MGNREGA Unemployment Allowance

Context: In FY 2024, only ₹90,000 was released as ‘unemployment allowance’ under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).

• Legal Provision: According to Section 7(1) of the MGNREGA Act, 2005, if a person is not provided employment within 15 days of applying, they are entitled to a daily unemployment allowance.
• Allowance Structure: The allowance is set at one-fourth of the wage rate for the first 30 days of the year and half of the wage rate for the period thereafter.
• Purpose: This provision was introduced to hold states accountable and ensure that they provide work as required by law. However, it remains one of the most underutilized clauses due to various administrative deficiencies.
• Disbursal Trends: In 2022-23 and 2023-24, only six states disbursed the unemployment allowance, compared to three states in 2021-22 and four in 2020-21. Notably, no states provided the allowance in 2019-20.
• Challenges: The low disbursal rate is attributed to inefficiencies at the block level, flaws in reporting, a lack of demand receipts, and state-level challenges, including underfunding.
• Parliamentary Concern: The Parliamentary Standing Committee on Rural Development has urged for higher-level intervention by the central government to address these issues and ensure that the unemployment allowance provision is properly implemented.