MGNREGA was set in motion to enhance livelihood security in rural areas by providing at least 100 days of guaranteed wage employment in a financial year, to every rural household whose adult members volunteer to do unskilled manual work. The objective of the study is to assess the impact of MGNREGA on income generation and consumption expenditure of selected households. Multi-stage random sampling is used to draw the 100 households of Sangrah and Rajgarh blocks of Sirmaur district in Himachal Pradesh. Simple tabular analysis, paired t-test, multiple linear regression, and marginal propensity to consume are used for the analysis. Results reveal that the scheme has significantly impacted the income generation and consumption expenditure of the households. There is a significant hike in the agriculture and livestock income, whereas, from other sectors like labour and business, income has declined after the enactment of the scheme. It is observed that an increase in non-food consumption is more than the food consumption, meaning when the income of beneficiaries rises the proportion of income spent on food falls, even the absolute expenditure rises. Marginal propensity to consume is found 0.66 i.e. with an increase in a unit of disposable income, a household is spending approximately 66 per cent. For an overall income leap, assets creation should become one of the prime concerns rather than prioritizing the direct ways to increase the income of beneficiaries.

Keyword: Engel’s Law; Marginal propensity to consume.