The act was first proposed in 1991 by P.V. Narasimha Rao. In 2006, it was finally accepted in the parliament and commenced implementation in 625 districts of India. Based on this pilot experience, NREGA was scoped up to covered all the districts of India from 1 April 2008. The statute is hailed by the government as "the largest and most ambitious social security and public works programme in the world". In its World Development Report 2014, the World Bank termed it a "stellar example of rural development".
The MGNREGA was initiated with the objective of "enhancing livelihood security in rural areas by providing at least 100 days of guaranteed wage employment in a financial year, to every household whose adult members volunteer to do unskilled manual work".Another aim of MGNREGA is to create durable assets (such as roads, canals, ponds and wells). Employment is to be provided within 5 km of an applicant's residence, and minimum wages are to be paid. If work is not provided within 15 days of applying, applicants are entitled to an unemployment allowance. Thus, employment under MGNREGA is a legal entitlement.
Apart from providing economic security and creating rural assets, NREGA can help in protecting the environment, empowering rural women, reducing rural-urban migration and fostering social equity, among others."
From 1960, the first 30 years of experimentation with employment schemes in rural areas taught few important lessons to the government like the ‘Rural Manpower Programme’ taught the lesson of financial management, the ‘Crash Scheme for Rural Employment’ of planning for outcomes, a ‘Pilot Intensive Rural Employment Programme’ of labour-intensive works, the ‘Drought Prone Area Programme’ of integrated rural development, ‘Marginal Farmers and Agricultural Labourers Scheme’ of rural economic development, the ‘Food for Work Programme’ (FWP) of holistic development and better coordination with the states, the ‘National Rural Employment Programme’ (NREP) of community development, and the ‘Rural Landless Employment Guarantee Programme’ of focus on landless households. The Planning Commission later approved the scheme and the same was adopted on national scale.
On 1 April 1989, to converge employment generation, infrastructure development and food security in rural areas, the government integrated NREP and RLEGP[n 1] into a new scheme JRY. The most significant change was the decentralization of implementation by involving local people through PRIs and hence a decreasing role of bureaucracy.
On 2 October 1993, the Employment Assurance Scheme (EAS) was initiated by the then prime minister P.V.Narasimha Rao to provide employment to agricultural hands during the lean agricultural season. Rao had started discussions on this act in 1991. The role of PRIs was reinforced with the local self-government at the district level called the ‘Zilla Parishad’ as the main implementing authority. Later, EAS was merged with SGRY in 2001.
On 1 April 1999, the JRY was revamped and renamed to JGSY with a similar objective. The role of PRIs was further reinforced with the local self-government at the village level called the ‘Village Panchayats’ as the sole implementing authority. In 2001, it was merged with SGRY.
In January 2001, the government introduced FWP(Food for Work Programme) similar to the one initiated in 1977. Once NREGA was enacted, the two were merged in 2006.
On 25 September 2001 to converge employment generation, infrastructure development and food security in rural areas, the government integrated EAS and JGSY into a new scheme SGRY. The role of PRIs was retained with the ‘Village Panchayats’ as the sole implementing authority. Yet again due to implementation issues, it was merged with Mahatma Gandhi NREGA in 2006.
The total government allocation to these precursors of Mahatma Gandhi NREGA had been about three-quarters of ₹1 trillion(US$14 billion).
According to the Eleventh Five Year Plan (2007–12), the number of Indians living on less than $1 a day, called Below Poverty Line (BPL), was 300 million that barely declined over the last three decades ranging from 1973 to 2004, although their proportion in the total population decreased from 36 per cent (1993–94) to 28 percent (2004–05), and the rural working class dependent on agriculture was unemployed for nearly 3 months per year.
The registration process involves an application to the Gram Panchayat and issue of job cards. The wage employment must be provided within 15 days of the date of application. The work entitlement of ‘120 days per household per year’ may be shared between different adult members of the same household.
Furthermore, the Act sets a minimum limit to the wages, to be paid with gender equality, either on a time-rate basis or on a piece-ratebasis. The states are required to evolve a set of norms for the measurement of works and schedule of rates. Unemployment allowancemust be paid if the work is not provided within the statutory limit of 15 days.
The legislation specifies the role of the state in ensuring transparency and accountability through upholding the right to information and disclosing information proactively, preparation of annual reports by CEGC for Parliament and SEGCs for state legislatures, undertaking mandatory financial audit by each district along with physical audit, taking action on audit reports, developing a Citizen's Charter, establishing vigilance and monitoring committees, and developing grievance redressal system.
The Constitution of India – India's fundamental and supreme law.
The Act aims to follow the Directive Principles of State Policy enunciated in Part IV of the Constitution of India. The law by providing a 'right to work' is consistent with Article 41 that directs the State to secure to all citizens the right to work. The statute also seeks to protect the environment through rural works which is consistent with Article 48A that directs the State to protect the environment.
Another important aspect of NREGA is the potential for women's empowerment by providing them opportunities for paid work. One third of all employment is reserved for women, there is a provision for equal wages to men and women, provision for child care facilities at the worksite - these are three important provisions for women in the Act. More recent studies have suggested that women's participation has remained high, though there are inter-state variations. One study in border villages of Rajasthan, Madhya Pradesh and Gujarat studied the effect on short term migration and child welfare. and found that among children who do not migrate, grade completed is higher. The same study found that demand for NREGA work is higher, even though migrant wages are higher.
Corruption in government programmes has remained a serious concern, and NREGA has been no exception. According to recent estimates, wage corruption in NREGA has declined from about 50% in 2007-8 to between 4-30% in 2009-10. Much of this improvement is attributable to the move to pay NREGA wages through bank and post office accounts. Some of the success in battling corruption can also be attributed to the strong provisions for community monitoring. Others find that "the overall social audit effects on reducing easy-to-detect malpractices was mostly absent".
A few papers also study the link between electoral gains and implementation of NREGA. One studies the effect in Andhra Pradesh - the authors find that "while politics may influence programme expenditure in some places and to a small extent, this is not universally true and does not undermine the effective targeting and good work of the scheme at large."  The two other studies focus on these links in Rajasthan  and West Bengal. Several local case studies are also being conducted to identify the regional impacts of NREGA.
The second performance audit by the Comptroller and Auditor General (CAG) of India covered 3,848 gram panchayats (GPs) in 28states and 4 union territories (UTs) from April 2007 to March 2012. This comprehensive survey by the CAG documents lapses in implementation of the act. The main problems identified in the audit included: a fall in the level of employment, low rates of completion of works (only 30.3 per cent of planned works had been completed), poor planning (in one-third of Gram Panchayats, the planning process mandated by the act had not been followed), lack of public awareness partly due to poor information, education and communication IEC) by the state governments, shortage of staff (e.g., Gram Rozgar Sewaks had not been appointed in some states) and so on. Notwithstanding the statutory requirement of notification, yet five states had not even notified the eight-years-old scheme. The comprehensive assessment of the performance of the law by the constitutional auditor revealed serious lapses arising mainly due to lack of public awareness, mismanagement and institutional incapacity. The CAG also suggested some corrective measures.
Even though the mass social audits have a statutory mandate of Section 17 (as outlined in Chapter 11 of the NREGA Operational Guidelines), only seven states have the institutional capacity to facilitate the social audits as per prescribed norms. Although the Central Council is mandated to establish a central evaluation and monitoring system as per the NREGA Operational Guidelines, even after six years it is yet to fulfill the NREGA directive. Further, the CAG audit reports discrepancies in the maintenance of prescribed basic records in up to half of the gram panchayats (GPs) which inhibits the critical evaluation of the NREGA outcomes. The unreliability of Management Information System (MIS), due to significant disparity between the data in the MIS and the actual official documents, is also reported.
To increase public awareness, the intensification of the Information, Education and Communication (IEC) activities is recommended. To improve management of outcomes, it recommended proper maintenance of records at the gram panchayat (GP) level. Further the Central Council is recommended to establish a central evaluation and monitoring system for "a national level, comprehensive and independent evaluation of the scheme". The CAG also recommends a timely payment of unemployment allowance to the rural poor and a wage material ratio of 60:40 in the NREGA works. Moreover, for effective financial management, the CAG recommends proper maintenance of accounts, in a uniform format, on a monthly basis and also enforcing the statutory guidelines to ensure transparency in the disposal of funds. For capacity building, the CAG recommends an increase in staff hiring to fill the large number of vacancies.
The Mahatma Gandhi NREGA story in numbers is a story worth telling... the scheme scores high on inclusivness...no welfare scheme in recent memory has caught the imagination of the people as much as NREGA has ... under which ₹1,10,000 crore (about USD$25 billion) have been spent to pay wages to 1,200 crore (12 billion) people.
It is perhaps the largest and most ambitious social security and public works programme in the world. ... soundness and high potential of the MGNREGA are well established ... . That, at any rate, is one of the main messages emerging from this extensive review of research on MGNREGA. It is also a message that comes loud and clear from the resounding popularity of MGNREGA—today, about one-fourth of all rural households participate in the programme every year.
The statute designates the Gram Sabha meetings held to conduct social audit as the ‘Social Audit Forums’ and spells out three steps to make them effective: publicity and preparation of documents; organizational and procedural aspects; and the mandatory agenda involving questions verifying compliance with norms specified at each of the 11 stages of implementation.
An application under the RTI to access relevant official documents is the first step of the social audit. Then the management personnel of the social audit verify these official records by conducting field visits. Finally, the 'Jansunwai' or public hearing is organised at two levels: the Panchayat or village level and the Mandal level. The direct public debate involving the beneficiaries, political representatives, civil servants and, above all, the government officers responsible for implementing the NREGA works highlights corruption like the practice of rigging muster rolls (attendance registers) and also generates public awareness about the scheme.
The critics claim that the scheme leads to wastefulness and contributes to fiscal deficit of the Government of India.
1. Government of India should increase the Central allocation for the scheme so that number of workdays can be increased to 200 and per day wage can be increased to Rs. 300.
4. Minimum wage act should be strictly implemented. Delay in wage payment should be resolved.
6. Gram Sabhas should be strengthened to monitor proper implementation of the scheme and also to check corruption.
Union Rural Development Minister, Nitin Gadkari, proposed to limit MGNREGA programmes within tribal and poor areas. He also proposed to change the labour: material ratio from 60:40 to 51:49. As per the new proposal, the programme will be implemented in 2,500 backward blocks coming under Intensive Participatory Planning Exercise. These blocks are identified per the Planning Commission Estimate of 2013 and a Backwardness Index prepared by Planning Commission using 2011 census. This backwardness index consists of following five parameters - percentage of households primarily depended on agriculture, female literacy rates, households without access to electricity, households without access to drinking water and sanitation within the premises and households without access to banking facilities.
Both proposals came in for sharp criticism. A number of economists with diverse views opposed the idea of restricting or "focussing" implementation in a few districts or blocks.
In the November 2014 cabinet expansion, Birender Singh replaced Nitin Gadkari as rural development minister. Among the first statements made by the new minister was an assurance that NREGA would continue in all districts. Around the same time, however, NREGA budget saw a sharp cut  and in the name of 'focusing' on a few blocks the programme has been limited to those blocks.
Finance Minister Arun Jaitley announced Rs. 48,000 crore to be allocated to the MGNREGA as a part of 2017 Union budget of India.
A major criticism of the MNREGA is that a lot of money disbursed by the government gets siphoned off by middlemen , thus leaving a number of MGNREGA workers either with unpaid wages or less than standard wages. In Mahuadand, Jharkhand, most of the people who had worked under the MNREGA did not get paid, while some either got paid less than stipulated or were given 5 kg of rice by private contractors instead.
Another criticism of NREGA is that it is making agriculture less profitable. Landholders often oppose it on these grounds. The big farmer’s point of view can be summed up as follows: landless labourers are lazy and they don’t want to work on farms as they can get money without doing anything at NREGA worksites; farmers may have to sell their land, thereby laying foundation for the corporate farming.
Economists like Jagdish Bhagwati and Arvind Panagariya have described NREGA as “an inefficient instrument of shifting income to the poor” – the general notion being that it takes five rupees to transfer one rupee to NREGA workers. Economists including Surjit Bhalla have termed it as unsuccessful suggesting that schemes such as the NREGA need to be junked, saying that any scheme with 85 percent leakages can’t be proclaimed to be “working successfully”.
The workers points of view can be summed up as: labourers do not get more than Rs. 80 in the private agricultural labour market, there is no farm work for several months; few old age people who are jobless for at least 8 months a year; when farm work is available they go there first; farmers employ only young and strong persons to work in their farms and reject the others and hence many go jobless most of the time.