Farm Mechanisation, MGNREGS and Labour Supply Nexus: A State-Wise Panel Data Analysis on Paddy and Wheat Crop

Abstract

An attempt has been made in this study to find out the relationship among the farm mechanisation, Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), labour supply and other factors mainly using state-wise data pertaining to paddy and wheat crops covering the period from 2000-01 to 2010-11. To measure the regression of various growth factors including MGNREGS on the use of farm machineries, regressions is computed using panel data with fixed effects models. The descriptive analysis of the study shows that the machine labour cost in real value (which is used as a proxy variable to reflect the level of farm mechanisation) incurred for cultivating both paddy and wheat has increased considerably during post MGNREGS period in almost all the states selected for the analysis. The machine labour cost incurred for cultivating paddy has increased substantially in states like Andhra Pradesh, Tamil Nadu, Karnataka and Madhya Pradesh after the implementation of MGNREGS, while the same increase was found very high in Madhya Pradesh, Himachal Pradesh, Uttar Pradesh and Punjab in wheat cultivation. In most states where the machine labour cost has increased substantially, the use of human labour in man-hours has declined sharply in both paddy and wheat, confirming the fact that farm machineries are used to substitute the human labour especially after implementing MGNREGS. The regression results computed using panel data suggest that the factors determining the use of farm machineries is not the same between the two major crops selected for the study. Besides MGNREGS dummy, the factors such as coverage of irrigation, yield enhancing inputs cost, land-labour ratio and human labour use in man-hours have significantly influenced the use of machine labour in paddy cultivation. But, in the case of wheat crop, irrigation coverage and land-labour ratio has not significantly influenced the use of machineries. The MGNREGS dummy used to capture its impact on farm mechanisation has turned out to be positive and significant in both paddy and wheat cultivation suggesting that the level of farm mechanisation has increased after its implementation of national rural employment guarantee scheme.