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Transformation of an underdeveloped economy into a modern economy takes place as surplus labor from the dominant agricultural sector in rural areas is transferred to the non-farm sector. Development experience of a country like India shows that the economy has not been able to absorb the surplus agricultural labor by creating adequate non-farm employment opportunities. One of the initiatives of the Government of India has been the implementation of Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in 2006 which is considered to be one of the largest public works program in the world. In view of its potential of MGNREGS to change the rural landscape by generating wage employment for the rural poor and creating assets and infrastructure for the agricultural sector, an attempt has been made in this paper to study the implementation of the scheme in the state of Maharashtra which is one of the leading states of India. The paper studies the implementation of the scheme in the state and analyzes the outcomes of the scheme in terms of extent of employment generation, asset creation and expenditure incurred in Maharashtra. Various constraints of the scheme are also observed. Finally, the paper discusses limitations and potentials of the scheme as well as policy implications. The study is based on secondary data, and is supported by discussions and qualitative data collected from the field by the authors. The analysis shows that MGNREGS has shown potential to introduce positive changes in the village economies, traditionally dependent on subsistence and dry agriculture, provided that adequate work is made available whenever needed. It is observed that the scheme will be sustainable and successful if it leads to creation of durable assets and efficient water resource management thus ultimately increasing productivity of the state agricultural sector.


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