Macroeconomic impact of the MGNREGA guaranteed rural work scheme in India

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High growth in India over recent years has widened the gap between the rich and the poor. The rural population, mainly dependent on seasonal agricultural work, is trapped in poverty and deprivation. The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) aims to address this issue by providing at least 100 days of guaranteed wage employment per financial year to members of rural households. A team of local researchers evaluates the impact of the MGNREGA, and potential adjustments to the program, on the Indian economy. Their findings indicate that withdrawing the program would decrease GDP, wages for semi-skilled labourers, the supply of unskilled labour, and household income. Similar outcomes are also found when 20% of MGNREGA spending is reallocated to education, health, or public administration. Find out more about the research methods, findings and policy recommendations in the following PEP publications:

Country
India
Project code
MPIA-12823

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