Impact of MGNREGA on Rural Credit Structure in Andhra Pradesh state of India: Household Level Panel Data Analysis from 2006-2012, Socioeconomics Discussion Paper Series 28

Bhattarai, M and Padmaja, P and Bantilan, C (2014) Impact of MGNREGA on Rural Credit Structure in Andhra Pradesh state of India: Household Level Panel Data Analysis from 2006-2012, Socioeconomics Discussion Paper Series 28. [Socioeconomics Discussion Paper Series]

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Abstract

With expenditure of USD8 billion per annum, the Mahatma Gandhi National Rural Employment Guarantee Schemes (MGNREGS) of India is one of the largest Social Safety Nets (SSN) programs in the developing world. The program aims to improve rural livelihood in India by reducing overall vulnerability and distress of rural poor. The nature and degree of implementation of the program vary across the Indian states (provinces); Andhra Pradesh is one of the states which has received/spent largest national level MGNREGS funding. Using panel data sets out of ICRISAT targeted four villages (and 227 households) in Andhra Pradesh state for the last 5 years (2007-11), we quantified the impact on the program on credit and debt structure the rural households, using quasi- experimental design such as difference-in-difference method of impact assessment. Extending the regression model, we evaluated factors determinant of the level of debt and its structure by using 5 years of panel household data by the Tobit model with random effects. The debt of the program participant households in the selected four villages of Andhra Pradesh, over the last 5 years, has declined by Rs. 8,000 (USD200) per annum, while the debt of non-participants of NREGS increased. About 90% of this reduction was on credit from non-institutional sources with high interest charge of over 40% per annum. The results also suggest that, over the 5 years period, the rural debt has been reduced significantly for lower caste households, with education, and small-holdings than their counterpart rural households. Likewise, overall debt to asset ratio (debt burden) has significantly reduced among the NREGS participating household (often poor households). Considering the high interest rate (often 40% per annum) for informal sector credits, the 50% reduction on debt-to-asset ratio of the program participant households is shown to provide significant social safety net benefits to the rural poor in the study area. The paper concludes with policy recommendations for effective targeting of the program and particularly the social safety net benefits to the poor households in the study area of Andhra Pradesh, India.

Item Type: Socioeconomics Discussion Paper Series
Divisions: RP-Market Institutions and Policies
CRPS: CGIAR Research Program on Policies, Institutions, and Markets
Series Name: Socioeconomics Discussion Paper Series 28
Uncontrolled Keywords: Social Safety Nets, Rural Credit and debt structures, Employment Guarantee, Schemes, MGNREGS, Household Panel data¸ Andhra Pradesh, India
Subjects: Others > Agriculture-Farming, Production, Technology, Economics
Depositing User: Mr B K Murthy
Date Deposited: 15 Dec 2014 08:07
Last Modified: 23 Apr 2015 08:49
URI: http://oar.icrisat.org/id/eprint/8407
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