On the Targeting and Cost‐Effectiveness of Anti‐Poverty Programmes in Rural India

Abstract

This article is motivated by a concern for the cost-effectiveness of anti-poverty outlays; much of its focus is on the targeting of Rural Public Works (RPW) and the Integrated Rural Development Programme (IRDP) over the period 1987±93. It is argued that benefits to the rural poor of larger outlays on these two major anti-poverty programmes are likely to be limited, given their mistargeting. Large sections of the rural poor were not covered in 1987. Worse, the non-poor were in a majority among the participants. Although the evidence is mixed, there was a worsening of the targeting of both RPW and IRDP, with RPW maintaining a slight superiority, over the period 1987±93. Yet IRDP was more cost-effective in both years, using a somewhat limited measure of cost-effectiveness. Large unspent balances due largely to slow disbursal of allocations and bunching of expenditure in a few months are linked to changes in cost-effectiveness. Wastage and diversion of funds are unavoidable, in a context of corrupt bureaucracy and capture of locally elected bodies such as Panchayats by a few influential persons. Short of drastic changes in the design and implementation of RPW and IRDP, substantially larger outlays may thus accomplish little in terms of poverty alleviation.

The Impact of Microfinance on Decision-Making Agency: Evidence from South India

“…15. Different studies (Gaiha et al, 2001;Ghosh, 1998;IFAD, 1989;Mahajan and Ramola, 1996;World Bank, 1991) have highlighted the considerable mis-targeting of IRDP, the misuse of loans (on average 20 to 40 per cent), the extremely low repayment rates (on average 24 to 40 per cent) as well as the low percentage of beneficiaries (on average 28 to 35 per cent) who have been able to move above the poverty line. 16.…”

“…They pointed out how important group membership was for the effective performance of the productive activity. Under IRDP, there is no assistance or effective supervision over loan use, even though the need for this is explicitly mentioned in the IRDP Guidelines (Gaiha et al, 2001). A considerable proportion of IRDP beneficiaries (42 per cent of men and 60 per cent of women) revealed that they used their loans for consumptive and emergency purposes such as health care expenditures, dowry payment or repayment of earlier debts, while TNWDP beneficiaries had recourse to the group fund, which they considered as a kind of lender of last resort.…”

Social Inequality, Local Leadership and Collective Action: An Empirical Study of Forest Commons

“…Although affirmative actions aimed at promoting equal opportunity may well produce some positive outcomes with regard to re-balancing the unequal participation of lower-and higher-caste households in the decision-making authorities of FUGs, numerous studies suggest that this is generally not necessarily the case. In their study of the cost-effectiveness of anti-poverty outlays such as the Rural Public Works and the Integrated Development Programme in India, for example, Gaiha et al (2001) observed that the targeted interventions of anti-poverty efforts were no different from those of a random selection from the aggregate rural population. They further noted serious targeting failures, implying substantial leakages to the affluent.…”

Decentralization, Democracy and Allocation of Poverty Alleviation Programmes in Rural India

“…This is related to the difference in the nature of these programmes as evidenced in the previous literature. For example, using NSS data in 1987and 1993, Gaiha et al (2001 showed that the large section of members in non-poor households participated in IRDP and RPW, with RPW maintaining a slight superiority in targeting performance, and suggested the possibility of corrupt bureaucracy and capture of locally elected bodies such as Panchayats by a few influential persons for these programmes, particularly for IRDP. Our results suggest in this context that, while self-targeting mechanisms worked to some extent for RPW in which decentralization generally resulted in a wider access of poor households to the programme, the extent of elite capture was greater in the case of IRDP and thus decentralization did not lead to its greater allocation.…”