Thursday, Sep 18, 2014

A scheme for the poor,not a poor scheme

Posted: March 27, 2013 3:00 am

Of late,there has been much public debate around the effectiveness of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA),particularly on its targeting of the poor and the socioeconomic profile of its beneficiaries (most notably in this newspaper). It is important to look at these claims closely,not as much to counter them but as to present the real picture that has been undermined by often-unsubstantiated criticism.

To begin with,it is important to keep in mind that the fundamental design of MGNREGA is based on universalisation,that is,any rural household,irrespective of caste,economic status etc,whose adult members are willing to do unskilled manual work,is eligible for work under the programme for up to 100 days a year. The thinking is that this built-in “self-targeting” mechanism makes the programme relatively more attractive to the most poor and marginalised.

In this article,we analyse whether this targeting is being achieved. Overall,available credible evidence,including from the NSSO,UNDP and many other independent studies,suggests that MGNREGA does a fairly successful job of targeting the poorest and the most vulnerable.

As per the 2009-10 National Sample Survey Office report on employment,it is the poor who are benefiting more from MGNREGA. Dutta et al (2012),while analysing the NSSO data,note that the participation rate — that is,the share of households working on MGNREGA — is much higher among the poor; 34 per cent of people in the poorest quintile (bottom 20 per cent households) benefited from MGNREGA,versus 14 per cent in the richest quintile (top 20 per cent). In fact,nearly three-quarters of workers are from the poorest 60 per cent of households. Field studies at the micro level find the same trend — a study conducted in Uttar Pradesh by IIM-Lucknow found that around 85 per cent of the scheme’s beneficiaries were from below poverty line (BPL) families.

The NSSO data does note that some households with higher Monthly Per Capita Expenditure (MPCE) participate in the scheme,as mentioned above. However,these are far fewer and could possibly reflect households who have been affected by recent economic shocks. It is also useful to note what “well off” means in the rural Indian context — a person on the 60th percentile in rural India has a MPCE of Rs 1,001,as per NSSO’s 66th round in 2009-10,very far from any notion of “well off” that we may have.

In terms of MGNREGA reaching the marginalised and most vulnerable groups,the evidence is again encouraging. For example,according to the MGNREGA MIS,the participation rate of SCs and STs in MGNREGA is consistently over 40 per cent and far exceeds their share in the population. A panel survey on MGNREGA conducted by NSSO between 2009-11 in the three states of Andhra Pradesh,Madhya Pradesh and Rajasthan finds that more than 90 per cent of the beneficiaries of MGNREGA belonged to SC,ST and OBC households. Dutta et al corroborate this finding. They find that the average participation rate of SCs,STs and OBCs exceeds the participation rate of “others” by 12.4 per cent,though there are inter-state variations. The evidence on inclusion goes beyond this as well. A survey continued…

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