University of Mysore JOURNAL OF MEDIA AND SOCIAL DEVELOPMENT Volume 1, Issue 2, October- December 2013 An Analysis of Public Expenditure on Employment Generation and Outcome in India: An Interstate ANAND C Analysis of Mahatma Gandhi National Rural INDIRA M Employment Guarantee Programme (MGNREGP) Multidimensional Poverty Measurement in NAVITHA THIMMAIAH India and Karnataka SATHYANARAYANA Dislocated Community, Reconstructing Identity andLanguage Media : Sindhis in India MUZAFFAR H. ASSADI Rebuilding Democracy from the Bottom Up: JAGADISH B. An NGO Experiment in Karnataka SIDDEGOWDA Y.S. Protecting Historical Cultural Structures in BATHOOL, ZAHRA Urban Planning: A Study of Mysore City GOWDA, KRISHNE SRIDHARA M. V Narmada Bachao Andolan Online: MIRA K. DESAI Exploring Discourses of Representation PUTUL SATHE and Resistance Cracking the Glass Ceiling in the Media: Rural Women in Community Radio KIRAN PRASAD 'Not just the cinema viewing, it's beyond…' - ARCHANA CHANUVAI A Studyon Emerging Trends in Hollywood Cinema NARAHARI Spectatorshipin Milieu of 'Media Convergence Culture' Children and Television: The Family Context of Media Use B.N.NEELIMA Internet, Political Communication and Media Inclusion in India - A Conceptual Perspective USHARANI N. JMSD, Oct.-Dec. 2013 / 1 An Analysis of Public Expenditure on Employment Generation and Outcome in India: An Interstate Analysis of Mahatma Gandhi National Rural Employment Guarantee Programme (MGNREGP) ANAND C INDIRA M Abstract : The National Rural Employment Guarantee Act (NREGA) which was later renamed as Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was introduced in 2005. The Act recognizes employment as an entitlement and defines an obligation for the government - the obligation to provide, in each year, 100 days of wage employment at a stipulated minimum wage to all rural households whose members are seeking or willing to do unskilled manual work. National Rural Employment Guarantee Programme was introduced with the twin objectives of generating employment and creating rural infrastructure. An attempt is made in this paper to analyze trends in allocation of funds under this programme and relate the expenditure to the outcomes measured in terms of employment generated across different states since the introduction of this programme. State wise average spending deflated by population shows that North Eastern states are ranked high in average spending. Among the factors which have influenced the employment generation, the average allocations, the percentage of rural population and the literacy level appear to be influencing the outcomes. While the amount of allocations and the percentage of rural population have positive influence, the literacy levels have negative influence. JMSD, Oct.-Dec. 2013 / 2 JMSD, Oct.-Dec. 2013 / 3 Anand C, Indira M An Analysis of Public Expenditure on Employment Generation and Outcome in India: Key Words: MGNREGP, Employment, Poverty Reduction, Rural public spending - especially that on poverty reduction. One such study Development. by Ritva Reinikka and Paul Collier (2001) used data from a series of household surveys in Uganda from 1992 - 99, found that education, Authors: Anand C., Senior Research Scholar, Department of Studies in Economics and access to roads, and access to extension services have a major positive Cooperation, University of Mysore, Mysore. Email: [email protected] impact on agricultural production, which has a connection with Indira M., Professor, Department of Studies in Economics and Cooperation, University of reducing rural poverty. Similar study, but using a different method by Mysore, Mysore. Email: [email protected] Fan, Zhang and Rao (2003) estimated the effects of different types of government expenditure on agricultural growth and rural poverty in INTRODUCTION Uganda. They found that government expenditures on agricultural research and extension services and that on rural roads have impact The great depression of 1930s had a considerable influence on on poverty reduction. These studies along with some others suggest the public policy options. The policy options proposed by Keynes that public investment play greater role in fostering future economic resulted in a paradigm shift and in this new paradigm fiscal instruments growth and poverty reduction. However, different types of expenditure are given greater importance and public spending was considered as have differential effects on growth and poverty reduction in different a tool to lift the economies from the depression by creating countries. At the International Food Policy Research Institute some employment and effective demand. Keynesian options of public more studies have been conducted on this theme for different countries investment to create employment which in turn creates effective but using secondary data at the national or local government level. demand brought in the importance of fiscal measures. The publication These studies are Fan, Hazell, and Thorat (2000) on India; Hao and of "General theory of Employment Interest and Money" by J.M. Fan (2001) on Vietnam; Fan, Zhang, and Zhang (2002) on China; and Keynes in 1936 influenced the government's fiscal operation. Since Jitsuchon, and Methakunnavut (2003) on Thailand. All these countries then the economic responsibilities and functions of the state are achieved remarkable results on growth and poverty reduction in the increasing day by day. Wagner observed that in the course of last two decades in Asia. development, state activities increase both intensively and extensively. It means that while government undertakes new functions the old Mahatma Gandhi National Rural Employment Guarantee Act functions also are to be performed more efficiently. (MGNREGA) Public expenditure policy is used as key instruments in pursuit The National Rural Employment Guarantee Act (NREGA) of of policy goals of growth, equity and stability across different phases 2005 is perhaps the most significant social policy initiative in India of economic development in India. When the country adopted the in the last decade. The main objective of NREGA is to provide mixed economy model after Independence the government assumed enhancement of livelihood security of the households in rural areas the primary responsibility of building the capital and infrastructure of the country by providing at least 100 days of guaranteed wage base to promote economic growth. The concerns regarding equity employment to every household in unskilled manual work (Ministry and poverty alleviation added important dimensions to public of Law & Justice, 2005). expenditure in terms of redistribution of resources. This commitment is clearly a landmark event in the history of There have been some prior studies that analyzed the impact of rural development policies in India. During 2006-07, NREGP involved JMSD, Oct.-Dec. 2013 / 4 JMSD, Oct.-Dec. 2013 / 5 Anand C, Indira M An Analysis of Public Expenditure on Employment Generation and Outcome in India: an expenditure of Rs. 88 billion and generated a little less than one only 200 districts and 1437 million in 2007-08, in part reflecting the billion person days of employment (Ministry of Rural Development, expansion of scheme to 330 more districts and creation of better Government of India). The NREGP performance is also crucial to the awareness. In fact, the total number of beneficiaries who completed success of the Millennium Development Goal of halving global 100 days of work rose from 2.1 million (10% of all participating poverty by 2015 (compared to 1990 levels) as rapid reduction in households) in 2006-07 to 3.5 million (11% of all households) in poverty in India will have an important bearing on the global poverty 2007-08. Chhattisgarh, Madhya Pradesh, Andhra Pradesh, and numbers. Rajasthan - all poor states - have the highest number of households completing 100 days of work (Mehrotra, 2008). Funding MGNREGP is implemented with the financial support from both the Progress of MGNREGP Central and State Governments. As per the Act the central Government Since the introduction of the programme during 2006-07 there bears the costs of the following items: is a continuous increase in the allocation of funds under the program a) The entire cost of wages of unskilled manual workers. benefiting several lakhs of households in rural areas. b) 75% of the cost of material, wages of skilled and semi-skilled Table 1 workers. Progress of MGNREGP in India (2006-2011) c) Administrative expenses as may be determined by the Central Government, which will include, inter alia, the salary and the Number of allowances of the Programme Officer and his supporting staff, Year Allocation Utilization Percentage of Households of Funds (in lakhs) amount Utilized provided with work site facilities. (in lakhs) employment d) Expenses of the Central Employment Guarantee Council. (in lakhs) The State Government bears the costs of the following items: 2006-07 12.07 8.82 73.07 210.16 a) 25% of the cost of material, wages of skilled and semi-skilled 2007-08 19.27 15.85 82.38 339.09 workers. 2008-09 36.30 27.25 75.068 451.15 b) Unemployment allowance payable in case State Government 2009-10 45.68 37.90 82.96 525.30 cannot provide wage employment on time. 2010-11 52.64 39.37 74.73 549.54 c) Administrative expenses of the State Employment Guarantee Percentage Council. change in 2010-11 from The total employment generated under the NREGP is clearly 2006-07 336.12 161.49 much larger than earlier employment programs, for example, Source: Ministry of Rural Development, Govt. of India. Sampoorna Grameen Rozgar Yojana (SGRY) and National Food for Work Program (NFFWP). These programs together generated 748 Data in table 1 shows that the allocation has increased from mere Rs million person days in 2002-03 and 856 million in 2003-04 (Mehrotra, 12 lakhs in 2006-07 to Rs 52.64 lakhs by 2010-11. The number of 2008). Under the NREGP, the figure was 905 million in 2006-07 for households benefitted also increased from 210.16 lakhs to 549.54 JMSD, Oct.-Dec. 2013 / 6 JMSD, Oct.-Dec. 2013 / 7 Anand C, Indira M An Analysis of Public Expenditure on Employment Generation and Outcome in India: lakhs.