In September 2005, India's parliament enacted a remarkable piece of legislation - the National Rural Employment Guarantee Act (NREGA), later renamed Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). The Act recognises employment as an entitlement and defines an obligation for the government - the obligation to provide, in each year, 100 days of wage employment at a stipulated minimum wage to all rural households whose members are seeking or willing to do unskilled manual work. An employment scheme under MGNREGA, henceforth referred to as MGNREGS, was launched in 200 poorest dis
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In September 2005, India's parliament enacted a remarkable piece of legislation - the National Rural Employment Guarantee Act (NREGA), later renamed Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). The Act recognises employment as an entitlement and defines an obligation for the government - the obligation to provide, in each year, 100 days of wage employment at a stipulated minimum wage to all rural households whose members are seeking or willing to do unskilled manual work. An employment scheme under MGNREGA, henceforth referred to as MGNREGS, was launched in 200 poorest districts during 2006-07 and extended to another 130 districts during 2007-08. Since 2008-09, MGNREGS has been implemented in all the 600-odd non-urban districts in the country. This study provides an early assessment of the MGNREGS. It examines, in particular, the effects of the program on employment, wages and incomes of the rural poor. It also considers its effect on overall growth of the economy. The study finds that the MGNREGS, despite problems in implementation, has succeeded in providing substantial additional wage employment to the rural poor at a wage no lower than what prevails. It has thereby increased money incomes for this group of workers quite significantly. Yet, the program has not made a significant contribution to reduction of rural poverty. The reason is food price inflation to which the program has ended up contributing. While the MGNREGS increased the demand for food, this was not met by an increase in the supply of food in the short run.
Excerpts from publication.
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