This paper addresses two broad questions related to poverty alleviation in India: (1) how much in aggregate does the government spend on poverty targeted programmes? and, (2) how effective have these programs been in targeting the poor and in alleviating poverty?
In intensely poor countries with pervasive poverty, it is arguably legitimate to characterise a vast spectrum if not virtually most government intervention as poverty reducing. These can include in principle investments in social and human capital, physical infrastructure, or even regulatory reforms to enhance economic growth. A focus on more direct poverty alleviation reveals a slew of programs and interventions that may be characterized as “activity targeted” interventions, relying on broadly defined targets. These typically include government expenditures on social sectors such as health and education, particularly primary education and basic health services. A deeper focus goes on to look at government interventions that, within the broad spectrum of activities to reduce poverty, explicitly seek to target the poor, and particularly the poorest of the poor, for impact.
Since most poverty targeted programs in India are sponsored by the central government but implemented by state governments and lower levels of government at district level and below, the paper provides a brief review of the federal fiscal architecture of the economy. This is done along with an overview of poverty targeted programs in the country. Subsequently, a brief discussion of targeting mechanisms is provided, including “Administrative Identification” as implemented in India. The selected poverty targeted programs are also reviewed, followed by a discussion of emerging issues and lessons to be learnt.
Some of the findings, administrative constraints and lessons learned include:
- targeted poverty schemes in India broadly rely on Administrative Identification (AI), undertaken for providing food security to the population broadly and to the vulnerable poor in particular. Secondary targeting – using indicators such as social category, gender or geographical location – are used but in conjunction with AI
- food-for-work schemes have used targeting based on self-selection, which in principle should lead to absence of either type of targeting errors. However, independent of the targeting mechanism used, there have been problems with leakage of benefits to ineligible recipients and exclusion of targeted beneficiaries
- the core underlying problems generating this outcome are corruption and poor governance of schemes. Gross violations of prescribed norms and guidelines of implementation are common, resulting in use of intermediaries, falsification of records, and provision of false information from the ground level up
- delegation of implementation to officials at local government level should lead to greater ownership of the programs but often contributes to the problem of corruption and governance