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.