Does India’s public works jobs program actually help poor people?
In 2005, in an effort to put a dent in the country’s high rate of rural poverty, the Indian government adopted a scheme to make 100 days of employment, at a minimum wage, available to any rural person who wished to work. The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) should be a win-win: poor people receive a decent wage to work on projects, such as roads and irrigation, and the whole community benefits.
MGNREGS is ambitious in scope as well as mission: employing 55 million households on 5.1 million projects with a budget of around US$7 billion, it is the largest public works employment project in the world. But does it really help the poorest and most vulnerable? Does it improve nutrition and reduce hunger? To find out, IFPRI Research Fellow Yanyan Liu and her colleagues looked at survey data at the national and state level, and then drilled down into the details in one large state, Andhra Pradesh.
MGNREGS is designed to be self-selecting: a person looking for work must take the initiative by signing up with their village government. This, it turns out, makes the program “pro-poor.” Why?
The work is unskilled and physically demanding, but “this is work the poor are doing anyway,” says Liu. “Most of these jobs are land improvement—clearing land, irrigating. These are not white collar jobs.” And while the wage is fair—above the market rate, in fact—it is still low. “All rural households are eligible,” Liu says, “but low pay and unskilled work mean only the poor are really interested.”
What about reducing hunger? Again, the results were positive: the IFPRI study in Andhra Pradesh found that in the short term, participants consumed more calories and more protein than nonparticipants. In the longer term, they used their wages to buy assets, also a positive move toward food security.
But Who Gets the Job?
What if there are more applicants than available jobs? How do program managers decide who gets the job? “That’s a black box,” Liu says. “Researchers do not really know.” The potential for “rationing” presents an obvious risk of corruption. To encourage transparency, program designers require that all program records be open for local people to see so that they can hold officials accountable. Andhra Pradesh took the extra precaution of paying workers through “smart” bank cards that send earnings directly to their accounts instead of through administrators who might take a cut.
The study also found that, because it offers equal pay for men and women, MGNREGS has the potential to empower women. In fact, more than half of participants are women, thanks to the fair wage and features such as day care, shelter, and water.
For more information on this topic:
- Welfare and Poverty Impacts of India’s National Rural Employment Guarantee Scheme: Evidence from Andhra Pradesh, Klaus Deininger and Yanyan Liu, IFPRI Discussion Paper 1289, 2013
- The Political Economy of MGNREGS Spending in Andhra Pradesh, Megan Sheahan, Yanyan Liu, Christopher B. Barrett, and Sudha Narayanand, working paper, 2014