The National Rural Employment Guarantee Scheme in Rajasthan : Rationed Funds and their Allocation across Villages

The performance of the National Rural Employment Guarantee Scheme (NREGS) in Rajasthan has been a matter of debate, both for its stupendous performance in the initial years of the scheme, but also for the relative sharp decline after 2010. Using a large primary survey collected from a representative sample across districts, this paper shows that the decline in performance of NREGS in Rajasthan is not entirely due to the lack of demand. Instead, the supply-driven, top-down nature of the programme has led to a ‘discouraged worker' syndrome, with workers showing disinterest in demanding work and passively waiting for availability of NREGS work. In this context, we show the role of elected representatives in allocating work to households. We find evidence of the significant influence of Sarpanches in deciding work allocation across villages. Using a sample of 328 villages in 75 multi-village Panchayats, we find evidence of rationing in favour of the village where the Sarpanch resides. Strengthening the demand-based nature of NREGS may reduce the need for rationing. Our results also suggest that a simple temporal tracking of NREGS outcomes at the village level, along with proper recording of demand through the MIS (management information system), may help detect discrimination within Panchayats