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Macro-Economic Impact of MGNREGA in India: An Analysis in CGE Modeling Framework

Author

Listed:
  • Akhilesh K. Sharma
  • Atul Sarma
  • Charanjit Kaur
  • Javier Cabrera
  • Deeksha Tayal

Abstract

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is one of the flagship programmes of the Government of India. The programme aims to deal with rural poverty and unemployment by assuring economic security to the rural poor, by providing guaranteed wage employment when other employment alternatives are scarce or inadequate. This study aims to evaluate the macroeconomic impacts of the MGNREGA on the Indian economy by running counterfactual simulations with the aid of PEP-1-1 CGE model. The findings indicate that MGNREGA has increased the real GDP of the economy as well as household income and real consumption budget. The increase in household income is higher for the bottom quintile classes in comparison to the richer households. If the MGNREGA expenditure is reallocated to educational services, medical services, and public administration, the GDP of the economy as well as household income will decline.

Suggested Citation

  • Akhilesh K. Sharma & Atul Sarma & Charanjit Kaur & Javier Cabrera & Deeksha Tayal, 2017. "Macro-Economic Impact of MGNREGA in India: An Analysis in CGE Modeling Framework," Working Papers MPIA 2017-11, PEP-MPIA.
    • Handle: RePEc:lvl:mpiacr:2017-11
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    More about this item

    Keywords

    MGNREGA; unskilled labour; GDP; household income; social accounting matrix; CGE modeling;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • C16 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Econometric and Statistical Methods; Specific Distributions
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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