The Impact of MGNREGA on Agricultural Outcomes and the Rural Labour Market: A Matched DID Approach

Abstract

This paper attempts to address the impact of the MGNREGA on the rural agricultural sector, focusing on cropping patterns, irrigated area, crop yields, wages and rural employment. The analysis is based on two data sources: the first is a unique district-season level panel dataset that we construct using multiple sources; and the second is unit-record data from the NSS Employment Unemployment Surveys. To identify causal effects, we employ a difference-indifference matching (DIDM) procedure, where districts are matched based on propensity scores; the use of propensity scores represents a novel aspect of this paper. We also examine pre-programme trends for each outcome variable to provide a check on the validity of our estimates. Our results indicate modest changes in cropping patterns that are state-and periodspecific; however they do not indicate any improvements in crop yields that were expected given the MGNREGA's focus on investments in irrigation, although there is some evidence that irrigated area may have expanded after a lag. We also find that there is no systematic evidence of impact on wages, and therefore no evidence that public works employment in MGNREGA crowded out casual labour in agriculture.

Public works programmes and agricultural risk: Evidence from India

“…Second, my estimation strategy assumes that the impact of NREGA on yields is static. In reality, impacts might vary over time: Berg et al (2018) find that NREGA-induced growth in real agricultural wages increases over time; Varshney et al (2018) find that NREGA increases irrigation, but only after a lag. The limited time span of the VDSA unapportioned data (which ends in 2011) inhibits an exploration of dynamic effects in this paper, but this is a fruitful area for future research.…”

MGNREGA and Agriculture in Kashmir Valley: A Case Study of District Budgam

“…Prasad [14] in Uttar Pradesh found that farmers are resorting to agriculture mechanization, use of family members as labour and hiring and engaging labour from outside the village. Whereas, Varshney, Goel, & Meenakshi [15] finds that post MGNREGA farmers are switching to less labor-intensive crops leading to a change in crop pattern. Reddy [16] does not find any evidence for the reduction in the cultivation area either because of increase in wages or labour insufficiency in agricultural peak season.…”

Indian Farmer and Government Initiatives: Policies, Gaps and Way Forward

“…Farmer suicides in India are being reported from all across the country. Moneylenders continue to play an important part in agricultural development, with interest payments that surpass the income earned (Esteves et al 2013, Varshney et al 2018. The price of a crop is inversely proportional to its production.…”

“…Advancement in technology: There is growing evidence that agricultural technologies, such as precision farming, can substantially increase farmers' output and income. In addition, the current engineering such as laser leveler, precise sowing and sowing and methods such as CRS for rice intensification, direct rice sowing, non-tillage, raised bed sowing and hill sowing, enable technically highly efficient cultivation (Rao et al 2009, Varshney et al 2018, Tyagi 2012. Their commercial profitability is low and these technologies are being developed by the government.…”

“…Market reforms for remunerative prices: Market reforms are necessary to enhance competition in the agricultural sector and ensure remunerative prices for the farmers (Shaikh and Gachande 2015). Market prices must be kept above the MSP during harvest season through various mechanisms, such as direct purchase and shortfall price payment (Varshney et al 2018, Sharma et al 2021.…”