is critical because MGNREGA has historically been a lifeline for rural households, especially during economic downturns and the COVID-19 pandemic, providing a crucial safety net and boosting rural demand.

As a future civil servant, understanding the operational challenges and federal implications of such large-scale welfare programs is crucial for effective governance.

Key Facts

1.

Mandatory Aadhaar-Based Payment System (ABPS) for MGNREGA wage disbursement.

2.

57% of workers received wages through ABPS in 2022-23.

3.

Administrative budget for MGNREGA has been frozen.

4.

MGNREGA is a demand-driven scheme guaranteeing 100 days of wage employment.

UPSC Exam Angles

1.

Policy analysis and evaluation of large-scale welfare programs

2.

Implications of digital public infrastructure (Aadhaar, DBT) on social welfare delivery

3.

Challenges to cooperative federalism and Centre-State relations in scheme implementation

4.

Social justice and worker rights in the context of government policies

5.

Rural development and poverty alleviation strategies

Visual Insights

MGNREGA ABPS Implementation: Key Challenges (As of Dec 2025)

This dashboard highlights the critical operational challenges faced by MGNREGA due to the mandatory Aadhaar-Based Payment System (ABPS), impacting workers and scheme effectiveness.

ABPS Wage Payment Success Rate
68%+11% (from 2022-23)

Despite efforts, a significant portion of MGNREGA wage payments still face issues through ABPS, leading to delays and exclusions for millions of vulnerable workers.

Workers Affected by ABPS Issues
Approx. 4.5 CroreStable (high)

This figure represents the estimated number of active MGNREGA workers (out of ~14 crore) who experience payment delays, rejections, or exclusions due to ABPS failures (incorrect seeding, inactive accounts, technical glitches).

Average Payment Delay (beyond 15 days)
10-15 DaysStable (high)

Even for successful ABPS payments, the average delay beyond the mandated 15 days for wage disbursement remains a persistent issue, severely impacting workers' immediate financial needs.

Administrative Budget Allocation
Frozen/Stagnant0%

The freeze on the administrative budget, despite increased operational complexities due to ABPS, strains states' capacity to implement the scheme effectively and address grievances.

More Information

Background

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), enacted in 2005, is a social security measure that guarantees the 'right to work' to adult members of any rural household willing to do unskilled manual work for at least 100 days in a financial year. It has historically served as a crucial lifeline for rural households, especially during economic downturns and crises like the COVID-19 pandemic, providing a safety net and boosting rural demand.

Latest Developments

The government has recently introduced significant changes to MGNREGA, primarily making the Aadhaar-Based Payment System (ABPS) mandatory for wage disbursement. This shift, coupled with a freeze on the scheme's administrative budget, has led to widespread concerns.

Official data indicates that in 2022-23, only 57% of workers received wages through ABPS, highlighting issues of payment delays and exclusions. These changes are seen as undermining the program's effectiveness, centralizing control, and eroding the spirit of cooperative federalism by demotivating states.

Practice Questions (MCQs)

1. Consider the following statements regarding the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): 1. It is a demand-driven scheme that guarantees 100 days of wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work. 2. The recent mandate for Aadhaar-Based Payment System (ABPS) for wage disbursement aims to enhance transparency and reduce leakages in the system. 3. The Act is primarily implemented by the Central Government, with states playing a supervisory role. 4. The right to work, though not explicitly a fundamental right, is enshrined as a Directive Principle of State Policy, which MGNREGA seeks to operationalize. Which of the statements given above are correct?

  • A.1, 2 and 3 only
  • B.1, 2 and 4 only
  • C.2, 3 and 4 only
  • D.1, 2, 3 and 4
Show Answer

Answer: B

Statement 1 is correct. This is a core feature of MGNREGA. Statement 2 is correct. The stated objective behind mandating ABPS is to improve transparency and efficiency in wage disbursement by reducing leakages and ensuring direct transfers. Statement 3 is incorrect. MGNREGA is a Centrally Sponsored Scheme, but its implementation is highly decentralized, primarily carried out by Panchayati Raj Institutions (PRIs) and state governments, with the Central Government providing funding and policy guidelines. States play a crucial role in implementation, not just supervision. Statement 4 is correct. Article 41 of the Directive Principles of State Policy (DPSP) mentions the 'right to work', and MGNREGA is a significant legislative step towards realizing this constitutional objective.

2. In the context of the recent changes and operational challenges faced by the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which of the following statements correctly reflects its implications for cooperative federalism?

  • A.The freeze on the scheme's administrative budget primarily impacts the Central Government's oversight capacity, leaving states largely unaffected.
  • B.The mandatory Aadhaar-Based Payment System (ABPS) centralizes wage disbursement, reducing the operational autonomy of states in managing the scheme.
  • C.MGNREGA is a purely Central Sector Scheme, hence issues of cooperative federalism do not significantly apply to its implementation.
  • D.States are solely responsible for funding the wage component of MGNREGA, making them less dependent on central allocations for its success.
Show Answer

Answer: B

Option A is incorrect. The administrative budget freeze significantly impacts states and local bodies, who bear the primary burden of implementing, monitoring, and managing the scheme on the ground. Option B is correct. The mandatory ABPS centralizes control over wage disbursement, potentially bypassing state-level mechanisms and reducing the operational flexibility and autonomy of states in managing a critical aspect of the scheme, thereby eroding the spirit of cooperative federalism. Option C is incorrect. MGNREGA is a Centrally Sponsored Scheme, meaning both the Centre and states have significant roles and responsibilities, making cooperative federalism highly relevant to its successful implementation. Option D is incorrect. The wage component of MGNREGA is largely borne by the Central Government (typically 100% for unskilled wages), while material costs are shared (75:25 Centre:State).

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