The MGNREGA in IndiaWhat does it imply for agriculture

and rural development?

Sudha Narayanan(with Krushna Ranaware, Upasak Das

and Ashwini Kulkarni)New Delhi, July 25, 2014

Background• “MGNREGA has hurt agriculture”

• “Digging holes“ view of the MGNREGA– Popular perception that assets have not been

created or that they are poor quality and hence useless.

• Making MGNREGA work for agriculture– At least 60% of the expenditure on works in a district “directly linked to” agriculture (July, 2014)

Goal

To review current research and assess the implications for MGNREGA for agriculture.

Outline

• The MGNREGA

• Conceptual framework for assessing impacts

• Assessing the assessments

– Reviewing the literature

– Survey from Maharashtra on the user perspectives of the benefits and problems with the MGNREGA works

• Implications for policy

The MGNREGA in India

• Minimum of 100 days of unskilled wage employment per rural household, for adults

– Demand driven

– Equal wages for men and women

- Labour intensive. Labour material ratio is 60:40

- Must create “durable assets”

- Water conservation, Drought Proofing, Irrigation facility, Land Development, Water harvesting, Flood Control, Rural connectivity

- More recently vermiculture, livestock, many more

Which works are permitted?

BiomassSoil quality

From MGNREGA to Agriculture

Inputs & investment Adaptation

• Mechanisation?• Cropping pattern

shifts?

Supply of labour

Land levelling

Land & Soil

LivestockWater availability

Connectivity

Water access

WagesWork

Assets on Private Lands

Public lands

Area cropped, productivity, cropping pattern and / or Incomes

Household

Existing Evidence

• Labour markets– consumption impact positive. Effect has been seasonal and

for SC/ST & women (Klonner and Oldiges, 2014)

– Wages and private employment , welfare of top quintile has been hurt in (Imbert and Papps, 2012, 13)

– General equilibrium effects (reduced migration (Das, 2014; Imbert & Papps, 2013) increasing local labour supply)

• Farm response– Adaptation has happened through mechanization of select

operations and in select size classes (Bhargava, 2012)

– MGNREGA participants increase input use for high return crops because of the “insurance” through work (Gehrke, 2013)

Maharashtra Survey (Feb-Mar, 2014)

• Multiple components– Verification Census of 4457 works– User interview (4376 households sampled)– Community questionnaire – Administrative data (Government website)

• 20 districts, 20 blocks, 5 GPs in each block• Complete asset verification• Rule-based sampling of users. Two for work on

public lands (government / commons); one for private lands

• Collaboration with agricultural colleges, funded by Government of Maharashtra

Survey Area (20 blocks, 100 GPs)

What type of works?

• Regional variation in scale and type of works.– Wardha Nagpur

dominance of other works

– Pune Sangli SolapurAhmednagar land development

– Latur, Gadchiroli, Gondia, Parbhani & Thane, water works

– Bhandara afforestation

• Owners and beneficiaries

• 161 hh benefit from multiple assets

278, 6%

1,301, 31%

1,272, 30%

244, 6%

474, 11%

675, 16%

AfforestationWC/WH on common landsLand development on private landsHorticultureRural connectivityOther works

Who benefits?

How useful is the MGNREGA work?

34.41 32.9

63.52

31.3

51.66

79.29

51.27

51.61 56.97

32.19

49.59

41.29

13.61

40.38

9.687

3.2

14.23

4.98 4.44 5.84

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Afforestation WC/WH oncommon lands

Landdevelopment

on privatelands

Horticulture Ruralconnectivity

Other works TOTAL

I do not care if it is useful to me or not Unable to sayHas been the worst thing that could happen to me Has made things worse for meNot useful Somewhat usefulVery useful

How has your life changed because of it?

37.3 37.6

61.5

32.2

48.2

77.4

51.71

46.751.6

32.5

47.4

43.8

17.0

39.16

10.18.2

5.0

14.7

5.2 2.7 6.55

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Afforestation WC/WH oncommon lands

Landdevelopment

on privatelands

Horticulture Ruralconnectivity

Other works TOTAL

I do not care Unable to say Much worse than beforeWorse than before No change Somewhat better than beforeMuch better than before

Usefulness in what ways?

• Water Conservation and Harvesting– Reduces wastage of water and runoff (72%)– Timely availability of water for plots /protective

irrigation/control over water (69.5 %)– Has increased availability of water in the wells in the

vicinity (69.5 %)– Water source now closer (69.5 per cent)

• Connectivity– Access to natural resources, fields (84%)– Greater traffic to and from village (80%)– Public transportation (79%)

• Land Development – Expand area under cultivation (89 %)– Higher yields– Greater control over water

What is considered most useful?

– Water Conservation /Harvesting

– Rural Connectivity

– Afforestation/Land Development

• In majority of the cases, works were decided locally in Maharashtra, but at various levels. In contrast to other states that are top-down.

• Using MGNREGA asset as stepping stone. – Highly or somewhat likely 83%

– Neither like nor unlikely 10%

– Somewhat or highly unlikely 7%

Among those who say works are not useful, common reasons are

– Too early to tell (horticulture, afforestation)

– In poor condition (~30%)

– Incomplete (~20%)

– Faulty design (~30%)

Different across different works and regions.

– Implementation and oversight

– Limited local capacity

Quality and ConditionPercentage of households surveyed that said asset (is) in % Number of responses

Did not exist 2 4337

- of "acceptable /adequate quality'" 44

-"quite good" 37

- "excellent" 8

- "quite bad" 5

- " extremely bad" 3

- "better than" when constructed 71 4188

- "same" condition as when built 27

- "worse" condition than when built 3

maintained by owner 37 4188

maintained collectively by users 32

unsure 5

other (not maintained, no need to maintain, no responses) 17

“the objective of asset creation runs a very distant second to the primary objective of employment generation...Field reports of poor asset quality indicate that [the spill-over benefits from assets created] is unlikely to have made itself felt just yet.” (World Bank, 2011)

Evidence on assets• IISc Study (Rapid scientific measures) 2011, 2013

– reduced the vulnerability of agricultural production, water resources and livelihoods to uncertain rainfall, water scarcity poor soil fertility.

• Agarwal, et. al (2012) – RoR 2.29-4.09% for Jharkhand wells.

• Tata-IWMI studies reported in Verma and Shah (2012)– Additional water /protective irrigation leading to saving of

diesel costs– Pisciculture– Groundwater rechargeFor a majority of assets, recovery is within a year of completion of works.

Policy Implications

• MGNREGA promising instrument at the farm level to cope with/ adapt to climate change – Drought proofing and water conservation

• Possibly high returns on `investment’

• Convergence is working or not?

Policy focus: address “blindspots”– Design and construction of works (the best is good,

can the bad get better?)

– Rationalize types of assets (e.g., wells, bori bundh)

– Mind the gap! (e.g., financing MGNREGA beneficiaries, market linkages.)