BackgroundMalnutrition is a major risk factor for mortality in children aged 1–12 months in India. Macroeconomic and social policies are determinants of both health and health inequalities. Therefore, policies targeting poverty and food insecurity might reduce infant malnutrition. The Mahatma Gandhi National Rural Employment Guarantee Act, a wage-for-employment policy of the Indian Government, targets deprivation and food insecurity in rural households. The Act could prevent malnutrition in children by improving household food security or increase the risk of malnutrition by reducing the time devoted to infant care or feeding if mothers are employed. We analysed the effect of household's and mother's participation in the scheme on malnutrition of children aged 1–12 months and studied how this effect occurred. MethodsWe did a quantitative cross-sectional study (single-stage cluster sampling) and qualitative focus group discussions (nested sampling) in Dungarpur district in Rajasthan, India. We randomly selected (with Stata; version 10.1) 44 villages from the five administrative blocks of the district. All households with infants aged 1–12 months (identified with records of the local village nurse and community health worker) in each of these villages were asked to participate in the study. We measured three indicators of malnutrition: underweight, stunting, and wasting (WHO criteria). We used multivariable logistic regression modelling with a hierarchical approach. We analysed focus group discussions to generate themes, and quantified theoretical pathways by path analysis. FindingsWe included 528 households with 1056 participants. Between August, 2010, and September, 2011, 281 households took part in the scheme, and 247 did not. Mothers were employed in 51 (18%) households in the scheme. Prevalence of wasting was 39% (n=206), stunting 24% (n=129), and underweight 50% (n=266). Households in the scheme were less likely to have wasted infants (odds ratio [OR] 0·58, 95% CI 0·38–0·90; p=0·016) and less likely to have underweight infants (OR 0·47, 95% CI 0·30–0·74; p=0·002) than were households not in the scheme. Stunting did not differ significantly between groups (OR 0·79, 95% CI 0·54–1·16; p=0·222). We did 11 focus group discussions with 65 mothers. Although the scheme reduced starvation, it did not provide the amount of benefit claimed by the programme because of lower than standard wages and delayed payments. Participants generally agreed that mother's employment was detrimental to infant care and feeding because of a lack of facilities at worksites for child care and breastfeeding. Results from path analysis did not support existence of an effect through household food security and infant feeding but did suggest a pathway of effect through low birthweight. The probability of being born with low birthweight (<2·5 kg) was lower in participating households than in non-participating households, which reduced the risk of infant malnutrition in the participating households. The probability coefficients of the Act's effect on each indicator were for wasting: indirect path −0·21 (p=0·074), direct path −0·23 (p=0·216), total −0·44 (p=0·016); for underweight: indirect −0·25 (p=0·051), direct −0·43 (p=0·061), total −0·68 (p=0·007); for stunting: indirect −0·06 (p=0·204), direct −0·26 (p=0·065), total −0·32 (p=0·047). Path analysis and logistic regression did not show a significant effect of mother's employment on the outcomes. InterpretationParticipation in the wage-for-employment programme was associated with reduced malnutrition, possibly mediated indirectly by improved birthweight rather than by improved infant feeding. Provision of child-care facilities at worksites could mitigate the negative effects of mother's participation in the scheme. Although the scheme seems to reduce risk of low birthweight, ensuring timely and adequate payment could improve food security, and augment the protective effect of the programme against infant malnutrition. FundingWeidenfeld Scholarship and Leadership programme, University of Oxford.