Since 2000, the Indian economy has experienced more rapid economic growth, including
even a few years of near double-digit growth, and a sharp decline in poverty. In spite of
these striking GDP growth achievements, growth in employment has been much slower.
As importantly, although the contribution of agriculture to the Indian economy is only
18 percent, agriculture continues to employ 47 percent of workers. This has led to the
concentration of workers, particularly women, into poorly paying work such as collecting
forest produce or being unable to find wage work outside of the peak agricultural season.
The Mahatma Gandhi National Rural Employment Guarantee Act of 2005 emerged in
response to this growing divergence between economic growth and rural job creation. It
is designed to provide 100 days of work to any rural household that demands work.
MGNREGA, as this program has come to be known, incites strong passions. For activists
demanding the right to work, this program is seen as a panacea for rural poverty, particularly
if its implementation can be improved to ensure that it reaches all vulnerable sections of
India’s rural economy. But many economists are concerned about the ineffectiveness of the
program, its fiscal costs, leakages, and its unintended consequences leading to rural and
urban labour shortages and possibly poor, long-term, lifetime chances for beneficiaries.
Using unique data from the India Human Development Survey, a large, repeated, national
household survey conducted by researchers from the National Council of Applied
Economic Research and the University of Maryland before and after the implementation
of MGNREGA, this report examines changes in the lives of rural households and in the
rural economy against the backdrop of changes brought about by the programme.
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