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An Impact Assessment Study of Individual Asset Creation and Income

Generation under MGNREGA with Special Reference
to Tiruchirappalli District - Pilot Study
______
G. John and Georgia L. Thinakaran2
1
1
Associate Professor, Department of Commerce, St. Joseph’s College, Tiruchirappalli
2
Assistant Professor, Department of Commerce, St. Joseph’s College, Tiruchirappalli
______________

Over view of the act

According to the Eleventh Five Year Plan (2007-12), the number of Indians
living on less than $1 a day, called Below Poverty Line (BPL), was 300 million
which decreased from 36 per cent (1993-94) to 28 percent (2004-05) and the
rural working class dependent on agriculture was unemployed for nearly three
months per year. In order to overcome this problem in addition to with the
remaining problems like illiteracy, hungry people, mal-nourished children,
anemic pregnant women, farmer suicides, starvation deaths, migration resulting
from inadequate employment, poverty, and the failure of subsistence production
during droughts, the Government of India (GOI) enacted the National Rural
Employment Guarantee Act (NREGA) in 2005. It is the biggest poverty
alleviation programme in the world which was started with an initial outlay of
Rs. 11,300 crore in year 2006-07. This Act is now called as Mahatma Gandhi
National Rural Employment Guarantee Act (MNREGA)
History of MNREGA
The following table clearly explains the chronological order of the Act.
Table 1

Year Implementation
August 2005 NREGA legalized
Feb 2, 2006 Came into force in 200 districts, first introduced in
Anantapur district in the state of Andhra Pradesh
Apr 2007 130 more districts included
Apr 2008 Universalization of the scheme
Oct 2008 Wage transaction through banks/post offices
Oct 2009 Name changed to MGNREGA
16 Feb 2009 MoU with the postal dept.

NREGA has come after almost 56 years of experience of other rural

employment programmes, which include both Centrally Sponsored Schemes
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and those launched by State Govt. These comprise the National Rural
Employment Programme (NREP) 1980-89; Rural Landless Employment
Guarantee Programme (RLEGP) 1983-89; Jawahar RojgarYojana (JRY) 1989-
1990; Employment Assurance Scheme (EAS)1993-99; Jawahar Gram Samridhi
Yojana (JGSY) 1999-2002; Sampoorna Grameen RojgarYojana (SGRY) from
2001; National Food For Work Programme (NFFWP) from 2004 were national
rural employment schemes. Among these, the SGRY and NFFWP have been
merged with NREGA in 2005.
Goals of MGNREGA
The major goal of this scheme is to protect the rural poor from vulnerabilities by
providing them demand based employment. It prevents risk associated with
agricultural investment and forced migration of rural poor. It brings prosperity
in rural economy via increased consumption demand. Apart from this it also
concentrates on the following:
 Enhancement of livelihood security in rural areas by guaranteeing 100 days
of wage employment in a financial year to every registered household
 Creating productive assets
 Protect the environment
 Reducing migration
 Special attention to social equality
 Empowering rural women and the poor through the provision of a right-based
law
 Providing social safety to the vulnerable groups with help of employment,
when other alternative are inadequate.
Objectives of the study
The main objectives of the present study are:
1. To assess the efficacy of household assets creation and investment under
MGNREGA in strengthening sustainable livelihood.
2. To assess the impact of MGNREGA on income generation those
reflect/replicate on household expenditure pattern and savings.
3. To assess the bottleneck issues, and recommendations given by the
stakeholders (end) to improve the operational aspects of MGNREGA.
Review of Related literature
The study “MNREGA Opportunities and Challenges” conducted by CSE (2008)
New Delhi found that MNREGA intervention has not been able to generate the
kind of employment demand as expected. Irrational wage calculation formula
has made productive assets creation less lucrative to local communities.
The MNREGA transformed a labour surplus economy to a labour using
economy.

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Centre for Food and Agribusiness Management (2009) pointed out the
perception of respondents by mean score on indicators and reveals that the
highest impact of NREGS has been on the prevailing wage rate in the
Gramapanchayat. The mean score on other indicators such as reduction of
incidence of poverty in the village, checking distress migration form village,
Development and strengthening of rural infrastructure, overall development of
village and sociopolitical mobilization among deprived sections of society i.e.
SC/ ST/ OBC shows that the overall impact of NREGS on development of GP
has not been very impressive.
Reetika Khera (2010) states that in the present system, where payments are
made on the basis of measurements rather than attendance alone, the junior
engineer (J.E.) exercises a lot of power. Attendance has to be reconciled with
measurement before payments are processed. Though the law requires it, in
many States Muster Rolls are not maintained at the worksite.
The article by Hiral Dave (2010) reveals large scale duplication of job cards in
Kotda village of Kutiyana block of Porbandar district of Gujarat. The number of
job cards issued, there is at least three times of the total number of voters.
This study by Harisha et al. (2011) has evaluated the impact of MGNREGA on
income generation and labour supply in agriculture in one of the districts in
central dry zone of Karnataka. Results have shown that the number of days
worked in a year with the implementation of MGNREGA programme has
significantly increased to 201 days, reflecting 16 per cent increase. Regression
analysis has revealed that gender, education and family size of the workers are
the significant factors influencing the worker’s employment under the Program.
The increase in income is to the tune of 9.04 per cent due to additional
employment generated from MNERGA.
A study done by Ahuja et al. (2011) in Haryana reveals that the farmers owning
large size of landholdings and more number of livestock are not much interested
in participating in MGNREGA works as they are busy in their own activities.
The farmers who have small land and livestock resources are more inclined to
work in MGNREGA and their participation is also more. Thus, MGNREGA is
providing livelihood security to the resource-poor rural people.
A study by International Labour Organization (2012) in Bihar highlights that
though the Act stipulates certain worksite facilities, none of the worksites
visited had basic provisions like space for taking rest, or a first aid kit available.
In a few of the worksites even drinking water was not stored and readily
available. People were found to be working in harsh conditions, continuously
and in ergonomically non-acceptable positions. One of the workers at a
worksite, when quizzed on safety issue said, it’s all unskilled work Sir and
NREGA is for poor people
K.Singaravelu was of the opinion that highest priority is given to the water
conservation work which accounts for 52% of the total works executed under

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NREGS. During the financial year 2011-2012 the total employment provided to
the households were 3.32 crore and total person days were 96.23 crore.
Statement of the Problem
From the past reviews the researcher found that most of the studies were on
performance analysis, community asset creation and women empowerment
under this scheme. Very few people have concentrated on social audit and
political aspects of NREGS. No researcher gave importance to individual asset
creation and their income - expenditure pattern. This induces the researcher to
concentrate on the current research problem. The study mainly focuses on the
answer to the following question:
1. Whether the scheme improves the expenditure pattern of the respondents?
2. Whether the scheme uplifts the beneficiaries’ life through investment?
Research Methodology
Research design
With the help of this research, the researcher wants to explore the facts and
figures related to respondent’s income - expenditure pattern and asset created by
them. Therefore this research is exploratory in nature.
Universe of Study
The study was carried out in state of Tamilnadu. However, the study area was
confined to Pullambadi Block in Tiruchirappalli district. Using purposive
sampling method the study area was selected. The Pullambadi Block consists of
33 Panchayat which includes 21770 registered households that contains 34742
registered jobholders.
The below tables gives the full information related to the study area from the
government record.
Table 2: Information related to Job cards and number of workers
(Figures in parenthesis workers in numbers)
Total No. of GPs 33
Total No. of Job Cards 21770
Total No. of Workers 34742
i) SC worker % as of total Workers 21.05 (7318)
ii) ST worker % as of total Workers 0.03 (11)
iii) No n SC&ST worker % as of total Workers 78.9 (27413)
iv) Men worker % as of total Workers 37.4 (12989)
v) Women worker % as of total Workers 62.6 (21753)

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Table 3: depict the working progress of the study area in the last four FY
FY 2015- FY 2014- FY 2013- FY 2012-
Progress
2016 2015 2014 2013
Total Households Worked 16,982 17,169 17,032 18,029
Total Individuals Worked 20,789 21,540 22,028 27,429
% of Men Worked 19.79 21.5 23.6 34.13
% of Women Worked 80.21 78.5 76.4 65.87
% of SC Worked 20.55 20.95 21.6 22.36
% of ST Worked 0.02 0.01 0.01 0
% of Disabled Persons
0.74 0.76 0.84 0.78
Worked

Table 4: Wage disbursements in the study area in the last four FY

FY 2015- FY 2014- FY 2013- FY 2012-
Progress
2016 2015 2014 2013
Average Wage rate per day
119.17 116.7 98.21 102.09
per person (Rs.)
Average Cost Per Day Per
143.83 137.19 103 1
Person (in Rs.)
Wages (Rs. in Lakhs) 1,232.76 1,028.86 1,114.01 1,239.3
Material and skilled Wages
231.46 162.75 20.12 15.63
(Rs. in Lakhs)
Total Adm Expenditure (Rs.
4.26 44.55 36.5 22.29
in Lakhs.)
Total Exp (Rs. in Lakhs.) 1,468.48 1,236.17 1,170.63 1,277.22
Source for Tables 2-4: www.nrega.com Designed & Developed by NIC-DRD
Informatics centre, krishi Bhawan, New Delhi

Table 5: Data related to the current year work progress

Particulars Values in Numbers
Total households demanded & allotted work 17,227
Total persons demanded work 22,021
Total persons allotted work 22,019
Total persons worked 2 21,540
Total households reached 100 day limit 1,065
Total bank accounts 2 26,967
Source: Panchayat record maintained by Pullambadi union office.

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Sampling Procedure
For the selection of beneficiary respondents two stages were followed. In the
first stage purposive sampling method was adopted for the selection of the study
area. In the second stage, for selecting the sample respondents, random
sampling method was adopted.
Sample Size
Even though the population varies from each and every Panchayat the
researcher selected two samples from each Panchayat uniformly totally 66
jobholders.
Data Collection
Data was collected both from primary and secondary sources. Primary data was
collected from all the end stakeholders of MGNREGA. Well structured
Questionnaire was used for collecting data from the beneficiaries. Informal
interviews also taken from selected households. In addition with this, a casual
walk into the MGNREGA worksites were conducted in order to understood the
factual position of the scheme at their footsteps. The secondary data was
collected from official records, policy documents, published reports of similar
projects, journals and Ph.D. thesis, journals and online sources.
Tools for data analysis
Both qualitative and quantitative data was analyzed in the light of framed
objectives. Quantitative data was tabulated and statistically analyzed.
Qualitative data was interpreted based on the information collected from the
field. The researcher adopted the chi-square test of goodness-of-fit to test the
hypotheses formulated.
Findings from the data Analysis
Related to investment:

Table 6: Whether they invest any amount on financial and non -financial
assets with the help of MGNREGA’s income.
Percentage of
No of Respondents
Options Respondents
Male Female Male Female
Yes 16 22 24 33
No 17 11 26 17
Total 33 33 100
Source: primary data
The above table clearly states that only 57 percent of the respondents invested
in financial and non -financial assets with the help of MGNREGA’s income.
Among the financial asset shares, treasury bills and Kishan Vikaspathra were

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totally neglected by the respondents. Under the financial asset, Selvamagal

Thittam was given highest priority by the respondents when compared with
other options.
Table 7: preferences given by the respondents related to
Investment options
No of Respondents
Investment
Male Female
Financial asset
a. Shares 0 0
b. Gold bonds 2 4
c. Treasury bills 0 0
d.Kishan vikaspathra 0 0
e.Selvamagal pathra 2 5
Non-financial assets - A. Farm assets
a. Poultry 2 7
b. Calf 0 0
c. Buffalo 0 0
d.Cow 2 0
e. Sheep 0 4
f. Goat 1 0
g. Tiller 1 0
h.Tractor 0 0
i.Weeding machine 2 0
Non-financial assets - B. Non-farm assets
a. Investment in housing land 0 1
b. Investment in house leasing 0 0
c. Investment in business 3 1
d. Investment in cultivated land 1 0
Total 16 22
Source: primary data
Among non-financial assets, 19 respondents have invested in various farm
assets like poultry, cow, sheep, goat, tiller and weeding machine. They felt that
the earnings from MGNREGA are not enough to invest in remaining options of
farm assets. Only six respondents have invested in nonfarm assets of non-
financial assets like investment in housing land, house leasing, business and
cultivated land.

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Table 8: Forms of savings

No: of Percentage of
Options
respondents respondents
Post office 5 7.50
Bank 18 27.27
Chit 9 13.61
Purchasing ornaments 11 16.67
Insurance policies 15 22.72
Lending money to others for interest 8 12.12
Total 66 100.00
Source: Primary data
It has been noted that as high as 27.27 percent of the respondents make their
savings in banks. The reason for high percentage is wages are paid through
banks while very least percent of 7.5 saved in post office, 13.61 percent deal in
Chit. From the table it is clear that the rural people are very cautious in
insurance, the preference given by them is 22.72 percentages. 12.12 percentages
of the respondents are engaged in money lending business like a black money
lenders.

Table 9: Whether able to purchase household durable assets

No: of Percentage of
Options
respondents respondents
Able to purchase 5 7.5
Not able to purchase 61 92.5
Total 66 100.0
Source: Primary data
Ninety three percentage of respondents opined that the income from
MGNREGA has not helped them in any way to purchase any household durable
assets. Only7.5 percentage of the respondents agreed that they have purchased
some durables with help of earning from this scheme. Some of the respondents
told that the durables were purchased with their main income only and this
earning helped them as an additional source. Thus, MGNREGS income has nil
or negligible impact on Purchasing of durable assets.
The Table-10 clearly shows that MGNREGA income has given the freedom to
spend or meet on day to day requirements. The indicators are ranked by SA -
Strongly Agree; A - Agree; ND - Neither agree nor disagree; D - Disagree; SD -
Strongly Disagree; NA- Not answered. Nearly 55 of the respondents agreed that
this scheme has helped them to only to fulfill their biological need and
recreation. The next rank has given by them related to purchase of Alcohol,
tobacco and Betel nut which indicates that the village people are very addict to
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these habits. The respondents totally denied that the income from this source
does not help them to renovate the house and meeting agriculture expenses. All
the whole respondents said that the income from this source did not help them
fully to meet their expenses.
Table 10: Spending patter on day to day requirements
Kind of expenditure SA A ND D SD NA Total
Food and consumption items 45 10 10 1 - - 66
Clothing 20 12 2 24 8 - 66
Electricity bill 12 25 8 2 19 - 66
Alcohol & tobacco & Betel nut 48 12 - - - 6 66
Phone bill 6 10 05 15 - 30 66
Cooking fuel 6 7 4 24 25 66
Recreation 45 10 5 6 - - 66
Transport 12 10 4 18 22 - 66
Social/religious function /festival 15 24 2 6 19 - 66
Agriculture related expenses 0 0 1 18 32 15 66
Renovation of the house 0 2 1 18 45 - 66
Expenses for livestock 11 4 4 12 30 5 66
Source: Primary data
Hypothesis Testing
H0: There is no significant relationship between gender and selection of
investment options.i.e gender and investment options are independent
Table 11
Options Male Female
Financial asset 4 9
Non-financial assets 12 13
Total 16 22
Source: Field Survey
Table 12: Computation of observed and expected frequencies
for investment options
Oi Ei (Oi - Ei)2 (Oi - Ei)2 / Ei
4 5.47 2.1609 0.395
12 10.52 2.1609 0.208
9 7.52 2.1609 0.286
13 14.47 2.1609 0.149
Total 1.035

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Notes:
i) The observed frequencies (Oi) are from the responses of the respondents
regarding criteria of investment options.
ii) While the expected frequencies (Ei) are obtained using the formula below:

Row total for the row of that cell  Column total for the column of that cell
Ei =
Grand Total
Chi-square depends on:
i) Degree of freedom (d.f) = (R-1) (C-1)
where, R= 2: C=2. Therefore, d.f= (2-1) (2-1) = 1x 1= 1
ii) At 5% level of significance: α = 0.05 (a one tail-test) Thus, = 3.84

The value of the chi-square above is obtained from the chi-square distribution
table using 5% level of significance and 1 degree of freedom.
Interpretation
The null hypothesis (H0) is accepted, since chi-square calculated value (1.035)
is less than chi-square tabulated value (3.84) at 5% level of significance.
Therefore, it could be concluded that gender and investment options are
independent.
Conclusion
From the above analysis it is concluded that the performance of MGNREGA in
Pullambadi is not at all satisfactory. The scheme could not ensure the 100 days
job guarantee to the majority of the job card holders.Only 1065 households
reached 100 day limit. It is too bad for success of the program. It is observed
that the scheme does not provide any avenue/platform for investment or
savings. Their standard of living has not improved due to MGNREGA.
Therefore the overall impact is very low. Certain initiatives and changes should
be taken to remove these barriers. Even though the scheme promised 100 days
of employment to rural people the scheme does not receive 100 marks from the
beneficiaries. Therefore the government has to revamp the scheme and their
operations.
References
1. http://www.researchgate.net/ publication/259451490 accessed on Jan 10 2016
2. Center for Food and Agri business Management. (2009): “Quick Appraisal of 5
Districts under NREGA in Uttar Pradesh." Indian Institute of Management,
Lucknow. Report submitted to Ministry of Rural Development, Government of
India.
3. Khera, Reetika (2010): “Wages of Delay”, Frontline Volume 27-Issue 10, May
8-21

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4. Hiral Dave (2010): “NREGA loot: Dead men walking as ghost workers” India
Express, Ahmedabad Edition November 16, 2010. p. 3
5. Harisha, B. G., Nagaraj, N., Chandrakantha, M. G., Murthya, P. S., Chengappac,
(2011): “Impact and Implications of MGNREGA on Labour Supply and Income
Generation for Agriculture in Central Dry Zone of Karnataka” Agriculture
Economics Research Review. Vol.24 ISSN: 0971-3441
6. Ahuja, Usha Rani, Tyagi, Dushyant, Chauhan Sonia, Choudhary (2011): “Impact
of MGNREGA on Rural Employment and Migration: A Study in Agriculturally
Backward and Agriculturally Advanced Districts of Haryana” Agr. Econ. Res.
Rev., Vol. 24 pp. 495-502
7. http://www.researchgate.net/ publication/259451490 accessed on Jan 10 2016
8. K. Singaravelu,” MGNREGS - A Sincere attempt to eradicate poverty”. Kisan
World Jan 2013, Vol 40. No 1, pp 50-54
9. Ministry of Rural Development, Mahatma Gandhi NREGA-Report to the People,
Govt of India, New Delhi. 2013.
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