The Indian Journal of Labour Economics

, Volume 59, Issue 1, pp 125–153 | Cite as

Should India do away with the MGNREGA?



Given the reverses the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) suffered in 2014–15, it seemed likely that the programme may be shut down. However, following vehement protests both within and outside Parliament, the Government of India decided to finally throw its full weight behind the programme. Nevertheless, should not development economists address the critiques against the programme and assess whether it is really worth spending such large sums of money on it every year? This paper responds to the various facets of the critique against MGNREGA. In the very nature of our response to the critique lies a vision for the programme going ahead. Our response can be sustained only on the basis of that vision. The paper provides a detailed explanation of why we reject the fundamental critiques of MGNREGA. At the same time, we accept many of the internal critiques as extremely important. The MGNREGA may be described as “both a major success and a huge failure”. But it would be wrong, therefore, to throw the baby out with the bathwater. Rather, the key is to learn from the successes of MGNREGA through a careful analysis of the conditions that have made these successes possible. The paper ends with an outline of the unfinished agenda for MGNREGA reform, without which its true potential will continue to remain unfulfilled.


MGNREGA Durable assets Cash transfers Sustainable livelihoods Migration 



I am grateful to Sanchita Bakshi and Goutam Piduri for assiduous research assistance, which enabled the paper to cover the massive literature that has emerged around MGNREGA. I thank Pramathesh Ambasta, Sanchita Bakshi and PS Vijay Shankar for a careful reading of earlier drafts and their suggestions for improvement.


  1. Ambasta, P. (2014), “Telling the right reform from the wrong”, The Indian Express, October 16.Google Scholar
  2. Afridi, F. and V. Iverson (2013), “Social audits and MGNREGA delivery: Lessons from Andhra Pradesh”, Indian Statistical Institute, Delhi.Google Scholar
  3. Afridi, F., A. Mukhopadhyay and S. Sahoo (2012), “Female labor force participation and child education in India: the effect of the National Rural Employment Guarantee Scheme”, IZA Discussion Paper No. 6593, The Institute for the Study of Labor (IZA), Bonn, Germany.Google Scholar
  4. Azam, M. (2012), “The Impact of Indian Job Guarantee Scheme on Labor Market Outcomes: Evidence from a Natural Experiment”, World Bank, Accessed on 14 June 2015.
  5. Baird, S., H.G. Francisco, B. Özler and M. Woolcock (2013), “Relative Effectiveness of Conditional and Unconditional Cash Transfers for Schooling Outcomes in Developing Countries: A Systematic Review”, Campbell Systematic Reviews, Norway.Google Scholar
  6. Bakshi, S., A. Chawla and M. Shah (2015), “Regional Disparities in India”, Economic and Political Weekly, Vol. 50, No. 01, July 03.Google Scholar
  7. Berg, Erlend, Sambit Bhattacharyya, Rajasekhar Durgam and Manjula Ramachandra (2012), “Can Rural Public Works Affect Agricultural Wages? Evidence from India”, CSAE Working Paper WPS/2012-05, Centre for the Study of African Economies, University of Oxford, Oxford.Google Scholar
  8. Bhagwati, J. and A. Panagariya (2013), Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries, Public Affairs, New York.Google Scholar
  9. Bhagwati, J. and A. Panagariya (2014), “Rural inefficiency act: Despite protests about diluting NREGA, the PM is right to confine it to 200 poorest districts”, Times of India, October 23.Google Scholar
  10. Bhargava, A.K. (2014), “The Impact of India’s Rural Employment Guarantee on Demand for Agricultural Technology”, International Food Policy Research Institute (IFPRI) Discussion Paper 01318, IFPRI, Washington, D.C.Google Scholar
  11. Bhaskar, A. and P. Yadav (2015), All is Well that ends in a Well: An Economic Evaluation of MGNREGA Wells in Jharkhand, Report submitted to National Institute for Rural Development, Institute for Human Development, Ranchi.Google Scholar
  12. Carswell, G. and G. de Neve (2013), “Women at the Crossroads: Implementation of Employment Guarantee Scheme in Rural Tamil Nadu”, Economic and Political Weekly, December 28.Google Scholar
  13. Centre for Science and Environment (2008), NREGA Opportunities and Challenges, New Delhi.Google Scholar
  14. Chandrashekhar, C.P. and J. Ghosh (2011), “Public works and wages in rural India”, Macroscan, 11 January.Google Scholar
  15. Chopra, Deepta (2014), ‘They don’t want to work’ versus ‘They don’t want to provide work’: Seeking explanations for the decline of MGNREGA in Rajasthan, Effective States and Inclusive Development Research Centre (ESID), Manchester, UK.Google Scholar
  16. Das, U. (2015), “Rationing and Accuracy of Targeting in India: The Case of the Rural Employment Guarantee Act”, Oxford Development Studies, Vol. 43, No. 3, pp. 32–37. also accessible at doi: 10.1080/13600818.2015.1042445.
  17. Davla, S., R, Jhabvala, G. Standing and S.K. Mehta (2015), Basic Income: A Transformative Policy for India, Bloomsbury Academic, London and New Delhi.Google Scholar
  18. Desai, S. (2015), MGNREGA: A Catalyst for Rural Transformation, India Human Development Survey, National Council of Applied Economic Research and University of Maryland, New DelhiGoogle Scholar
  19. Dreze, J. (2015), ‘The digging-holes myth’, Indian Express, July 1.Google Scholar
  20. Dreze, J. and R. Khera (2010), “The BPL Census and a Possible Alternative”, Economic and Political Weekly, Vol. XLV, No. 09, pp. 1030–1037, February 27.Google Scholar
  21. Dutta P., R. Murgai, M. Ravallion, and D. Walle (2012), “Does India’s Employment Guarantee Scheme Guarantee Employment?”, Economic and Political Weekly, Vol. XLVII, No. 16, pp. 1152–1159, April 21.Google Scholar
  22. Esteaves T., K.V. Rao, B. Sinha and S.S. Roy (2013), Environmental Benefits and Vulnerability Reduction Through Mahatma Gandhi NREGS: A Synthesis Report. Ministry of Rural Development, Government of India and Deutsche GIZ, New DelhiGoogle Scholar
  23. Foucault, M. (1980), “Lecture One 7 January 1976”, in Power/Knowledge Selected Interviews and Other Writings1972-1977, Pantheon Books, New York.Google Scholar
  24. Gehrke, E. (2014), “Employment guarantee as risk insurance? Assessing the effects of the NREGS on agricultural production decisions”, University of Passau and German Development Institute, Berlin.Google Scholar
  25. Ghosh, J. (2009), “Equity and Inclusion through Public Expenditure: The Potential of the NREGS”, Paper for International Conference on NREGA, New Delhi, 21–22 January.Google Scholar
  26. Hanlon, J., A. Barrientos and D. Hulme (2010), Just Give Money to the Poor: The Development Revolution from the Global South, Kumarian Press.Google Scholar
  27. Holmes, R., S. Rath and N. Sadana (2011), “An Opportunity for Change? Gender Analysis of the Mahatma Gandhi National Rural Employment Guarantee Act”, Project Briefing 53, Overseas Development Institute, LondonGoogle Scholar
  28. IGIDR (2014), MGNREGA Works and their ImpactsA Rapid Assessment in Maharashtra, Indira Gandhi Institute for Development Research, Mumbai,, Accessed on 14 July 2015.
  29. Imbert, C. and J. Papp (2012), “Labor Market Effects of Social Programs: Evidence from India’s Employment Guarantee”, Working Paper, Department of Economics, Princeton University.Google Scholar
  30. Indian Institute of Science (2013), Synthesis ReportEnvironmental Benefits and Vulnerability Reduction through Mahatma Gandhi National Rural Employment Guarantee Scheme, Bengaluru.Google Scholar
  31. Islam, M.D. and A. Sivasankaran (2014), “How Does Child Labor Respond to Changes in Adult Work Opportunities? Evidence from NREGA”, Paper Presented at International Conference on MGNREGA Impact, Indira Gandhi Institute of Development Research, Mumbai, October.Google Scholar
  32. Jayachandran, S. and R. Pande (2015), Why Are Indian Children So Short?,, Accessed on 14 June 2015.
  33. Jha, R., R. Gaiha, and M.K. Pandey (2011), “Net Transfer Benefits under India’s Rural Employment Guarantee Scheme”, Journal of Policy Modeling, Vol. 34, No. 2, pp. 1120–1130.Google Scholar
  34. Jha, R., S. Bhattacharyya and R. Gaiha (2010), “Social Safety Nets and Nutrient Deprivation: An Analysis of the National Rural Employment Guarantee Programme and the Public Distribution System in India”, ASARC Working Paper 20104, Australian South Asian Research Centre (ASARC), Canberra.Google Scholar
  35. Johnson, D. (2009), “Can Workfare Serve as a Substitute for Weather Insurance? The Case of NREGA in Andhra Pradesh”,, Accessed on 10 July 2015.
  36. Kapur, D., P. Mukhopadhyay and A. Subramanian (2008), “The Case for Direct Cash Transfers to the Poor”, Economic and Political Weekly, Vol. XLIII, No. 15, April 12.Google Scholar
  37. Khera, R. (2013), “Mid-day Meals: Looking Ahead”, Economic and Political Weekly, Vol. XLVIII, No. 32, August 10.Google Scholar
  38. Khera, R. and N. Nayak (2009), “Women Workers and Perceptions of the National Rural Employment Guarantee Act”, Economic and Political Weekly, Vol. XLIV, No. 43, October 24.Google Scholar
  39. Klonner, S. and C. Oldiges (2014), “Employment Guarantee and Its Welfare Effects in India”, Proceedings of the International Conference on MGNREGA, Mumbai, IGIDR, 26–28 March.Google Scholar
  40. Kidambi, S. (2007), “Social Audits in Andhra Pradesh: A Process in Evolution”, Economic and Political Weekly, Vol. XLII, No. 47, November 24.Google Scholar
  41. Kishore, Rohan (2015), “Cash transfers gain globally”, Livemint,, Accessed on 14 July 2015.
  42. Krishnamurty, J. (2006), “Employment Guarantee and Crisis Response”, Economic and Political Weekly, Vol. 41, No. 9, pp. 789–790.Google Scholar
  43. Krugman, P. (2008), “Deficits and the Future”, The New York Times, December 1.Google Scholar
  44. Kumar, P. and I. Maruthi (2011), Impact of NREGA on Wage Rate, Food Security and Rural Urban Migration in Karnataka, Agricultural Development and Rural Transformation Centre, Institute for Social and Economic Change, Bangalore.Google Scholar
  45. Liu, Y. and C. Barett (2013), Heterogeneous Pro-Poor Targeting in India’s Mahatma Gandhi National Rural Employment Guarantee Scheme. IFPRI, Delhi.Google Scholar
  46. Liu, Y. and K. Deininger (2010), Poverty Impacts of India’s National Rural Employment Guarantee Scheme: Evidence from Andhra Pradesh, World Bank.Google Scholar
  47. Mani, Subha, Jere R. Behrman, Shaikh Gal and P. Prudhvikar Reddy (2014), “Impact of the NREGS on Schooling and Intellectual Human Capital”, GCC Working Paper No. 14-01), University of Pennsylvania, Philadelphia.Google Scholar
  48. Mookherjee, D. (2014), MNREGA: Populist leaky bucket or successful anti-poverty programme? Boston University,, Accessed on 13 January 2015.
  49. MoRD (2012), Report of the Committee for Revision of MGNREGA Operational Guidelines, Ministry of Rural Development, Government of India.Google Scholar
  50. Muralidharan, K., P. Niehaus and S. Sukhtankar (2014), “Payment Infrastructure and the Performance of Public Programs: Evidence from Biometric Smartcards in India”, Working Paper, Department of Economics, University of California, San Diego.Google Scholar
  51. Narayanan, N.C. and N. Lokhande (2013), “Designed to Falter: MGNREGA Implementation in Maharashtra”, Economic and Political Weekly, Vol. XLVIII, No. 26–27, pp. 61–66.Google Scholar
  52. Narayanan, S. and U. Das (2014), “Women Participation and Rationing in the Employment Guarantee Scheme”, Economic and Political Weekly, Vol. XLIX, No. 46, pp. 1650–1657, November 15.Google Scholar
  53. Niehaus, P. and S. Sukhtankar (2013), "Corruption Dynamics: The Golden Goose Effect, American Economic Journal, Vol. 5, No. 4Google Scholar
  54. Pande, R. and Malhotra, A. (2006), Son Preference and Daughter Neglect in India. What Happens to Living Girls?, International Centre for Research on Women, New DelhiGoogle Scholar
  55. Pani, N. and C. Iyer (2011), Evaluation of the Impact of Processes in the Mahatma Gandhi National Rural Employment Guarantee Scheme in Karnataka, National Institute of Advance Studies, Bengaluru.Google Scholar
  56. Planning Commission (2012), Twelfth Five-year Plan (2012-2017), Faster, More Inclusive and Sustainable Growth, Volume 1, New DelhiGoogle Scholar
  57. Pritchett, L. and S. Bhattacharya (2012), “Cash is no cure-all”, Indian Express, November 27.Google Scholar
  58. Rajasekhar, D., M. Devendra Babu and R. Manjula (2012), Elite Capture in Grama Panchayats of Karnataka, Centre for Decentralisation and Development, Mimeo, Institute for Social and Economic Change, Bangalore.Google Scholar
  59. Rajivan, A. (2006), “Tamil Nadu: ICDS with a Difference”, Economic and Political Weekly, Vol. XLI, No. 34, pp. 3684–3688.Google Scholar
  60. Ravi, S. and M. Engler (2009), Workfare as an effective way to fight poverty: A case of India’s NREGS,, Accessed on 16 January 2015
  61. Rawls, J. (2011), Justice as Fairness: A Restatement, Harvard University Press, Cambridge, USAGoogle Scholar
  62. Samaj Pragati Sahayog (2015), Nari Sangh, A Film by SPS Community Media.Google Scholar
  63. Sen, K. (2014), Success and failure in MGNREGA implementation in India. Effective States and Inclusive Development (ESID), Manchester, UK.Google Scholar
  64. Shah, M. (2007), “Employment Guarantee, Civil Society and Indian Democracy”, Economic and Political Weekly, Vol. XLII, No. 45–46, pp. 43–51.Google Scholar
  65. Shah, M. (2008), “Direct Cash Transfers: No Magic Bullet”, Economic and Political Weekly, Vol. XLIII, No. 34, 77–79.Google Scholar
  66. Shah, M. (2009), “Multiplier Accelerator Synergy in NREGA”, The Hindu, April 30.Google Scholar
  67. Shah, M. (2014), “How to Reform and How Not To”, The Hindu, November 4.Google Scholar
  68. Shah, M. (2015), “Cash transfers, the lazy short cut”, The Hindu, January 14.Google Scholar
  69. Shah, M. (ed.) (2013), Sameeksha: An Anthology of Research Studies, Ministry of Rural Development, New Delhi.Google Scholar
  70. Shah, M. and P. Ambasta (2008), “NREGA: Andhra Pradesh Shows the Way”, The Hindu, September 8.Google Scholar
  71. Shah, M. and H. Kulkarni (2015), “Urban Water Systems in India”, Economic and Political Weekly, Vol. 50, No. 30, pp. 57–69.Google Scholar
  72. Shah, M., D. Banerji, P.S. Vijayashankar and P. Ambasta (1998), India’s Drylands: Tribal Societies and Development through Environmental Regeneration, Oxford University Press, Delhi.Google Scholar
  73. Shah, T. and P. Kela (2015), “MP Lessons for Bumper Agricultural Growth”, Financial Express, May 19.Google Scholar
  74. Standing, G. (2014), “From Cash Transfers to Basic Income: An Unfolding Indian Agenda”, The Indian Journal of Labour Economics, Vol. 57, No. 1, pp. 111–137.Google Scholar
  75. Stanford Encyclopedia of Philosophy (2012), “John Rawls”,, Accessed on 16 January 2015.
  76. Sudarshan, R.M. (2011), “India’s National Rural Employment Guarantee Act: Women’s Participation and Impacts in Himachal Pradesh, Kerala and Rajasthan”, Research Report Summary 06, Institute of Development Studies.Google Scholar
  77. The Hindu (2013), “Cash transfer may hurt girls and kids, says Amartya Sen”, The Hindu, January 10. United Nations (2014), Revision of World Urbanization Prospects, New York.Google Scholar
  78. UNDP (2015), Sameeksha II: An Anthology of Research Studies (20122015), United Nations Development Program, New Delhi.Google Scholar
  79. Verma, S. (2011), MGNREGA Assets and Rural Water Security: Synthesis of Field Studies in Bihar, Gujarat, Kerala and Rajasthan, International Water Management Institute (IWMI), ColomboGoogle Scholar
  80. World Bank (2009), Reshaping Economic Geography, World Development Report, Washington D.C.Google Scholar
  81. World Bank (2014), Risk and Opportunity, World Development Report, Washington D.C.Google Scholar

Copyright information

© Indian Society of Labour Economics 2016

Authors and Affiliations

  1. 1.Samaj Pragati SahayogBagliIndia
  2. 2.Shiv Nadar UniversityDadriIndia

Personalised recommendations