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

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.