The Ripple Effect of MNREGA on Private Firms
Featuring Shashwat Alok and Prasanna Tantri
Although MNREGA is the world’s largest workfare programme, a study finds it harms India’s organised employment sector.
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Shashwat Alok
Associate Professor of Finance. His work explores how laws, government policies, and institutions influence the financial behaviour of firms and individuals, especially in emerging markets. His recent work focuses on how fintech and alternative data can support financial inclusion, and how climate change affects firms and capital allocation.
Prasanna Tantri
Associate Professor of Finance and the Executive Director at ISB’s Centre for Analytical Finance (CAF). His research focuses on banking, financial inclusion, financial contagion, regulation, and the intersection of politics and finance.
Key Takeaways
- MNREGA caused a 10% reduction in the permanent workforce within manufacturing firms.
- Firms responded to the labour-supply shortage by turning to increased mechanisation.
- This shift raised production costs, resulting in a decline in both net profits and productivity.