Net Transfer Benefit under National Rural Employment Guarantee Scheme

This paper explores the important but relatively neglected issue of real income transfers, net of the
opportunity cost of time, under India’s National Rural Employment Guarantee Scheme. We use
representative household level primary data for three states, Rajasthan, Andhra Pradesh and
Maharashtra to depict various individual and social characteristics of the population in these states as
well as those of the participants in the NREGS. We also model the stochastic dominance comparisons
of the log of per capita monthly expenditures of participants with and without alternative employment
opportunities in the absence of NREG as well as the determinants of such opportunities. As an
approximate measure of the net transfer benefits under NREGS, we consider shares of NREG
earnings net of the opportunity cost of time in household income net of NREG earnings net of the
opportunity cost of time. The distribution of such net transfers across household characteristics as
well as the distribution of benefits across villages in the three states are also discussed. In general net
transfers under the NREGS are quite modest.