.141 Research Study No 138 IMPACT OF NREGA ON WAGE RATES, FOOD SECURITY AND RURAL URBAN MIGRATION IN GUJARAT V.D.SHAH MANISH MAKWANA AGRO-ECONOMIC RESEARCH CENTRE SARDAR PATEL UNIVERSITY VALLABH VIDYANAGAR – 388 120 GUJARAT MAY – 2011 Foreword Amidst great hype and hope, Indian parliament passed a revolutionary novel and unique Act “Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA)” in 2005. It aims at arresting out-migration and enhancing food and livelihood security of rural peoples on a sustained basis. It is a major initiative of Government of India towards poverty reduction and income generation among rural poor families. MNREGA is a unique welfare programme in the world, as no country in the world has ever given a legal right of this kind to such a large population. MNREGA is expected to address the worst kind of poverty in the country, as it provides a legal guarantee for 100 days of employment in every financial year to the poor rural households at statutory minimum wages. It also introduced novel features of unemployment allowance. MNREGA is not a welfare programme dishing out doles. It is a development initiative chipping at durable productive assets which give momentum to growth process in rural area by improving the purchasing power. MNREGA programme was implemented in all the rural districts of the country since April, 2008. There exist a mix bag of opinions on level of impact and functioning of MNREGA. At present, degree of impact, implementation, irregularities and corruption in MNREGA programme has become a hot issue of debate for researchers, academicians and politicians. The conflicting views on level of corruption, functioning and degree of impact indicates that clear picture on effectiveness of the Act yet to emerge. Keeping this controversy and debate in view, the Directorate of Economics & Statistics, Ministry of Agriculture, Government of India asked Agro-Economic Research Centre, Vallabh Vidyanagar, Gujarat to undertake study on probing and quantify the impacts of MNREGA on different parameters and constraints affecting the effectiveness of the programme in State. The study is intended to assess the pros and cons of MNREGA programme. The study conducted in 18 States and co- ordinated by Prof. Pramod Kumar, Institute of Social and Economic Change (ISEC), Bangalore. i The study was conducted in 5 selected districts namely Dahod, Navsari, Banaskantha, Surendranagar and Jamnagar of Gujarat State. From each selected district, 2 villages and from each village, 20 participants and 5 non- participants comprising SC, ST, OBC and others were selected. The field data were collected by recall from 250 sample households for calendar year 2009. The study shows that MNREGA holds the key for the development of rural areas, poverty reduction and income generation among rural poor households. However low to moderate impact on income level, wage rate of unskilled labour, food security and livelihood of rural peoples was made by the programme. The people’s awareness on their legal rights under MNREGA was found below expectation. The MNREGA not able to generate the kind of employment demand as expected. On the basis of survey report, policy suggestions have been made to improve the development, effectiveness of MNREGA. The results of the study suggests that after implementing corrective measures, MNREGA holds out prospects of not only transforming livelihoods of the poorest people, but also heralding a revolution in rural governance of India. Shri V D Shah, Research Officer of our centre, put in lot of efforts and unquantifiable work for preparing this enrich and excellent evaluation research report. The special thank to Shri Manish Makwana, Research Associate of our centre and to entire project team for providing necessary help and co-operation at all the stages of study report. We will feel extremely rewarded if the finding of the study can generate sufficient interest among academicians, policy makers and those who have keen interest in agricultural and rural development of country. Date: 23-05-2011 Dr. R. H. Patel Place: Vallabh Vidyanagar Director ii Preface The “Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA)” was enacted in 2005 to provide a minimum guaranteed wage employment of 100 days in every financial year to rural households with unemployed adult members prepared for unskilled manual work. MNREGA ranks among the most powerful initiatives ever undertaken for transformation of economy of rural households in India. It holds out prospect of not only transforming livelihood of poorest people but also heralding a revolution in rural governance of India. It aims at arresting out- migration and enhancing food and livelihood security of rural peoples on a sustained basis. It recognizes employment as a legal right. MNREGA is in implementation in all the rural districts of the country since April, 2008. At present, degree of impact, implementation, irregularities and corruption of MNREGA has become a hot issue of debate for researchers, politicians etc. Keeping controversy and debate in views, Directorate of Economics and Statistics, Ministry of Agriculture, Government of India asked to undertake this study. In this study, attempt has been made to assess the impact of MNREGA on wage rates, food security and rural urban migration in five selected districts of Gujarat State. The study is based on both, secondary and primary data. The primary data collected for the reference year 2009 from 200 participant and 50 non-participant households spread over 5 districts namely Banaskantha, Navsari, Dahod, Surendranagar and Jamnagar of Gujarat State. This report is a product of support, help and contribution from many individuals and organisations. I commend all of them for their valuable contribution. I would like to place on record my sincere thanks to Dr. R.H.Patel, Director of our centre, Dr.Mahesh Pathak, Hon. Advisor of centre and Dr. R.A.Dutta, Deputy Director of centre for providing valuable guidance and infrastructural support as and when needed. Special thanks are due to Shri H.N.Chibber, Additional Commissioner (MNREGA), Commissionerate of Rural Development, Government of Gujarat and all MNREGA officials at study districts / talukas for providing necessary help and support at all iii stages of the study. I would like to thank Sarpanch / Talati of selected villages, sample households and all others who have directly or indirectly provided valuable help and support in field work and preparing this valuable report. I am equally grateful to Dr.M.N.Swain, Research Officer for helping in Logit analysis. I register my special thank to Shri Manish Makwana, Research Associate at centre and entire project team for their help, support and contribution in making this study so enrich. I am also thankful to Prof. Pramod Kumar, Institute for Social and Economic Change, Bangalore, who as a co-ordinator of the study provided valuable guidance and all kind of support as and when needed. I am equally grateful to Mr. Utpal Ghosh, Economic & Statistical Advisor, Directorate of Economics and Statistics; Mr.B.S.Bhandari, Advisor, Ministry of Agriculture, GoI; Mr. V.P. Ahuja, Additional Economic Advisor, Ministry of Agriculture, GoI and Mr.B. Naik, Economic Officer, Ministry of Agriculture, GoI for providing their help as and when needed. I am sure the findings and recommendations of the study will be useful for administrators, policy makers and those who have interest in rural development of the country. Date: 23-05-2011 V.D.Shah Place: Vallabh Vidyanagar Project Leader iv Project Team Sr. Activities Name Designation No. 1 Project Leader Shri V. D.Shah Research Officer 2 Project Assistant Shri Manish Makwana Research Associate 3 Field work Team Shri Manish Makwana Research Associate Shri C. M. Patel Field Supervisor (CCS) Shri J. S. Raj Agriculture Assistant (CCS) Shri Hitesh Makwana Agriculture Assistant (CCS) Shri J. N. Singh Computer (CCS) 4 Tabulation / Shri Manish Makwana Research Associate Data Processing 5 Data / Shri J. B. Kahar Data Entry Operator Draft Entry Shri Himanshu Parmar Research Fellow Shri Hemal Padhiyar Research Fellow Ms. Kalpana kapadia Research Associate 6 Secondary Shri Shreekant Sharma Research Associate Data Tabulation 7 Miscellaneous Shri Vinod Parmar P.A. to Director v Contents Chapter No. Title Page No. Foreword i Preface iii Project Team v List of Tables ix CHAPTER 1: Introduction 1 - 20 1.1 Background 1.2 Workfare Programmes in India 1.3 Mahatma Gandhi National Rural Employment Guarantee Act 1.4 Review of Literature On MNREGA 1.5 Need of the Study 1.6 Objectives of the Study 1.7 Sampling Design 1.8 Reference Year 1.9 Data Collection 1.10 Limitation 1.11 Organization of Study Report CHAPTER 2: Agricultural Profile, Functioning and Socio-Economic 21 - 74 Characteristics of MNREGA in Selected Districts and State Section –I Demography Details of Selected Districts and State 2.1.1 Population 2.1.2 Agriculture Profile of Selected Districts Section – II Functioning, Employment and Socio-Economic Characteristics of MNREGA 2.2.1 Implementation and Administrative Setup in Gujarat 2.2.2 Job Cards Issued and Employment Generation by Sex and Castes 2.2.3 Works Undertaken under MNREGA during 2008-09 to 2010-11 2.2.4 Expenditure on Works Undertaken under MNREGA 2.2.5 Social Auditing and Inspection of MNREGA works 2.2.6 Unemployment Allowance 2.2.7 Wage Payment through Banks/Post Offices vi 2.2.8 Work projection under MNREGA for 2010-11 Summary CHAPTER 3: Characteristics, Income and Consumption Pattern of 75 - 95 Sample Households 3.1 Demographic Profiles of the Sample Households 3.2 Per Household Occupation (Activity) wise Mandays-2009 3.3 Source-wise Per Household Annual Net Income-2009 3.4 Item-wise Food Consumption (Per Capita / Month)-2009 3.5 Per Capita Monthly Consumption Expenditure of Sample Households – 2009 3.6 Inequality (variability) in Income and Consumption of Sample HHs. -2009 3.7 Factors Impacting Participation in MNREGA-Logit Regression Analysis Summary CHAPTER 4: Work Profile, Wage Differential and Migration under 96 - 113 MNREGA 4.1 Work Profile under MNREGA of Sample HHs.-2009 4.2 Activity-wise Employment under MNREGA-2009 4.3 The Out-Migration Incidents – 2009 4.4 Wage Differentials between MNREGA and Non-MNREGA works Summary CHAPTER 5: The Qualitative Aspects of the Functioning of MNREGA 114-144 5.1 Assets Holding (Rs. /HHs.) 5.2 Borrowings by Sample Households – 2009 5.3 Borrowing Sources in Sample Villages and Investment in Assets by Sample HHs.-2009 5.4 Some Qualitative Aspects of Functioning of MNREGA 5.5 Quantitative Information with Reason on Functioning of MNREGA 5.6 Beneficiaries Perception on Potential Benefits of MNREGA 5.7 Perception of Beneficiaries on Food Security and Related Aspects with Suggestions to Improve MNREGA Functioning Summary vii CHAPTER 6: MNREGA impact on village economy 145-157 6.1 Infrastructure Availability within Study Village-2009 6.2 Changes in Occupational Pattern-2009 6.3 Effects of MNREGA on Wage Rates in Study Villages 6.4 Effects of MNREGA on Labour Charges for Agricultural Operations 6.5 Some Questions about Functioning of MNREGA Summary CHAPTER 7: Concluding Remarks And Policy Recommendations 158-177 A. Concluding Remarks B. Policy Recommendations Bibliography 178-179 Appendix- 1 to 2 180-197 Comments from the Co-ordinator 198 Action taken on the comments 199 viii List of Tables Table No. Title Page No. 1.1 Performance of NREP in the sixth and seventh five year plan 2 1.2 Performance of RLEGP in the Seventh Plan 3 1.3 Employment Generated By SGRY and NFFWP-2002-03 to 2005-06 4 1.4 Total Employment Generated and Expenditure under MNREGA in 11 India -2006-07 to 2009-10 1.5 Details of Selected Sample Districts and Sample Villages 17 2.1 Demography Details of selected District and State 23 2.2 Agricultural Statistics at a Glance for Selected Districts 25 2.3 (i) Fund Availability and Utilization for MNREGA in Gujarat State 29 –2008-2009 2.3(ii) Fund Availability and Utilization for MNREGA in Gujarat State 30 - 2009-2010 2.4 (i) Employment generated through MNREGA and its socio-economic 38 characteristics in Gujarat-2008-09 2.4 (ii) Employment generated through MNREGA and its socio-economic 39 characteristics in Gujarat-2009-10 2.4(iii) Employment generated through MNREGA and its socio-economic 40 characteristics in Gujarat-2010-11 (Till Aug.’2010) 2.5 (i) District wise number of works completed/progress under MNREGA - 45 2008-09 2.5(ii) District wise number of works completed/progress under MNREGA- 46 2009-10 2.5(iii) District wise number of works completed/progress under MNREGA - 47 2010-2011 (Till Aug -2010) 2.6 (i) District wise amount spent on works completed/progress under 49 MNREGA-2008-09 2.6 (ii) District wise amount spent on works completed/progress under 50 MNREGA-2009-10 2.6 (iii) District wise amount spent on works completed/progress under 51 MNREGA-2010-11 (Till Aug 2010) 2.7 (i) District-wise social auditing and inspection of MNREGA works in 54 Gujarat-2008-09 2.7 (ii) District-wise social auditing and inspection of MNREGA works in 55 Gujarat-2009-10 2.7 (iii) District-wise social auditing and inspection of MNREGA works in 56 Gujarat-2010-11(Till Aug 2010) 2.8 Unemployment Allowance Paid (2010-11)-Gujarat 59 2.9(i) District-wise wage payment through banks/post offices in Gujarat - 61 2008-09 2.9(ii) District-wise wage payment through banks/post offices in Gujarat - 62 2009-10 2.9(iii) District-wise wage payment through banks/post offices in Gujarat - 63 2010-11(Till Aug 2010) 2.10 Work projection under MNREGA for 2010-11-Gujarat State 65 2.10(i) Work projection under MNREGA for 2010-11-Banaskantha District 67 2.10(ii) Work projection under MNREGA for 2010-11-Dahod District 68 ix