Economic Impact of MGNREGS Works in north Karnataka


Sheetal Bharat, Pleasa Serin Abraham and Rajesh Balarama


BASE University Working Paper Series: 16/2022


Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) works carried out in Honnakiranagi village in Kalburgi district of North Karnataka are evaluated in this paper for their economic impact on the participants. A preliminary survey on about a third of the households’ expenditures suggest that the MGNREGS works had a significant impact on their incomes as well as quality of consumption. It was found that if a household works an extra day under MGNREGS, they are likely to spend over 40 per cent of their additional income on grains, about 6 per cent on milk, over 9 per cent on sugar, over 15 per cent on reading and writing paraphernalia, all other factors being held constant. However, participation in the scheme do not seem to help the families move upwardly in terms of ownership of more durable assets, indicating that the scheme is broadly servicing the demand for necessary goods, not beyond. These findings confirm the Engel law which states that the lowest income families spend large shares of their incomes on necessaries. The scheme is adequately performing its intended role of enhancing household budgets for those who most need such an enhancement.

Keywords: MGNREGS; economic impact; consumption expenditure; Karnataka

JEL Classification: D04, D12, I38, J08, J29, O12, O20