Abstract

It is argued that the national rural employment guarantee scheme introduced during 2006 has increased the farm wage rate substantially by artificially increasing demand for labour. This seems to have resulted in sharp reduction in farm profitability. Is there any substance in this argument? Chapter 6 delves into this issue deeply utilizing cost of cultivation survey data from different states and different crops consisting of both low and high value crops. The chapter also narrates why the impact of MGNRGES on farm profitability cannot be the same for all crops and all states with empirical evidence. With an analysis of operation-wise cost of cultivation, this chapter also attempts to bring out the variation in its impact between high productivity states and low productivity states.

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