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Enhancing rural livelihoods: analysing the role of MGNREGA in mitigating the impact of drought on rural employment in India

Student name: Ms Surbhi Gupta
Guide: Dr Kavita Sardana
Year of completion: 2017
Host Organisation: National Council of Applied Economic Research (NCAER), New Delhi
Supervisor (Host Organisation): Dr Prem Vashishtha
Abstract: “The recent droughts have emphasized the need for more research on the causes as well as the impacts of drought and the need for additional planning to help mitigate the possible worst effects of future droughts. In rain-fed agricultural systems, erratic rainfall can have comprehensive and devastating impacts on affected livelihoods and local economies. Drought is one of the major constraints to sustainable improvement of agricultural productivity in the rain-fed farming systems. The impacts of drought can be both direct and indirect. Through this study, I intend to study mainly indirect impacts of drought on labour employment and analyse to what extent the policy instruments like Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is successful in mitigating the negative effects of drought. Weather shocks like drought compound the imbalance between labour supply and labour demand which implies that labour supply increases while number of households offering work on their farm falls that leads to fall in employment. Public works programmes are labour market interventions that are often introduced to provide alternative employment opportunities, in contexts of widespread poverty where labour markets are thin. As an ‘employment-based safety net’, public works serve the purpose of offering rural poor an additional source of food (food-for-work) or income (cash-for-work) for consumption smoothing purposes when the harvests have failed. Public works are popular with policymakers because they are self-targeting (the heavy work requirement and payment of subsistence food rations or sub-market wages discourages the non-needy from benefiting), and they offer the potential of creating useful assets (e.g. community infrastructure) while simultaneously transferring food or income to the poor. The best known and most durably successful employment-based safety net is the Mahatma Gandhi National Rural Employment Guarantee Act (NREGA) of 2005, which extends the right to 100 days of employment at the local average agricultural wage to every rural Indian household. A key principle is the guarantee of employment, which assures any household affected by a livelihood shock, such as drought, of access to an alternative source of income. This has the immediate effect of smoothing food consumption through the period of shortage, and the long run effect of securing the livelihoods through employment generation for affected rural poor.” This study focussed on studying the impact of droughts on rural labour employment in India and further analysing role of MGNREGA in mitigating such impacts to enhance rural livelihoods.”

Keywords: MGNREGA, rural employment, Drought, Livelihood