Poverty & Inequality

MNREGA and its assets

  • Blog Post Date 15 March, 2016
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Sudha Narayanan

Indira Gandhi Institute of Development Research


Critics of MNREGA believe that the programme is a dole to dig a hole and hence, a huge waste of resources and that it would be better to simply provide cash. In this article, Sudha Narayanan, Associate Professor at the Indira Gandhi Institute of Development Research, argues that evidence from various states on the quality of MNREGA assets suggests that this 'dole-hole' view of is largely unfounded.

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Ever since its rollout 10 years ago, the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) has evoked strident criticism, especially from the 'dole-hole' community of critics, who maintain that MNREGA is a dole to dig a hole and therefore a huge waste of resources. It would be better, they say, to simply provide cash. So far, the burden of proof of the usefulness of MNREGA has fallen on those who hold a more benign view of the programme – as not just a potentially credible safety net, but one that also creates assets that support sustainable livelihoods. While there is academic evidence regarding the former, research on the latter issue is only just emerging. Existing evidence on MNREGA assets, however, suggests that the 'dole-hole' view is largely unfounded. Indeed, today it is hard to write off MNREGA works as 'holes', even if the measurement of impacts of these assets is scarce and poses significant methodological and practical challenges.

MNREGA assets: Then and now

When MNREGA was implemented in 2006, it was envisaged that it would create "durable assets" geared towards water conservation, drought proofing, irrigation, land development, water harvesting, flood control and rural connectivity. Yet, across states, most of the early years were devoted to putting in place the basic prerequisites for programme implementation. The record of asset generation at this time was far from inspiring, prompting the World Bank to remark that "the objective of asset creation runs a very distant second to the primary objective of employment generation". Field reports of poor asset quality indicate that [the spillover benefits from assets created] is unlikely to have made itself felt just yet."

Since then, there has been an increasing focus on asset creation, partly due to the waning preoccupation with setting up the programme architecture, and partly on account of the recognition that this was important in its own right. Two factors catalysed this trend. The first was an incremental expansion of the list of admissible works1, to include works on private lands, vermiculture, fodder production for livestock, cattle and poultry shed, etc. and then individual household, anganwadis2 , Indira Awas Yojana3 or other government scheme-sanctioned houses, playgrounds and so forth. A second thrust came from convergence initiatives, which envisaged dovetailing MNREGA with existing programmes in other departments4. The labour and wage component would come from MNREGA while the material and technical inputs would come from other departments. Although in the initial years, it was not clear what convergence had or had not achieved, in recent years, there are many examples of meaningful convergence having augmented livelihoods of beneficiaries, without undermining the spirit of the programme.

Today, the record of MNREGA asset creation is impressive not so much for the 18.2 million works purportedly completed, but because of the staggering diversity of assets that have been or are being created and their transformative promise.

The four dimensions of impacts

MNREGA assets can be regarded as having impacts along four dimensions. The first is augmenting rural incomes though investments in rural livelihoods. In Tamil Nadu, for example, the department of fisheries or animal husbandry identify beneficiaries, verify eligibility of applicants for constructing a goat, cow or poultry shed or fish pond under the MNREGA, and handhold farmers in rearing cattle, poultry or fish. Often, there is also a marketing arrangement in place where the farmer has an assured market selling to milk dairy cooperatives; this is the case in Madhya Pradesh and Chhattisgarh as well. In Bilaspur district of Chhattisgarh, for example, complementary efforts to establish milk-chilling plants locally and the formation of producer groups are poised to transform the lives of the rural poor. Poultry and sericulture initiatives are organised along similar lines. Another example is the development of horticulture on private lands, including trees for fruit, fodder and firewood. A study of Maharashtra's assets documented self-reported benefits of Rs. 3 for every rupee spent on horticultural works within just three years of completion (Narayanan 2014).

Another set of works relate to augmenting productivity of agriculture through investments in land and water. In Cudappah, a district in Andhra Pradesh prone to drought, a massive network of contour trenches along hillocks has increased water availability in irrigation borewells of farmers, who otherwise blame MNREGA for a rise in farm wages. In dry Ladakh in Jammu and Kashmir, MNREGA had funded an intensive network of kuhls5while North Andaman has prioritised flood protection through embankments and gabion structures to prevent salt-water infiltration to paddy fields. Elsewhere in Chitradurga district in Karnataka, farmers report that threshing floors built under MNREGA prevent wastage of grain of up to 15-25% relative to when they used paved roads for threshing. These are examples of anecdotal evidence on the diverse assets that support agriculture.

In addition, there is ample systematic evidence from well-designed studies based on field surveys to suggest that gains may be significant. Both Bhaskar and Yadav (2015) and Agarwal et. al. (2012) find that Jharkhand's MNREGA wells had impressive rates of return of 6% and 2.29-4.09%, respectively. A set of Tata-IWMI (International Water Management Institute) studies reported in Verma and Shah (2012), documenting best examples of 140 MNREGA water-related assets in 75 villages in Bihar, Gujarat, Kerala and Rajasthan, suggest that for a majority of assets, cost recovery is within a year of completion of works. Additional water consequently available for protective irrigation led to saving of diesel costs. Many water works helped groundwater recharge and supported pisciculture. An IISc (Indian Institute of Science) study (2011) and Tiwari et al. (2013) using rapid scientific measures, and Esteves et al. (2013) found that MNREGA assets they studied reduced the vulnerability of agricultural production, water resources and livelihoods to uncertain rainfall, water scarcity and poor soil fertility. A survey of 2,000 households in 40 villages in Andhra Pradesh, Rajasthan, Madhya Pradesh and Karnataka quantifies clear benefits in terms of reduced soil erosion, increased water availability, groundwater recharge and biomass. In a survey of perceptions of users of 4,100 assets in 100 villages in 20 districts in Maharashtra, farmers consistently viewed water conservation and harvesting works as enabling diversification of crop production for the market, maintaining livestock, and expanding area under irrigation and cultivation (Narayanan 2014).

All of these works not only augment the productivity of marginal farmlands, an increasingly important resource base for food production, but also contribute to the resilience of Indian agriculture in general. Conservative estimates suggest medium term declines of food production of 1.5-5.8% with climate change, with more serious consequences for rain-fed regions. Farm-level structures that support smallholders hold the key to tackling these twin challenges. The recent announcement in the Union Budget of creating farm ponds under MNREGA is an explicit recognition of this aspect.

A third dimension, construed as part of building resilience, includes greening initiatives via MNREGA, with carefully selected species of trees. Here the scale is staggering. Tamil Nadu alone has planted close to 5.8 million saplings during 2014-2016, with survival rates of an average of 75%, and continuous maintenance and replacement. Several other states such as Chhattisgarh, Andhra Pradesh and Telangana have focussed on highway/roadside plantation, with similarly impressive survival rates. Our own survey from Maharashtra finds a survival rate between 60-80% comparing favourably with afforestation projects worldwide.

A fourth dimension of the impact of MNREGA assets is their contribution to the management of natural disasters. Whether it is tsunami or coastal erosion protection through mangroves and plantation, flood-proofing or mere desilting of channels to allow for better drainage, MNREGA has begun to make a perceptible difference in the management of natural disasters. In North Andaman, for instance, the local community, whose memories of the tsunami are still fresh, has welcomed coastal protection through regeneration of mangroves under MNREGA. In Tamil Nadu, coastal plantations as windbreakers and to prevent soil erosion have been created on a large scale.

The benefits of many of these assets are hard to capture rigorously in a causal analytical framework; yet, good examples of works portend scales of benefits that might well outshine other aspects of the programme.

Challenges and the way forward

Several challenges however remain. In many states, MNREGA is still a programme to generate "100 days" of employment per rural household with the aim of 'stopping migration', with scant attention paid to assets. In its worst form, MNREGA itself is deemed a huge nuisance. Inadequate staff strength and insufficient attention to technical design issues continue to undermine the programme in many states (Shrivastava 2015, Ambasta et al. 2008). Further, all convergence initiatives are not equally successful. It is only when complementary efforts downstream are made (for example, credit access to farmers for animal husbandry and fisheries, or assured markets), that these initiatives yield sustained income gains to the beneficiaries. Last but not least, systematic documentation of the assets created under the MNREGA is essential for greater transparency. States like Andhra Pradesh and Telangana, among others, routinely document the location with before-after pictures of the worksite for internal monitoring. This is a critical component to ensure the creation of good quality durable assets.

The first step however is for the government to begin seeing MNREGA as a sharp policy instrument to address some of the pressing issues facing rural and agrarian India today rather than as a monument to its predecessors' failure. Not doing so would, in itself, be a monumental failure.


  1. This expansion started as early as 2009 and has continued since. A significant milestone is what was called MNREGA 2.0 by the then Union Minister of Rural Development. Introduced in May 2012, it involved - among other substantive changes – expansion of the list of permissible works. By 2013, there was already a strong stress on assets for livelihoods and for those that would support agriculture.
  2. Anganwadi means "courtyard shelter" in Hindi. It refers to a government sponsored child-care and mother-care centre in India, catering to children in the 0-6 age group. Anganwadis were started by the Indian government in 1975 as part of the Integrated Child Development Services programme to combat child hunger and malnutrition.
  3. Indira Awaas Yojana is a social welfare flagship programme launched by the Indian Government in 1985 to provide housing for the rural poor in India who are either homeless or have inadequate facilities for constructing a safe and durable shelter.
  4. The first task force to examine questions of convergence was set up as early as 2008 and the first set of guidelines for convergence had been issued by 2009.
  5. Kuhls refer to surface water channels in mountainous areas.

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