IDEAS home Printed from https://ideas.repec.org/a/gok/ijdcv1/v5y2015i2p101-113.html
   My bibliography  Save this article

MGNREGA policies and deterrence of development in rural India: An analytical approach

Author

Listed:
  • Dube, Partha Pratim
  • Gangopadhyay, Partha

Abstract

The paper offers two new insights in the context of the Mahatma Gandhi national rural employment guarantee act (MGNREGA) in India: first, we establish that migration of the skilled workers can occur under the MGNREGA scheme due to the low wage rate while the quality of work degrades as skilled workers migrate. As a result, we argue, only subsidies can offer a helpline in this regard. Secondly, this paper also argues that the political economy assumes critical importance for any welfare intervention like MGNREGA. We hence model the political economy of rural sector to explain why MGNREGA policies can fail. We show that, in situations where political parties and politicians can sequentially commit first to de facto (local) tax rates, and then levels and distribution of local public goods such as institutions and infrastructure, the political equilibrium is an underprovision equilibrium. In the underprovision equilibrium, the local government at the grass-root level of democracy chooses low tax rates (de facto) and offers inadequate local public goods, which can thus be an equilibrium outcome, which will in turn deter rural development through MGNREGA policies to eradicate rural poverty.

Suggested Citation

  • Dube, Partha Pratim & Gangopadhyay, Partha, 2015. "MGNREGA policies and deterrence of development in rural India: An analytical approach," International Journal of Development and Conflict, Gokhale Institute of Politics and Economics, vol. 5(2), pages 101-113.
  • Handle: RePEc:gok:ijdcv1:v:5:y:2015:i:2:p:101-113
    as

    Download full text from publisher

    File URL: http://www.ijdc.org.in/uploads/1/7/5/7/17570463/dec15_art2_final.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Timothy Besley & Stephen Coate, 1997. "An Economic Model of Representative Democracy," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 85-114.
    2. Banerjee, Abhijit V. & Pande, Rohini, 2007. "Parochial Politics: Ethnic Preferences and Politician Corruption," Working Paper Series rwp07-031, Harvard University, John F. Kennedy School of Government.
    3. Abhijit Banerjee & Kaivan Munshi, 2004. "How Efficiently is Capital Allocated? Evidence from the Knitted Garment Industry in Tirupur," Review of Economic Studies, Oxford University Press, vol. 71(1), pages 19-42.
    4. J-P. Platteau & A. Abraham, 2002. "Participatory Development in the Presence of Endogenous Community Imperfections," Journal of Development Studies, Taylor & Francis Journals, vol. 39(2), pages 104-136.
    5. Soumyendra Kishore Datta & Krishna Singh, 2014. "Participatory job demand and efficiency of performance of NREGS in rural asset creation: An analysis in the context of West Bengal, India," Economic Analysis and Policy, Elsevier, vol. 44(1), pages 74-84.
    6. Munro, Alistair & Verschoor, Arjan & Dubey, Amaresh, 2013. "Does working with spouses make teams more productive? A field experiment in India using NREGA," Economics Letters, Elsevier, vol. 118(3), pages 506-508.
    7. Timothy Besley & Rohini Pande & Vijayendra Rao, 2012. "Just Rewards? Local Politics and Public Resource Allocation in South India," World Bank Economic Review, World Bank Group, vol. 26(2), pages 191-216.
    8. Niehaus, Paul & Sukhtankar, Sandip, 2013. "The marginal rate of corruption in public programs: Evidence from India," Journal of Public Economics, Elsevier, vol. 104(C), pages 52-64.
    9. Partha Gangopadhyay, 2000. "On the coase theorem and coalitional stability: the principle of equal relative concession," Theory and Decision, Springer, vol. 48(2), pages 179-191, March.
    10. Renaud, Paul S. A. & van Winden, Frans A. A. M., 1991. "Behavior and budgetary autonomy of local governments : A multi-level model applied to the Netherlands," European Journal of Political Economy, Elsevier, vol. 7(4), pages 547-577, November.
    11. Rohini Pande & Christopher Udry, 2005. "Institutions and Development:A View from Below," Working Papers 928, Economic Growth Center, Yale University.
    12. Kaushik C. Basu, 1980. "Optimal Policies in Dual Economies," The Quarterly Journal of Economics, Oxford University Press, vol. 95(1), pages 187-196.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Migration equilibrium; Srinivasan-Bhagwati subsidy; Underprovision equilibrium; Electoral games; Local public goods;

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gok:ijdcv1:v:5:y:2015:i:2:p:101-113. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/gipepin.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.