NREGA improving the lives of poor, says study
Although MGNREGA has been looked upon with suspicion by the Government, industry as well as the landed farming class for various reasons including inefficiency, leakages, corruption, rise in rural wages, cost escalation etc., a new report reveals that the programme reduced poverty among its participants between 2004-05 and 2011-12 by providing employment.
The report entitled Mahatma Gandhi National Rural Employment Guarantee Act: A Catalyst for Rural Transformation has estimated that MGNREGA’s contribution to reducing poverty among its participants is about 32 percent between 2004-05 and 2011-12. In the absence of MGNREGA-induced consumption, poverty among its participants would have been 38.0 percent in 2011–12 and not 31.3 percent.
The programme, which has been much cursed by pro-market economists, actually prevented 14 million persons from falling into poverty (those non-poor in 2004–05 who would have become poor by 2011–12 without MGNREGA employment), says the report.
The programme made a dent in reducing poverty among the marginalised social groups. The report says that despite a high initial poverty rate (75.8 percent in 2004–05), poverty among Scheduled Tribes was reduced by 27.6 percent and among Scheduled Castes by 37.6 percent. MGNREGA has been relatively more effective in reducing poverty in less developed areas (34 percent) as compared to more developed areas (27 percent).
The present report, which examines changes in the lives of rural households and in the rural economy against the backdrop of difference brought about by the MGNREGA programme between 2004-05 and 2011-12, has been prepared by a team of researchers led by Sonalde Desai, Prem Vashishtha and Omkar Joshi.
Comprising 6 chapters, the report is a result of joint effort by the National Council of Applied Economic Research (NCAER) and University of Maryland. The six different chapters of the report are: Chapter 1: Mahatma Gandhi National Rural Employment Guarantee Act and Its Implementation; Chapter 2: Who Participates in MGNREGA?; Chapter 3: How Important is MGNREGA in Shaping Household Income Security?; Chapter 4: MGNREGA in a Changing Rural Labour Market; Chapter 5: How Does MGNREGA Improve Household Welfare?; and Chapter 6: Challenges Facing a Demand-Driven Programme in an Unequal Society.
The report is based on comparison of the results of the India Human Development Survey (IHDS) conducted in 2004-05 and 2011-12. The IHDS started in 2004–05 with interviews of 41,554 households in 1,503 villages and 971 urban blocks. These households were re-interviewed in 2011–12, including the households that split from the original family but were still located in the same area, resulting in a survey of 42,152 households and 204,577 individuals in 2011–12—including 83 percent of the original households and 2,134 new households.
Among other things, the report informs us the following:
• MGNREGA is far more likely to attract the poor than the non-poor. In 2004-05, 30 percent of households among the rural poor participated in MGNREGA as compared to 21 percent of the non-poor. Before MGNREGA was launched (i.e. in 2004-05), about 42 percent of the total surveyed rural population was below the poverty line.
• In 2011-12, 31 percent of households among the rural poor participated in MGNREGA as compared to 23 percent of the non-poor. During 2011-12, nearly 26 percent of the total surveyed rural population was below the poverty line.
• Of rural households, 20.6 percent were vulnerable or poor in 2011–12, of which 31 percent participated in MGNREGA. Since MGNREGA coverage of rural households was barely 24.4 percent in 2011–12, poor or vulnerable participants constitute no more than 6 percent of rural households. Still, MGNREGA’s 6 percent share of the rural poor means the poor represent nearly a quarter (24 percent) of its share of all rural households.
• MGNREGA work appeals particularly to households with very small farms; about 42 percent of MGNREGA participants own farms that contain 1 hectare or less. These cultivators have little work outside of the peak harvesting season and tend to supplement their meagre farm incomes with any available labour.
• The report clarifies that targeting MGRNREGS in the 200 poorest districts won't work since 69 percent of the poor live outside such districts.
• At the level of households, the poorest are most likely to participate in MGNREGA, but this pro-poor bent is far less pronounced at the state level. The correlation between MGNREGA participation and per capita net state domestic product, as an indicator of state prosperity, is very weak. In Maharashtra and Chhattisgarh, one finds the clear negative relationship between prosperity and participation that is expected. By contrast, in some prosperous states, such as Andhra Pradesh and Tamil Nadu, participation is high, while in poor states such as Bihar participation is low. This pattern suggests that MGNREGA implementation reflects state-level priorities rather than actual programme demand.
• Less than 20 percent of rural households participate in MGNREGA in Bihar, Gujarat, Haryana, Punjab and Maharashtra, while over 40 percent of households in Chhattisgarh, Rajasthan and Tamil Nadu participate. Participation also appears to be high in smaller north-eastern states like Mizoram, Manipur and Nagaland.
• More than 70 percent of rural households in IHDS claim that they did not participate in MGNREGA because not enough work was available. In states with a stronger programme, 60 percent of poor households participate, while in low-prevalence states barely 11 percent of poor households participate. Improving state-level implementation could thus have a tremendous impact on the ability of poor households to obtain MGNREGA work.
• Only 13 percent of rural men and 10 percent of rural women aged 15–59 work in MGNREGA. Average number of days worked in MGNREGA is less than four days at the population level. Thus MGNREGA is a very small part of the rural labour market. About 45 percent of female MGNREGA workers were either not working or worked only on a family farm in 2004–05. This suggests that MGNREGA may well be the first opportunity many women have to earn cash income.
• 68 percent of households in the most affluent quintile of household assets never requested a MGNREGA card, compared with only 47 percent in the poorest asset quintile.
• 67 percent of the forward-caste households never requested a MGNREGA card, compared with less than 40 percent of scheduled caste/tribe households.
• Among those who request the MGNREGA card, almost everyone seems to get it, and scheduled caste/tribe or poor households are not more likely to be excluded.
• About 52 percent of MGNREGA participants are illiterate. Only four percent of participants have any education above higher secondary.
• The availability of funds rose about 25 percent between 2008–09 and 2009–10, but fell sharply after 2011–12. Funds use after 2010–11 has shown consistent improvement. But completion of projects undertaken has not improved. The ratio of works completed to total works taken up reached a peak at 51 percent in 2010–11 and fell sharply thereafter.
• Completion and quality of MGNREGA work remain a challenge. Gram Panchayats may lack sufficient technical expertise to produce a well-prepared plan, and cost overruns may lead to cancellation of projects
• Agricultural wage rates rose faster than growth in agricultural productivity and non-agricultural wages creating tensions between workers and medium and large farmers who rely on agricultural labour in peak seasons. This may have led to poorer implementation of MGNREGA in areas with high pre-implementation agricultural wages.
• About 29 percent of rural households did not get any work or did not get sufficient days of work despite expressing interest.
• Whereas 48 percent of MGNREGA participants who had obtained loans in the previous five years borrowed from moneylenders in 2004–05, only 27% did so in 2011–12.
• Overall financial inclusion has risen. Regardless of MGNREGA participation, between 2004–05 and 2011–12 the proportion of rural households relying on moneylenders fell from 39 percent to 22 percent of households that took out a loan; borrowing from moneylenders in even low-intensity villages fell from 31 percent to 18 percent.
• Rural wages rose sharply between 2004–05 and 2011–12, but the increase has been greater at the top of the wage distribution than at the bottom. Men’s daily wages for agricultural work grew by 50 percent between 2004–05 and 2011–12, those for women by 47 percent.
Mahatma Gandhi National Rural Employment Guarantee Act: A Catalyst for Rural Transformation (2015) - Sonalde Desai, Prem Vashishtha and Omkar Joshi, National Council of Applied Economic Research (NCAER) and University of Maryland, please click here to access the full report
MGNREGA Report to the People, 2 February, 2015, Ministry of Rural Development, please click here to access
World’s largest anti-poverty scheme MGNREGA cut poverty, empowered women, but reach limited, The Financial Express, 13 August, 2015, please click here to access
'MGNREGS reduced poverty, empowered women' -Rukmini S, The Hindu, 12 August, 2015, please click here to access
More evidence: NREGA generated jobs for poor SCs & STs, please click here to access
Move to dilute MGNREGA: From Right to Scheme, please click here to access
Image Courtesy: MKSS