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How can efficiency of a welfare scheme be measured? The purpose of this paper is to develop an efficiency evaluation model, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) implementation efficiency model (MIEM), to evaluate the rural employment guarantee scheme in India.

MIEM employs data envelopment analysis (DEA) to compare relative efficiency of MGNREGA implementing states. It uses policy implementation process as a central “black-box” about which not much can be said, to account for state-wise implementation differences.

Based on administration, funds, expenditure, employment created, works executed and completed, women beneficiaries and households completing 100 days of employment, the MIEM captures current implementation efficiency and provides suggestions to propel inefficient states toward efficiency.

DEA has operationalized MGNREGA evaluation. As a decision support system, MIEM assists evaluators to develop guidelines from better performing states. It is anticipated that it will facilitate scaling up MGNREGA in inefficient states.

The model developed here can be applied to diverse evaluation conditions thus leading to better utilization of scarce resources.

This paper is one of few to use DEA to evaluate MGNREGA, and is one of the first to evaluate all India implementing states on efficiency.