The Indian National Rural Employment Guarantee Act: Will it reduce poverty and boost the economy?

This paper reviews early experience with a major new public works programme in India, the National Rural Employment Guarantee Act (NREGA) passed by the Indian parliament in September 2005. The act built on a previous initiative in one Indian state — the Maharashtra Rural Employment Guarantee Programme1 — to ensure that a minimum amount of paid work would be available to those in rural areas who need it. As an act of parliament, it confers statutory rights — unlike a project, which could be prone to short-term changes. In specified districts (now more than half of the districts in the country), NREGA offers up to 100 days of employment per rural household per year on public works, at the prevailing minimum unskilled wage rate. The aim of the act is to boost the rural economy and enhance overall economic growth.