Is There a Case for the Employment Guarantee Scheme in India? Some Recent Evidence

Overall participation in the Employment Guarantee Scheme (EGS) in Maharashtra (an Indian state) fell sharply over the period 1980-97. Some of this reduction was due to expansion of irrigation facilities leading to expansion of farm employment. Alongside, expansion of non-farm employment led to a further reduction in the demand for the EGS. Although there was a slight rise in participation in subsequent years, it was dampened by a change in the composition of the EGS. Specifically, substitution of community assets (e.g. soil conservation works) by individual assets (e.g. wells) involved fewer workers. The official explanation for the decline in EGS participation in recent years in terms of expansion of farm and non-farm employment opportunities is thus partly valid. In some of the poorer regions (e.g. tribal villages), however, the EGS continues to confer significant transfer and stabilisation benefits during long seasonal slacks. As alternative employment options are few and far between, the dependence on the EGS is unavoidably high for those who are able to participate in it. If the overall participation rates are low, it is partly a consequence of the nature of projects undertaken and low outlays and not so much a result of slackening of demand for the EGS. A case therefore is made for enhanced outlays under the EGS with a substantially higher reallocation in favour of the poorest regions.