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Rural poverty reduction through centrally sponsored schemes.

This paper discusses the evolving profile of poverty in India and reviews the national performance of selected anti-poverty programmes between 1997-1998 and 2005. For each programme, it outlines the budgetary allocation principle used for the States and districts and analyzes budgetary performance over the period. The main objective is to explore the extent to which the anti-poverty programmes are reaching their target groups effectively. Finally, it identifies the specific factors responsible for under-performance and provides a set of recommendations for policy makers and programme implementers which could help improve the outcomes of the schemes.

Key words Anti-poverty programmes--Central government schemes--performance--State contribution


Despite India being one of the ten fastest growing economies of the world, it is home to over a third of the world's poor people. Several features of poverty in India stand out. First, poverty is getting concentrated in the poorer States. In terms of absolute numbers, Uttar Pradesh, Bihar and Jharkhand account for around 27 per cent of the country's population but 30 per cent of India's poor lived there in 1973-1974, which has increased to over 41 per cent by 20051. Second, more than three-fourths of the poor live in rural areas. Third, more than three-fourths of the rural poor depend on agriculture. Agricultural growth will therefore have greatest potential of poverty reduction. Fourth, poverty has many social dimensions. There has been hardly any decline in poverty for the scheduled tribe households, almost half of them continue to be below the poverty line. Although poverty among the scheduled castes has declined from 46 to 38 per cent during 1993-1999 (2), the caste system confines those from lower castes to a limited number of poorly paid, often socially stigmatized occupational niches from which there is little escape, except by migrating to other regions or to towns where their caste identity is less well known. Many states, especially in the north and western part of the Country, are characterized by long-standing and deeply entrenched social inequalities associated with gender. Gender cuts across class, leading to deprivations and vulnerabilities which are not necessarily associated with household income.

And lastly, poverty is intimately connected with vulnerability and shocks. Severe and chronic deprivation in India is compounded by general uncertainty with respect to livelihood and life, which threatens an even wider section of the population than might be counted as poor.

Thus poverty is an extremely complex phenomenon, which manifests itself in a range of overlapping and interwoven economic, political and social deprivations. These include lack of assets, low income levels, hunger, poor health, insecurity, physical and psychological hardship, social exclusion, degradation and discrimination, and political powerlessness and disarticulation. Therefore, policy instruments should be designed to address not only the low income and consumption aspect of poverty, but also the complex social dimensions (3).

Here the aim is to review the national and statewise performance of selected anti-poverty programmes (APP) between 1997/1998 and 2005, and discuss the extent to which the performance of APP since the 9th Plan measures up to the pro-poor objectives which schemes set for themselves. It also provides a set of recommendations for policy makers and programme implementers which could help to improve APP performance. The programmes selected are: Integrated Rural Development Programme (IRDP)/Swarnjayanti Gram Swarozgar Yojna (SGSY); Jawahar Rozgar Yojna (JRY)/Employment Assurance Scheme (EAS)/Sampoorna Grameen Rozgar Yojna (SGRY) and National Food for Work (NFFW); Indira Awas Yojna (IAY); National Social Assistance Programme (NSAP), especially pensions; Drough Prone Area Programme (DPAP), Desert Prone Programme (DPP) and Integrated Wastelands Development Programme (IWDP); Targeted Public Distribution System (TPDS)/Antyodya; and two major tribal welfare schemes--Special Central Assistance (SCA) to Tribal Sub-Plan (TSP) and Grants under 275 (1).

Allocation of funds for schemes

Although the Constitution of India does not mandate any significant role for the central government in poverty alleviation programmes, such schemes have been a part of Government of India's (GoI's) budget right from the early 1970s. These were basically of three types; (i) schemes to promote self-employment; (ii) creating new work opportunities for wage labour; and (iii) the third category focused on backward areas, arid areas, hilly regions, etc., of the country. Since then the names have changed, but objectives have not; and the current schemes in the Ministry such as SGSY, SGRY, National Rural Employment Guarantee Programme (NREGA) and IWDP (including DPAP and DDP) too are serving the three good old aims of promoting self-employment, wage employment and area development respectively. In addition, there are now programmes for providing basic infrastructures for better quality of life in rural areas, such as rural housing, and programmes for social security of the poor and destitute, such as old age pensions.

Of the seven schemes chosen for examination, five are supervised by the Ministry of Rural Development (RD), one by the Ministry of Food and Consumer Affairs, and the last one by the Ministry of Tribal Affairs. The annual allocation for the tribal schemes and NSAP is part of the Additional Central Assistance, which is decided and allocated annually by the Planning Commission, and is released by the Finance Ministry to the State governments. Food allocations are done by the Food Ministry to the States for TPDS on the basis of their share in poverty, and on the directions of other Ministries for welfare schemes [(RD) for SGRY, Human Resource Development (HRD) for Mid-day Meals, etc.]. Allocations for the rest four schemes are decided annually by the RD Ministry, on the basis of its overall annual plan ceiling, as also the five yearly allocation of each scheme indicated by the Planning Commission in the current Five-Year Plan. These funds are transferred by the Ministry direct to the districts, bypassing the State legislatures and the State Finance Departments.

The Plan budget of the RD Ministry was Rs 7,070 crores in 1994-1995, increased to Rs 9,760 crores in 2000-2001, and to Rs 24,480 crores in 2005-2006 (4). The share of this Ministry in the total plan of central Ministries supported by the budget has generally been more than 20 per cent. The increase in the allocation of the RD Ministry over the last 15 years is part of the general strategy of GoI to increase transfers to the States via the central Ministries at the cost of general purpose transfer via the Planning Commission. Within the central Ministries, the social sector schemes receive a higher share now as compared to the previous Plan periods. GoI has thus increased its control over the schemes implemented by the States in three ways, firstly through substantial funding of Centrally Sponsored Schemes (CSS), the budget for which is now more than the Central Plan Assistance as against a norm of 1/6th fixed by National Development Council (NDC); secondly much of it goes straight to the districts, thus bypassing the States and placing district bureaucracy somewhat directly under the supervision of the GoI; and thirdly more than half of Central Assistance even from the Planning Commission is given in the form of Additional Central Assistance (ACA) for specific schemes, which is often not formula based but where the GoI Ministries often have some control over the State allocations and releases (5).

How is State/District share in central releases determined?

Allocation of funds to the States under major rural poverty alleviation programmes have been based on the incidence of poverty estimated by the Planning Commission. However, when the methodology was changed in 1993-1994, it was found that some States were adversely affected. Therefore, an adjustment formula was worked out under which the losses under the new estimates were contained to not more than 15 per cent of their expected entitlement as per the old methodology (6). Second, the share of eight north-eastern States in the total number of poor comes to around 4 per cent, but it was decided to increase their allocation to 10 per cent of the total, by reducing allocation of other States. This has meant that Assam now gets 7.47 per cent share in allocations in SGSY and SGRY, whereas its share in the number of poor in the country is only 3.22 per cent. Transfers for SGSY and SGRY are based on the share of each State in the total number of rural poor. For IAY, share in housing shortage is given 50 per cent weightage (increased to 75% wef 2005-2006), and poverty gets the remaining weightage. The three watershed schemes (DPAP, DDP and IWDP) are demand based. Grants for the tribal schemes are released on the basis of percentage of tribals in that State as a proportion of total tribal population in the country (7).

From out of the State allocation, allocation of funds to the districts is based on an index of backwardness. Two indicators are used for working out the index of backwardness, namely, the proportion of the SC/ST population of the district to the total SC/ST population in the State and the inverse of agricultural production per agricultural worker with equal weightage assigned to each of the two indicators (4). The rural population of the district as weighted by these indicators separately will be the basis of allocation of funds to the districts within the overall allocation of the State. Within the district, while distributing the funds among the village panchayat, 60 per cent weightage is given to the SC/ST population and 40 per cent to the total population of the village panchayat.

Notwithstanding the above provisions, the allocation to the States/Districts for SGRY is subject to the minimum allocation of Rs 25,000/--to each of those village panchayats, which were receiving less than Rs 25,000/--as on 1.4.2001 (increased to Rs 50,000 from 2004-2005). Apart from SGRY, the role of panchayats in other schemes is generally restricted to selection of the beneficiary, whereas actual implementation is done by the block officials.

State contribution

The contribution of the States in CSS was generally 50 per cent in the 1980s, but was reduced to 25 per cent in the 1990s in view of the difficult fiscal situation of the States (6). In fact, some of the schemes started in the current decade are cent per cent funded by GoI, such as the Pradhan Mantri Gram Sadak Yojna (PMGSY) and Rashtriya Sam Vikas Yojana (RSVY). Of the seven schemes under consideration in this paper, the share of the States for the largest scheme, SGRY and NFFWP, comes to roughly 12 per cent, as the food component is given free (it was 5 kg per day per worker, but reduced to 3 kg since September 2005 in view of food Shortages). State share for IRDP was 50 per cent, but was reduced to 25 per cent in 1997-1998. The IWDP was totally' centrally funded up to 2002-2003, but since then the States are asked to contribute 8.33 per cent. The scheme for pensions is again cent per cent centrally funded, but the States are encouraged to contribute, which increases the scale of pension from Rs 75 to Rs 100-250 per month4. Many States do so, as they were already running a State pension scheme before the introduction of the CSS in 1996, but no State contributes to National Family Benefit Scheme (NFBS) or Annapurna. Tribal grants are all entirely centrally funded, whereas for foodgrains BPL consumers have to pay the subsidized rate. The States are responsible for local storage and movement from Food Corporation of India (FCI) go down to fair price shops. Poorer States tend to pass on this responsibility to the shopkeepers, thus encouraging corruption.

Releases & utilization

The 9th Plan (1997-2002) outlay for the Department of Rural Development was Rs 32,870 crores, against which the figures for budget estimate (BE), revised estimate (RE), and actual expenditure were Rs 41015, 40753, and 40435 crores respectively (4). This: however masks inter-scheme and inter-state variation in utilization. It has been not possible to push expenditure in Swarnjayanti Gram Swarozger Yojna (SGSY) and National Social Assistance Programme:(NSAP), whereas other rural development (RD) schemes have no such problem, except in a few States.

The States have been finding it difficult to spend funds for SGSY. In the first two years after 1999, the SGSY took off only in those States where a fair amount of ground work had already been done towards formation of self-help groups, especially in mobilizing rural women under Development of Women and Children in Rural Areas (DWCRA). As a result, Andhra Pradesh, Tamil Nadu and Karnataka showed considerable progress under SGSY even in the initial years. Another reason for poor performance of the scheme is lack of competent non governmental organizations (NGOs) in northern States, where they do not have a strong presence.

NSAP's requirement of funds at 1996 population was assessed at Rs 1373 crore (4). However, this scheme does not have contractors, and hence little pressure is generated at the grassroots to identify beneficiaries and push expenditure. By the time expenditure picked up to a level of Rs 800 crores, GoI decided to transfer the scheme to the States, and lost all interest in the scheme. From CSS it became an (ACA) scheme. Unfortunately its allocation, for want of advocacy, got reduced to only Rs 680 crore annually during 2001-2002 to 2003-2004. Two years back, due to a public interest litigation (PIL) in the Supreme Court where it was alleged that government was under-funding an important safety net scheme, an additional sum of Rs 510 crore was provided in 2004-2005. Thus a total amount of Rs 1,190 crore was provided for NSAP and Annapurna in the revised Annual Plan 2004-2005. However, the total expenditure in 2004-2005 was only 694 crores, which was only 58 of the allocation, though more than what the States spent in the previous two years (540 and 546 crores), but much less the level of expenditure reached in 2000-20001 (Rs 810 crores). Releases by GoI in 2005-2006 further improved to Rs 1190 crores, presumably due to intensive monitoring by the Supreme Court.

The average offtake for Annapurna during the last four years ending 2004-2005 comes to only 1.12 lakh tonnes, which at the rate of 120 kg per annum will suffice for less than 10 lakh people. According to government's own calculation, 13.8 lakh should be the number of potential beneficiaries for Annapurna. Thus the overall coverage of the scheme is less than 75 per cent. (4)

It is interesting that assistance under IAY has increased from 10,000 to Rs 25,000 per house during 1996-2005; whereas pension amount remained unchanged at Rs 75 per month since the inception of the scheme in 1995. (4) This is despite the fact that the overhead expenditure in implementing the pension scheme is least as compared to other schemes, such as SGRY and TPDS. Fortunately GoI increased the pension amount to Rs 200 per month, due to which allocation in 2006-2007 also jumped to Rs 2800 crores.

As regards schemes for tribal areas, the Guidelines stipulate that the releases would be subject to the performance by the State governments and the utilization of previously released funds. However, in actual practice this was never insisted upon, at least up to 2004-2005, and funds were released without waiting for utilization. The Ministry considers itself weak in enforcing fiscal discipline in the States. This has meant that the Ministry of Tribal Affairs is able to report almost 100 per cent utilization of allotted funds, and secondly, there is no diversion of funds from one State to the other. However, there is no guarantee that the States pass on the SCA funds to ITDPs in time, and there are many reports to show mis-utilization.

In other schemes, although overall expenditure is satisfactory some States like Bihar, Jharkhand, West Bengal, and Assam are not able to utilize their total entitlement of central funds. Among the richer States, Punjab and Maharashtra have also sometimes not been able to utilize their full quota of funds. On the other hand, the middle income States such as Andhra Pradesh and Karnataka have generally been quite vigilant in fulfilling the conditions of release and often been getting more than their allocation, as the unutilized funds (and foodgrain quota) of States like Bihar and Jharkhand are passed on to them.

Despite being one of India's poorest State and therefore with the greatest need for development assistance from the Centre, Bihar has perhaps the lowest resource utilization rate for central government's assistance in India. Unused funds from the central government allocation unfortunately lapse and are then transferred to more efficient and vigilant States. The reasons are lack of political and administrative will, lack of capacity to spend and send accounts, lack of staff, insufficient delegation, and archaic procedures.

Assessment of schemes

The Mid-term Appraisal of the 9th Plan had assessed some of the rural development schemes. The IRDP/ SGSY appears suffers from numerous defects including sub-critical investment levels; non-viable projects; lack of technological and institutional capabilities in designing and executing projects utilizing local resources and expertise; illiterate and unskilled beneficiaries with no experience in managing an enterprise; indifferent delivery of credit by banks (high transaction cost, complex procedure, corruption, one-time credit, poor recovery); overcrowding of lending in certain projects such as dairy; poor targeting with a high proportion of the non-poor included; absence of linkage between different components of the SGSY; rising indebtedness; poor access to markets, and the capacity of government and banks to implement the SGSY being outstripped by the increase in its scale (7). A disturbing feature of the SGSY in several States has been the rising indebtedness of its beneficiaries.

Evaluation of the programmes for wage employment also reveals serious weaknesses: inadequate employment and thin spread of resources; widespread use of machines, violation of material-labour (60:40) norms; fudging of muster rolls; and schemes implemented universally through contractors who sometimes hired outside labourers at lower wages. Central norms of earmarking, such as 40 per cent of funds for watershed development and 20 per cent for minor irrigation, have not been followed. Today Rs 60 out of Rs 100 in wage schemes is reserved for wages, but in reality only Rs 10 to Rs 15 actually goes to the labourer, the rest is illegal income for bureaucracy, contractors and politicians (8). With the declaration of an employment guarantee, districts will find it even more difficult to prepare suitable labour intensive projects, and supervise the quality of works and genuineness of payment.

The programme for rural housing, although quite popular because of the large sum involved, has led to a strengthening of dependence of the rural poor on the elite. Given the large number of potential beneficiaries awaiting the allotment of a free house and limited resources a situation has been created wherein the poor are divided among themselves. There is pressure from the local MLAs and MPs to ensure that their followers are prioritized for the allocation of a house. Thus the scheme dis-empowers the poor collectively while providing a small number of them individually with a valuable asset. Instances of corruption to the tune of Rs 5,000 to 8,000 per house (out of Rs 25,000) have also been detected.

As regards the schemes of NSAP, the procedure of registration involves production of several proofs and certificates, which makes it very cumbersome. As a consequence, potential applicants have to undergo substantial transaction costs dealing with the bureaucracy in the application process. However, once the registration formality is completed, the pension holders did receive their entitlement without much harassment. But after 2001-2002, release of funds to the district became erratic, resulting in huge delays and uncertainty. There were complaints that the State Finance Departments did not release funds, though they received it from GoI as ACA. Huge backlogs were reported for NFBS also (9).

The three watershed related schemes--DPAP, DDP and IWDP--should theoretically improve land productivity. Although 27.5 m ha has been treated by the end of the 9th Plan, its overall impact on agricultural production is not visible. Lack of maintenance of structures and inadequate local capacity to deal with issues of common lands are the most important causes for poor sustainabitity. Many successful and sustainable projects run by NGOs show that success is due to the emphasis on social issues, people's mobilization, clear direction to government machinery to accept principles of participatory management, explicit project monitoring and strong sense of ownership by the local community. Therefore, funds should be disbursed only when State and district governments show that they are making progress in adopting more participatory approaches.

With a network of more than 4 lakh Fair Price Shops (FPS) claiming to distribute annually commodities worth more than Rs 15,000 crore to about 16 crore families, the public distribution system (PDS) in India is perhaps the largest distribution network of its type in the World, at least on paper. The percentage offtake of below poverty line (BPL)/Antyodaya Anna Yojana (AAY) foodgrains as percentage of allocation has gradually improved since 2001-2002 from 59.2 to 81.9 per cent in 2004-2005. However, not all States lift their entire quota, Bihar and Jharkhand being the worst defaulters, lifting less than half their allotment. A recent Planning Evaluation Organisation (PEO) study (2005) (10) finds that about 58 per cent of the subsidized foodgrain issued from the Central Pool does not reach the BPL families because of identification errors, non-transparent operation and corrupt practices in the implementation of TPDS. During 2003-2004, it is estimated that of 14.1 million tonnes of BPL quota from the Central Pool, 6.1 million tonnes reached the BPL families while 8 million tonnes did not (10). There are errors of wrong inclusion of ghost cards and non-BPL households; only about 57 per cent of the BPL households are covered by it. As the following Table shows, of the poorest quintile less than half possessed BPL or AAY card, although ideally 75 per cent of them should possess BPI and the rest 25 per cent AAY cards.

As regard schemes for scheduled tribes, the total expenditure of Ministry for Tribal Affairs during the 9tb Plan period was Rs 3387 crores, out of which Rs 2005 and 741 crores were on the SCA to TSP and Grants under 275 (1) respectively (7). SCA is primarily meant for family-oriented income-generation schemes, but non-release of SCA funds on time by the State Finance Departments to the nodal department has been adversely affecting the smooth running of income generating programmes. Moreover, SCA and SGSY have similar objectives, and it amounts to duplication of efforts. Under Article 275(1) of the Constitution, grants from the Consolidated Fund of India are extended annually to various State Governments to raise the level of administration in the Tribal Areas to that of the rest of the State, besides promoting the welfare of the scheduled tribes living therein. Here too delays by the State Finance Departments and lack of monitoring affect implementation. These funds are meant for improving infrastructure, for which there are other schemes too, thus resulting in duplication.

Some general weaknesses

Besides, there are general problems, relating to lack of credible monitoring and impact analysis, and poor capacity among panchayats and district administration. Although the Ministry of Rural Development has always generated a lot of reports on concurrent evaluation, the quality of these reports is poor, and these do not present the correct field picture. There appears to be a great deal of difference in the conclusions drawn by the studies done by the Ministry, when compared with independent assessment by academic organizations or even the Planning Commission. However, lately, the Department of Land Resources has devised a methodology to review and rate States' performance on all watershed projects (4). RD and other Ministries could evolve similar methodology for all programmes, as information on financial expenditure is readily available with them.

As regards panchayats, although some village level panchayat leaders have done commendable work, Panchayati Raj Institutions (PRIs) on the whole have not benefited the people to the extent of funds provided by government. Their record in empowering the excluded people is even more disappointing. There are also administrative and personnel problems, such as shortage of technical staff at the village and block levels.

Today the PRIs hesitate to levy and collect taxes, as they prefer the soft option of receiving grants from GoI. This must be discouraged. The panchayats should levy and collect taxes on their own in order to reduce their dependence on State and central governments. For instance, Tamil Nadu collects land tax through government machinery and then transfers 85 per cent to the panchayats. It will strengthen horizontal accountability of panchayat to their constituents if the entire burden of collection is shifted to the village panchayats, and then receive matching grants from the Centre/States. The formula of transfer should no doubt give weightage to population and poverty, but also to efficiency, so that there is incentive to them for increasing the sources of own revenues of PRIs through own and assigned taxes and increasing their capacity to collect. State grants should be given to them only when the PRIs are able to collect a minimum percentage of the taxes assigned to them.

Is greater allocation for State plans the answer?

Despite problems with central control, it must be admitted that reducing funds for CSS and devolving more resources to the States via the NCA route for State plans may not always improve efficiency, at least in the poorer and badly governed States. There is no guarantee that these States will not use additional funds for recruiting more group C & D staff, or increase non-merit subsidies. In addition to the problems associated with CSS (poor monitoring, too many schemes) which are common to State sector schemes too, releases by the State Finance Departments in many States for their own schemes (as well as for ACA schemes) is highly ad hoc, uncertain, delayed, and subject to personal influences.

Because of low capacity to formulate schemes, as well as lack of-will to help the poor, it may be premature to transfer powers to the panchayats or even States to decide the mix of schemes in their region. In many States contractors' lobby is strong, and they would pressurize the States to increase allocations for such schemes where it is easy to make money. Schemes such as National Old Age Pension Scheme (NOAPS) and Annapurna, where there are no contractors, would suffer. Secondly, the States have not created the necessary knowledge base to formulate policies on crucial issues, such as increasing employment or reducing poverty. Greater autonomy to panchayats to choose the schemes may result in lower priority to health and education, or schemes where benefits are delayed, such as afforestation, or to schemes that benefit the poor, such as pensions. Panchayats also are not keen to annoy the powerful rich farmers, and will not ban the digging of new tubewells although it may benefit a larger number of small farmers who have access to shallow wells. They have generally preferred infrastructure to providing employment as the main goal of SGRY, and thus given a free hand will not give priority to national goal of reducing unemployment. Thus wholesale replacement of CSS by State sector (or by PRIs) is neither desirable nor politically feasible, at least for quite some time to come.

We therefore, have a long way to go before States and districts can have a more effective say in choosing their own mix of poverty alleviation programmes from a basket of Central Schemes. This will need a panchayat structure and district administration that is responsive and inclusive of the poor, besides being technically capable of designing appropriate schemes.

Selection of NGOs

Many poverty alleviation schemes need local participation, where NGOs can help. However, weak monitoring mechanisms in government have prompted proliferation of NGOs set up by social climbers and manipulators who, with little commitment to sustainable development or poverty alleviation, use their extraprofessional 'resources' to obtain projects from government.

How does one ensure that only genuine NGOs with capacity are selected? First, the power to appoint NGOs as partners should be with a district committee in which people with knowledge of that area (including ex-collectors and academics) are members. Second, periodical district-wise studies should be done by government assessing the reputation and capacity of NGOs, so that the fly-by-night operators are kept at bay. Third, important personnel in the project, including public distributors (PDs) and collectors should have long tenure so that they develop personal knowledge about the local NGOs. And, lastly, names and details of NGOs which are being funded by the district administration should be in the district website in order to encourage probity and transparency.

Specific suggestions for re-designing poverty programmes

In SGSY, subsidy should be done away with, but grants should be given to microfinance institutions (MFIs), who have to incur transaction costs in servicing small loans. SGSY should have two components: one to help micro-enterprises, which are not necessarily managed by the poorest, but without any subsidy; the other to assist in receiving group loans from the banks for consumption and other purposes to self help groups (SHGs), specially of poor women.

Wage-employment programmes should not be run in about one-third of India's districts, where wage rate is already high and where unskilled labour comes from other regions. Even in the backward districts it is difficult to find public works on a large scale that are both labour intensive and lead to such durable assets which help the poor, and yet utilize 60 per cent of funds for the labour component. The problem can be overcome if it is not insisted to complete the works in a few months time, and increase the time horizon to 5 to 8 yr, so that not only does one select afforestation and watershed related activities that require earth work and increase land productivity, but also add to poor peoples' incomes through new public and private assets. This will need monitoring not just how many people are employed but whether trees survive, and contour bunds are maintained. Employment then becomes a by-product of a labour intensive economic activity.

Under the Right to Information Act, the list of registered labourers, the muster of all works, payments made, absentees, etc., should be made public; this transparency would cut down on corruption greatly. It should be compulsory to record the electoral card number of the wage workers in the muster-rolls so that their identity can be verified.

IAY should link allotment of houses to those who have endeavoured to form self help groups and/or are taking advantage of other poverty alleviation programmes in the desired manner. In this way, the housing strategy would be an integral part of the strategy of the poverty alleviation. Secondly, one could think of covering selected districts or blocks at a time so as to saturate area. This too would help restrict the fissiparous tendency of dividing the poor within a village/ panchayat.

NOAPS has tremendous potential with least amount of leakages. Computerization can do much to strengthen the automaticity of transfer processes. While the pension amount has been adequately raised to a minimum of Rs 200 a month, the procedure has not been simplified and the monitoring mechanism has not been put in place. In addition to old people, BPL widows and disabled should be included for pensions.

In TPDS, fair price shops should be allotted to such people who are already running a viable shop in that area. This will ensure that the shop remains open on all working days. States should invest in improving local storage and transport of foodgrains. The list of BPL card holders should be updated once in five years, and should be put on the website so that it can be verified independently. All Primitive Tribal Groups, all Mushahar, Chenchus and other SC/ST groups identified by States as extremely vulnerable groups, all migrant labour who engage in manual work, all homeless persons, and all who are released from beggar homes and mental hospitals should compulsorily be declared as AAY families.

It is suggested that GoI should use funds under SCA to TSP and under Article 275(1) to put pressure on the States to resolve the persistent tribal problems of land alienation, involuntary displacement due to development projects and lack of proper rehabilitation, and access to forests, especially to non-timber forest products (NTFPs).

It is well recognized that sustained growth in agriculture, which provides livelihood to 76 per cent of the rural poor, will inevitably lead to poverty reduction. However, except for watershed programmes, other APPs make little impact on raising agricultural production. Therefore, public investment in irrigation, power and roads should be sufficiently stepped up by reducing subsidies on fertilisers, water and power. Canal systems are in poor shape for lack of operations and maintenance outlay. These should be improved by stepping up plan allocations for maintenance, involving users' groups in management, and appropriate pricing of water to cover operation and maintenance costs. In eastern India where there is plenty of groundwater, use of pedal pumps should be popularized.

Summing up

Changing the design of schemes alone is not enough. Greater efforts are needed to build the capacity of administration and improve governance at the district level. The success of targeted poverty schemes in India is dependent upon proper identification of the beneficiaries, transparency, supervision over field staff, and social mobilization. Funds have more than tripled in the last ten years for poorer districts, but neither GoI nor donors have studied whether there is capacity at the district and sub-district level to. absorb the funds and produce quality results. And more than the capacity, one needs to examine if the States have the required will to improve themselves.

Many States in India, especially the poorer ones, have lost the dynamism and capacity to undertake reforms on their own without any external pressure. These States are ruled by people who understand power, patronage, caste, transfers, money, coercion and crime. The language of professionalism, goal orientation, transparency, building up of institutions, and peoples' empowerment is totally alien to them. In these States neither politics nor administration has the capacity for self-correction, and therefore only external pressure can coerce them to take hard decisions that will hit at their money making tactics. In the Indian situation (where foreign donors provide very little aid to the States as compared with what is provided by the Centre) this can come only from the Centre, backed by strong civil society action. The concept of good governance should therefore be translated into a quantifiable annual index on the basis of certain agreed indicators, and central transfers should be linked to such an index. GoI today transfers more than three lakh crore Rupees to the States. Even if ten per cent of this transfer is linked with good governance, States will be incentivised to improve their performance.

Received June 7, 2007


(1.) Himanshu. Recent trends in poverty and inequality: Some preliminary results. Economic and Political Weekly, February 10, 2007.

(2.) Sundaram K, Tendulkar SD. Poverty among social and economic groups in India in 1990s. Economic and Political Weekly December 13, 2003; 38 (50).

(3.) Sen A. Poverty and inequality in India. Economic and Political Weekly September 18-24, 2004; 39 (38).

(4.) Ministry of Rural Development, Government of India, New Delhi. Available from:, accessed on June 1, 2007.

(5.), accessed on June 1, 2007.

(6.) http://planning, accessed on June 1, 2007.

(7.), accessed on June 1, 2007.

(8.) Government of India. Mid term appraisal of the 9th Plan (1997-2002). New Delhi: Planning Commission; 2000. Available from: midch5d.htm and midch3.htm.

(9.), accessed on June 1, 2007.

(10.) Government of India, 2005, Evaluation of the TPDS, PEO. New Delhi: Planning Commission. Available from: http://

(11.) NSS 61st round. New Delhi: Government of India, Ministry of Statistics and Programme Implementation; 2006.

N.C. Saxena

Samya-Centre for Equity Studies, New Delhi, India

Reprint requests: Dr N.C. Saxena, Commissioner of the Supreme Court, Samya-Centre for Equity Studies, Secretariat of the Commissioners, 68, Friends Colony West, New Delhi 110065, India e-mail:
Table. Percentage of households that possess ration cards in

 Any card BPL card APL card AAY card

Poorest 77.3 44.2 28.2 4.9
Q2 81.6 40.5 38.4 2.7
Q3 83.3 40.0 41.6 1.8
Q4 84.9 30.5 52.7 1.7
Richest 87.5 16.8 70.1 0.6

Source: Ref. 11

BPL, below poverty line; APL, above poverty line; AAY, Antyodaya
Anna Yojana
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Author:Saxena, N.C.
Publication:Indian Journal of Medical Research
Date:Oct 1, 2007
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