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Has MGNREGS affected the Farmers Profitability? An Assessment based on Cost of Cultivation Data. Socioeconomics Discussion Paper Series Number 25

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Title Has MGNREGS affected the Farmers Profitability? An Assessment based on Cost of Cultivation Data. Socioeconomics Discussion Paper Series Number 25
 
Creator Narayanamoorthy, A
Bhattarai, M
Suresh, R
 
Subject Agriculture-Farming, Production, Technology, Economics
 
Description It is often argued that the national rural employment guarantee scheme (MGNREGS)
introduced during 2006 has increased the farm wage rate substantially that resulted in sharp
reduction in farmers’ profitability. Is there any substance in this argument? In this paper, we
have done an attempt to specifically study this issue utilizing data series of cost of cultivation
survey data available for different crops published by the Commission for Agricultural Costs
and Prices. Utilizing these cost of cultivation data from 2000-01 to 2010-11, we have
analyzed impacts of MGNREGS on farm profitability. We have included here nine different
crops namely paddy, wheat, sorghum, chick pea, pigeon pea, rapeseed and mustard,
groundnut, sugarcane and cotton for the analysis. As the productivity of crop often
determines its profitability, two states for each crop, one each from the category of high area
with high productivity (HAHP) and another one from high area with low productivity (HALP),
have been considered for the analysis. The results of the study have not completely
supported the argument that the profitability of crops has declined after the introduction of
MGNREGS in 2006. This is not only true with HAHP states but also with HALP states.
However, this study showed that the real cost incurred on account of human labor has
increased considerably in eight out of nine crops in both HAHP and HALP states after the
introduction of MGNREGS (2006-07 to 2010-11). But, the increase in labor cost has not
made any deleterious impact on the profitability. The profitability calculated by deducting the
value of output from cost C2 has increased in eight out of nine crops in HAHP states,
whereas the profitability has either increased or the losses reduced in all nine crops in HALP
states. Not only the average profit of most crops has increased but the number of years
profit realized by the farmers has also increased in most crops during the post-MGNREGS
period as compared to pre-MGNREGS period (2000-01 to 2005-06). While there is no
distinct pattern emerging in profitability between food grain and non-food grain crops, the
level of increase in profitability is found to be relatively better among the non-food grain
crops after the introduction of MGNRGES. Increased productivity in most crops considered
for the analysis has one way, or the other, helped to negate the increase in human labor cost
and facilitated to increase the profitability.
 
Publisher ICRISAT
 
Date 2014
 
Type Socioeconomics Discussion Paper Series
NonPeerReviewed
 
Format application/pdf
 
Language en
 
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Identifier http://oar.icrisat.org/8345/1/ISEDPS_25_2014.pdf
Narayanamoorthy, A and Bhattarai, M and Suresh, R (2014) Has MGNREGS affected the Farmers Profitability? An Assessment based on Cost of Cultivation Data. Socioeconomics Discussion Paper Series Number 25. [Socioeconomics Discussion Paper Series]