Has Profitability of Foodgrain Production Declined After Implementation of MGNREGS in India?

Narayanamoorthy, A and Bhattarai, M and Suresh, R (2018) Has Profitability of Foodgrain Production Declined After Implementation of MGNREGS in India? In: Employment Guarantee Programme and Dynamics of Rural Transformation in India: Challenges and Opportunities. India Studies in Business and Economics (ISBE) . Springer, Singapore, pp. 131-152. ISBN 978-981-10-6262-9

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Whether national rural employment guarantee scheme (MGNREGS) introduced during 2006 has increased the farm wage rate substantially to the point that has reduced farm profitability due to the programme. This is still an unsettled issue in the literature. Hence, in this paper, an attempt has been made to analyse these issues utilising cost of cultivation survey data published by the Commission for Agricultural Costs and Prices. With the data of different states from 2000–01 to 2010–11, the study has covered five different foodgrain crops namely paddy, wheat, jowar, bengal gram (channa) and pigeon peas (red gram) for the analysis. The study does not seem to support the argument that the profitability of foodgrain crops has declined after the introduction of MGNREGS. This is not only true with high area with high productivity (HAHP) states but also with high area with low productivity (HALP) states. However, this study shows that the real cost incurred on account of human labour has increased considerably in all five crops in both High and low productivity states during the MGNREGS period (2006–07 to 2010–11) as compared to preceding years. In fact, real profitability even after subtracting the cost of imputed value of family labour cost used in the cultivation of the crops (cost C2) has either increased or the losses incurred reduced in all five crops in both HAHP and HALP states. The number of years profit realised by the farmers has also increased in most crops during post-MGNREGS period as compared to pre-MGNREGS period (2000–01 to 2005–06). Increased productivity of most of these crops also might have helped to increase the profitability of farmers across the country, even taking account increase in human labour cost during the same period.

Item Type: Book Section
Divisions: Research Program : Innovation Systems for the Drylands (ISD)
CRP: CGIAR Research Program on Policies, Institutions, and Markets (PIM)
Series Name: India Studies in Business and Economics (ISBE)
Uncontrolled Keywords: Cost of cultivation, Farm profitability, Indian agriculture, MGNREGS, Productivity of crops, Poverty reduction through employment generation, Rural labor markets, Rural livelihoods, India, Mahatma Gandhi National Rural Employment Guarantee Act, MGNREGA, Employment Guarantees Program, National rural employment guarantee scheme
Subjects: Others > Food Production
Others > MGNREGA
Others > Agriculture-Farming, Production, Technology, Economics
Others > Indian Agriculture
Others > India
Others > Agricultural Economics
Depositing User: Mr Ramesh K
Date Deposited: 04 Jul 2018 05:10
Last Modified: 03 Sep 2018 08:16
URI: http://oar.icrisat.org/id/eprint/10783
Acknowledgement: This paper is part of a project on ‘Impacts of MGNREGA on Food Security and Rural Livelihoods in Selected States of India’, funded by CGIAR Research Programme on Policies Institutions and Market (CRP-PIM) and implemented by ICRISAT, Hyderabad (India) with several partners in India, including Alagappa University, Tamil Nadu. This is a revised version of the paper which authors had earlier published as a Discussion Series Paper Number 25 titled as ‘Has MGNREGS Affected the Farmers Profitability? An Assessment based on Cost of Cultivation Data’, under the Research Programme on Policies, Institutions and Markets of International Crops Research Institute for the Semi-Arid Tropics (ICRISAT). The authors acknowledge ICRISAT and CRP-PIM for providing funding support for this study. The authors are also thankful to N. Gayadhri Devi and Susanto Kumar Beero for their research assistance in completing this paper.
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