Impact of Mahatma Gandhi National Rural Employment Guarantee Act on Rural Credit System in India: A Standard Logit Difference in Difference Approach

AbstractThe Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) of India is one of the most extensive social safety nets programs in the developing world. The initiative attempts to enhance rural livelihoods in India by lowering rural poor vulnerability and misery. The program ’s nature and extent of execution vary from state to state. Using panel data sets from the Indian Human Development Survey (IHDS), which covering India for two waves, 2004–05 and 2011–12. We used a quasi-experimental approach, such as the difference-in-difference technique of effect evaluation , to quantify the program’s influence on rural families’ credit and debt structures. The empirical analysis shows evidence of changing the behavior of taking loans from formal sources among non-poor households actively participating in the MGNREGA program. But the difference-in-difference result s shows that among poor households participating in the MGNREGA scheme, the tendency to depend on formal sources to take loans is still insignificant. That means informal lending sources are still more prevalent among poor people. This tendency has not changed even after the initiation of this progr am. The article finishes with policy recommendations for successfully targeting the program, notably the social safety net benefits to disadvantaged households in India.
Source: Global Social Welfare - Category: International Medicine & Public Health Source Type: research