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Rural Development

A Bird's Eye View Into the Mahatma Gandhi National Rural Employment Guarantee Act

Rumela Ghosh's picture

World Bank / Curt Carnemark
The 10th South Asian Economics Students Meet (SAESM) was held in Lahore, Pakistan, bringing together 82 top economics undergraduate students from the region. The theme was the Political Economy of South Asia, with a winning paper selected for each of the six sub-themes. In this post, Rumela Ghosh presents her winning paper on the political economy of social security. Posts from the other winning authors will follow over the next few weeks.


Employment is one of the burning problems affecting South Asia. India now has a diminished growth rate below 6% per year. In recent years although the living standards of the 'middle classes' have improved, reform for underprivileged groups has not been so exciting. According to National Service Scheme (NSS) data the average per capita expenditure rose at the exceedingly low rate of 1% per year in India. There has been a sharp decline in real agricultural wages also. A quantitative assessment of the impact of various rural wage employment schemes during the last two five-year plans and the current one shows that the results in terms of employment generated have been steadily decreasing.
 
My paper looked at schemes to tackle unemployment in India. A Bird's Eye View into Mahatma Gandhi National Rural Employment Guarantee Act firstly examines the Maharashtra Employment Guarantee Scheme (MEGS) introduced in the 1970s. It examines how at different time frames and contexts the elite managed to maintain their support base and reinforced its legitimacy by supporting a poverty alleviation program – the EGS. It also highlights the issue of gender concern and the problem of migrant workers.
 
Among various EGS, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is the flagship program implemented at the national level which achieved measurable success, though with some flaws. It guarantees every rural household up to 100 days of wage employment in a year within 15 days of demand for such employment. My study highlights the significant interstate differences in the supply of employment and tries to explore the reasons why. Supply falls far short of demand, particularly in low-income states, where the organizational capacity to implement the scheme is limited.

The paper examines the conceptual design and delivery of MGNREGA to assess its effectiveness against unemployment and poverty. I discuss existing labor laws applicable to workers in the unorganized sector covering wages, contract and poverty incidence. The paper also seeks to derive the short run and long run implications of a minimum wage law. A detailed empirical analysis of the spatial dimension of implementation, problems of funding, and budgetary incidence of MGNREGA.
 
A comparative study of MGNREGA scheme as implemented in Tamil Nadu where it is largely fair and corruption free with respect to that in Uttar Pradesh where the implementation has some serious flaws with corrupt practices of local officials paying wage payments to non-existing laborers has been illustrated. It studies the differences in utilization, extent of targeting, magnitude of income transfers and the cost-effectiveness of food subsidies.

I designed a game-theoretic model to design a near-perfect scheme with suggestions to eliminate the loop holes. Various falsified implementation strategies by contractors like fictitious names in muster rolls, commission to the contractor for partially/not working laborers has undermined the objectives of MGNREGA. This illegal money laundering from a subsidized scheme like MGNREGA digs a deep hole in India's economic pocket when the economy is reeling under inflation and rupee value depreciation pains. The model attempts a systematic game theory based solution approach for restricting these scheme implementation faults. A graphical presentation shows that, with such a policy laborers in the long run will have an incentive to deliver under MGNREGA only.

#2 from 2013: Challenges for India’s Livelihood Youth Skill Development in Rural Areas

Abhilaksh Likhi's picture

Our Top Ten blog posts by readership in 2013
This post was originally published on July 2, 2013


A critical element in India’s 12th Five Year Plan (2012-2017) is the generation of productive and gainful employment on a sufficient scale. The aim of such planning is to systematically absorb the growing working population in the unorganized sector of an expanding economy. This sector contributes about sixty percent of the country’s GDP. Infact, it employs workers in micro enterprises, unpaid family work, casual labor and home based work on a mammoth scale. In addition, it also absorbs migrant laborers, farmers, artisans and more importantly out of school rural youth.

In the last decade, the Indian economy has witnessed a structural transformation from agricultural activities to manufacturing and services oriented activities. A distinct feature of this transition has been a substantial decline in the absolute number of people employed in agriculture. However, according to the Planning Commission, a crucial factor in the migration of the labor force from rural to urban areas is its temporary nature and occurrence only in lean agricultural seasons. Besides, this large chunk of labor force is not available to participate in the manufacturing or the services oriented activities due to severe lack of appropriate skill sets. According to the Commission, the latter reflects rural distress, driven by the fact, that more than eighty percent of India’s farming households are small and marginal, tilling only less than 2.5 acres of land.

We’re Seeking 18 Dynamic Leaders to Help Us Meet Our Goals

Keith Hansen's picture

The World Bank Group is searching internally and globally for 18 experienced and driven professionals to help achieve two ambitious goals: reducing the number of people living on less than $1.25 a day to 3% by 2030 and promoting shared prosperity by fostering the income growth of the bottom 40%. These leaders will be crucial to our plan to improve the way we work, so we can deploy the best skills and expertise to our clients everywhere, to help tackle the most difficult development challenges around the world.   

Last month, the Bank Group’s member countries endorsed our new strategy which for the first time leverages the combined strength of the WBG institutions and their unique ability to partner with the public and private sectors to deliver development solutions backed by finance, world class knowledge and convening services.

Instrumental to the success of our strategy is the establishment of Global Practices and Cross-Cutting Solution Areas, which will bring all technical staff together, making it possible for us to expand our knowledge and better connect global and local expertise for transformational impact. Our ultimate goal is to deploy the best skills and expertise to our clients at the right time, and become the leading partner for complex development solutions.

We are accepting applications for the Global Practice senior directors who will lead these pools of specialists in the following areas: Agriculture; Education; Energy and Extractives; Environment and Natural Resources; Finance and Markets; Governance; Health, Nutrition, and Population; Macroeconomics and Fiscal Management; Poverty; Social Protection and Labor; Trade and Competitiveness; Transport and Information Technology; Urban, Rural, and Social Development; and Water.

Long term impacts of household electrification in rural India

Dominique Van De Walle's picture

It is estimated that 1.3 billion people in 2009 were still without electricity. Many rural households in the developing world continue to cook with wood and biomass (mainly dung), and spend a lot of time collecting and preparing fuel for domestic use. Across the world, these time (and resulting health) burdens are thought to be higher for women and the children under their care. 

One popular argument is that by relieving time burdens spent in collecting and preparing fuel, household electricity results in rural women engaging in market-based work — judged to be a good thing since women’s empowerment has been linked to having one’s own income.  In fact, a number of studies show that the introduction of household electrical appliances accounts for a large share of the increase in married American women’s labor force participation in the 20th century. For the developing world, a recent paper by Taryn Dinkelman finds similar and large effects on female employment (and not on male employment) for South Africa, which are attributed to the use of electric stoves and other time saving appliances.