The NREGA guarantees employment for the poor in crisis. It
is to trigger labour intensive growth for the economy in the
second round through assets that generate mainstream
employment. So it is not about creating a permanent army of
unskilled workers. It is a tool for transmission of the
economy from labour surplus economy to labour using
economy.
It has two components: the cash transfer and the creation of
productive assets relevant to local needs. The Act fills up the
lean four non-agriculture months that average Indian rural
habitant faces. The 100 days of guaranteed employment at
a minimum wage of Rs 60/day aim at holding people to
villages during this lean period. Though the Act doesn’t limit
the guarantee to any period, it is assumed that people will
demand works only during the lean season.
Technically the Act transfers atleast Rs. 6000 a year to an
individual, i.e. around one and half times of the annual
poverty line figure of Rs. 4272 for rural areas.2 So the
scheme alone can push a person above the poverty line. At
the current average of NREGA providing 30 days
employment3, it has contributed at least Rs 1800/person.
But what is of prime importance is the creation of productive
assets like irrigation facilities, which in turn will create
further employment. In fact, creation of productive assets
and infrastructure in villages is a right kind of indicator of the