A scheme for the poor, not a poor scheme
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Of late, there has been much public debate around the effectiveness of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), particularly on its targeting of the poor and the socioeconomic profile of its beneficiaries (most notably in this newspaper). It is important to look at these claims closely, not as much to counter them but as to present the real picture that has been undermined by often-unsubstantiated criticism.
To begin with, it is important to keep in mind that the fundamental design of MGNREGA is based on universalisation, that is, any rural household, irrespective of caste, economic status etc, whose adult members are willing to do unskilled manual work, is eligible for work under the programme for up to 100 days a year. The thinking is that this built-in "self-targeting" mechanism makes the programme relatively more attractive to the most poor and marginalised.
In this article, we analyse whether this targeting is being achieved. Overall, available credible evidence, including from the NSSO, UNDP and many other independent studies, suggests that MGNREGA does a fairly successful job of targeting the poorest and the most vulnerable.
As per the 2009-10 National Sample Survey Office report on employment, it is the poor who are benefiting more from MGNREGA. Dutta et al (2012), while analysing the NSSO data, note that the participation rate — that is, the share of households working on MGNREGA — is much higher among the poor; 34 per cent of people in the poorest quintile (bottom 20 per cent households) benefited from MGNREGA, versus 14 per cent in the richest quintile (top 20 per cent). In fact, nearly three-quarters of workers are from the poorest 60 per cent of households. Field studies at the micro level find the same trend — a study conducted in Uttar Pradesh by IIM-Lucknow found that around 85 per cent of the scheme's beneficiaries were from below poverty line (BPL) families.