PROJECT-PROFILE

“CURRENT POVERTY
ALLEVIATION SCHEMES ”

Submitted to- Submitted by-

Mr. Rasheed CA Saiful Islam
Assistant Professor B.A.LL.B(Self Financed)
JMI IVSemester
 ACKNOWLEDGEMENT

First and foremost, I would like to thank our subject teacher Mr. Rasheed CA, for the valuable
guidance and advice. He inspired us greatly to work on this interesting assignment. His

willingness to motivate us contributed tremendously to our assignment. I also would like to

thank him for showing us some sample assignments on how to go about the research assignment.

It gave me an opportunity to analyze and learn about the operation of various Articles of

Constitution of India relating to the topic. Besides, I would like to thank the Faculty staff for

providing us with a good environment and facilities for completing this assignment. In addition, I

would also like to thank my seniors who provided me with the valuable information acting as a

source of guidance in making the assignment. Finally, an honorable mention goes to my family

and friends for their understandings and supports in completing this assignment. Without the

help of the particulars mentioned above, making of this assignment would not have been

possible.

THANK YOU!
 SYNOPSIS
Integrated Rural Development Programme
(IRDP) ·
IRDP and political compulsions ·
Impact assessment of jawahar rozgar yojna
(JRY) ·
Rationale for rural works programme ·
Results based on state governments’ reports ·
Main Findings of the Concurrent Evaluation:
· Field inspections ·
Problems in monitoring
Current Poverty Alleviation Schemes
A Quick Assessment Integrated Rural Development Programme (IRDP)

The Integrated Rural Development Programme is one of the largest micro-enterprise

programmes in the world, having reached about 50 million borrowers since its inception in 1979.
It seeks to raise the incomes of poor beneficiaries to a level above the poverty line by requiring
the banks to extend loans to them for the purchase of assets, and by subsidizing 25 to 50 percent
of the cost of the assets. It is a centrally sponsored scheme being implemented on a 50:50 basis
by the centre and the states. By the end of 1994, the total cumulative outlay had grown to Rs 132
billion in credit and Rs 82 billion in subsidy (Copestake, James G. 1996, The Resilience of
IRDP: Reform and Perpetuation of an Indian Myth, Development Policy Review, 14, 51-68).
However, a government evaluation showed that only 15% beneficiaries could cross the poverty
line. In a study Osmani found that 24% of assets did not generate any income and another 50%
of the assets did not make any contribution to net disposable income. The scope of poverty
reduction through IRDP is limited both by the debt-capacity of the poor and by the high cost of
appraising, monitoring and enforcing small loan agreements. The first limitation is in theory
offset by subsidy, but it attracts rich borrowers to the scheme, and thus creates political and
administrative problems. The subsidy element has led to large scale corruption on the part of
lower level functionaries who certify beneficiaries as being below the poverty line. It has also led
to corruption on the part of bank staff, and on the part of borrowers themselves, some of who sell
off their assets and pocket the subsidy, or who borrow by proxy for non-target group borrowers.
Large numbers of milch animals are often bought for beneficiaries at the same time in cattle
fairs, pushing up their price. The difference in the price and quality of financed assets over their
market price, along with the costs of time, out-of-pocket expenses, and payments to middlemen
is estimated to raise the transactions costs to the borrower by an estimated 20 percent (Mahajan
and Ramola 1995), so that although the interest rate on bank loans under the programme is 12
percent, the effective interest is between 30 and 35 percent entirely nullifying the benefits of the
average subsidy amount of one-third. There are in addition huge transactions costs in terms of
bank and government staff time. While the administrative problems associated with the target
group approach to eradication of poverty are well known (such as frequent transfer of key
officials, inadequate assessment of the ability of beneficiaries to utilise programme service,
carelessness in identifying the beneficiaries, corruption), problems relating to strategy and the
very design of programmes are hardly questioned. Often the very conditions for the success of
these programmes such as vertical and horizontal linkages, and adequate technological and
institutional capability are absent. There is also lack of coordination with other concerned
departments. For instance, the programmes for poverty alleviation have not been sufficiently
integrated and oriented to the development of infrastructure (drainage, soil conservation and
afforestation) for increasing agricultural productivity. The programmes are also weakly
integrated with plans for area development and do not lead to sustained increase in employment,
and the assets created exclusively for the benefit of the poor in JRY are few. It is well established
that unless credit is accompanied with adequate infrastructural support by way of extension,
marketing, etc. the result is infructuous lending (ML Dantwala Dilemmas of Growth: The Indian
Experience, Sage 1996). There is hardly any planning done at the district level to ensure long
term viability of the programmes. This is compounded because of the state government's
unwillingness to delegate financial and administrative powers, and the sectoral departments
refusing to accept dilution of their authority. The failure by the poor to use assets profitably
stems from several factors, of which control over markets is an important factor. The poor are
not able to secure economies of scale because of indivisiblities in marketing costs and in
insurance opportunities. Low price received by poor for their products is also because of
interlocked output and capital markets, lack of value addition technologies, poor organisational
base and insensitive government policies. These problems need to be attacked by the same
agency, which is not possible in government system. Whereas NGOs could take initiative in
some of these sectors, they cannot change exploitative government policies. Most poor people
operate in very limited segments of highly segmented product and labour markets, and therefore
demand for their products gets saturated fast. There was an implicit assumption that the poor
loanee possessed information and skills to choose viable options, had access to raw material
supplies, and were able to overcome the structures of exploitation which made them poor in the
first place. The programme had better success in better regions from infrastructural point of view
and for economically better-off people. For the rest, linkages with other departments were too
strong to be ignored, and better results would have resulted if holistic view of poverty was taken.
Thus the IRDP programme should have taken into account other disabilities from which the poor
suffer; their exclusion from community decision making and markets for labour and
commodities. On the whole, the basic concept of IRDP remains flawed. The massive amount
spent on subsidies which has by and large not accrued to beneficiaries at all would be much
better spent on agriculture, rural infrastructure and social security. Growth in the first two of
these are essential concomitants of credit, and the third an alternative to credit for those who for
reasons of old age or disability have few if any productive microenterprise opportunities (Ghate
1996). Second, IRDP suffers from the basic misconception that the provision of credit is a one-
time event rather than a continuing relationship between lender and borrower. It is unrealistic to
expect the larger share of borrowers to "graduate" just on the basis of an "injection" of credit (the
medical terminology is significant), even if provided in sufficient "doses" (which was until now
not usually not the case). Third, there is still an under-emphasis on activities which require no
fixed assets at all such as a large number of trading, service and even simple processing
activities. Thus the mix of activities in India is very different from other large micro-enterprise
programmes in Bangladesh, the Philippines and Nepal for instance, which finance a much larger
component of petty trading and service activities suitable to the poorest of the poor. While these
activities are no doubt overcrowded, their discouragement in India (due to a preoccupation with
asset formation) has restricted the type of livelihood activities that can be financed, and has led
to overcrowding in those which are financed (milch animals for instance). Instead of responding
to a demand-led pattern of lending opportunities, banks are still restricted to a list (albeit an
expanding one) of "approved" activities. In practice the range of activities for which loans were
available was quite narrow. On the demand side, certain profitable enterprises were quickly
saturated because of too many loans for single professions and their profitability declined. Dreze
found that in U.P. a bank gave 20 loans for setting up shops in a village of 143 households.
Fourth, IRDP totally neglects savings, on the mistaken belief that the poor cannot save at all. The
distinction made by banks between the acceptable use of credit for productive purposes and its
unacceptable use in consumption is an artificial one in the context of poverty. About two thirds
of the borrowing of the poor in India is for consumption purposes (all of it from the informal
sector) of which three quarters is for illnesses and household needs in the lean season. (Mahajan
and Ramola 1995). In the absence of any system for encouraging even minuscule but regular
savings a great deal of IRDP credit gets diverted to emergency consumption needs. Fifth, one of
major lacunaes in IRDP is the total absence of "social intermediation". This is the process under
which poor borrowers are encouraged to organize themselves into groups and given awareness
training in the importance of regular savings and credit discipline in an attempt to build up
mutual support systems and peer group pressure and to instil in them a greater sense of self-
confidence. In large programmes in other countries this function is conducted by the bank itself
(e.g. Grameen Bank, as indeed it is in India by the cooperative banks set up by SEWA and
WWF), and by intermediating NGOs, as in the Philippines and in Nepal. In India the self-help
groups (SHG) movement is seeking to provide social intermediation through the Women’s
Development Corporations, but is still small compared to IRDP. To sum up, although some poor
have made moderate gains, not more than one in five have succeeded in crossing the poverty line
as a direct result of IRDP. Although 5 million cattle were distributed during the sixth Plan
period, it did not get reflected in the figures of cattle census. Little attention has been paid to the
main issue in cattle distribution programme: lack of adequate protection for cattle from
inclement weather, poor access to grazing lands and veterinary services. These problems can be
reduced by group lending which will raise debt-capacity and reduce transaction costs.
Intermediation by voluntary agencies may also help. Shifting of influence from local officials to
panchayat bodies may improve targeting provided there are strong grass root organisations, but it
may have opposite effect elsewhere. Despite attempts to increase public participation in the
identification of beneficiaries, IRDP remains a highly bureaucratic programme whose benefits
could be achieved far more cost-effectively by reforming the regular credit delivery system on
the one hand, and strengthening credit reception systems through the SHG movement on the
other. IRDP and political compulsions The scale of programme has outstripped the capacity of
government and banks to implement it. The administrative machinery to monitor local physical
investment opportunities against which credit disbursement targets can be fixed simply does not
exist. There is consequently over-investment and recycling of dairy animals. Appraisal can be
improved by a transfer of power over local disbursement from government and politicians to
local banks. However, in the last decade the reverse has happened. Inadequate appraisal and
political interference contribute to poor recovery performance and high rates of default. The
repayment rate has been around 30 to 40 percent, severely affecting the profitability of rural
banking in India. Occasional loan melas, lack of active support from state governments for
recovery of loans, and loan waiver schemes give rise to a feeling that these loans were
government largesse and were not to be repaid. Sound banking practices were replaced by
political considerations. The continuation of IRDP can best be explained by the political need to
perpetuate a myth about bureaucratic capability to reduce mass poverty. For politicians at both
local and national levels, the IRDP is an opportunity for making political capital out of the
patronage potential inherent in subsidised credit delivery. Because of the distortion of objectives,
lending policy under IRDP tends to be driven by the availability of subsidised funds rather than
by the effective demand for credit. Indicators for monitoring are target and not achievement
based. Thus retention and profitability of assets purchased are never monitored. There is a wedge
between the long term poverty alleviation goals and its immediate transfer function. IRDP helps
in preserving a certain mai-baap attitude towards the State; it is at best a political sedative. A
substantial reduction in total disbursement and making it more demand driven will make it
politically unacceptable. Till then it remains a myth; of a benevolent State deeply committed to
poverty reduction.

Impact assessment of jawahar rozgar yojna (JRY)

Comprehensive and reliable data about unemployment or its structure is not available. The data
available from various rounds of the NSS shows that in 1987-88 there were 4.3 % people who
were totally unemployed in the rural areas and 8.7 % people were under-employed. The quantum
of under employment in terms of man years has been computed to be equivalent to 13.6 million
man-years.

Rationale for rural works programme

The NSS rates of under-employment appear to be under estimates. This data does not take into
account the phenomenon of work stretching which occurs when too much free time is available
during the slack agricultural season. Thus the whole family may do a certain quantum of work in
three days which would actually require only one day for a person, if he had some other
productive work. Measurement of employment without prescribing standard work norm is quite
hazardous. Secondly, withdrawals from labour force of those who are usually/currently in the
labour force during daily or weekly count are not always voluntary due to lack of perception of
employment opportunities. Therefore such days should be counted as unemployment. Thirdly,
rural housewives may report domestic work as their usual activity and are also helping in the
fields but their number is not included fully in the labour force, thus depressing unemployment.
The impact of these factors would certainly increase the figures for unemployment and under-
employment in the agricultural sector. Certain characteristics of unemployment are by now well
known. Unemployment and demand for jobs is highly dispersed not only regionally but it is also
fragmented in terms of timings and duration. Then, unemployment in the rural areas is markedly
higher among the casual labourers as compared to the self employed. This is why there is a
positive corelation between State level unemployment rates and the proportion of agricultural
labour in the labour force of that State. States like Kerala, West Bengal and Tamil Nadu which
have a higher proportion of landless labourers report much higher rate of unemployment. This is
perhaps the most disturbing feature of the unemployment situation as in the years to come the
percentage of agricultural labourers in total labour force is bound to grow because of
displacement from land. Therefore highest priority should be given to creating employment
opportunities for the agricultural labourers, more than half of whom belong to the scheduled
castes and tribes. It also follows that creating off-farm employment opportunities during the
slack season in agriculture will mostly attract the landless people and thus will not adversely
affect agricultural operations. Although labour absorption in agriculture is likely to increase with
the increase in the agricultural output yet because of agriculture becoming more modernised and
capital intensive the potential for increase in labour input in agriculture will be rising at a lower
rate than the number of people dependent on agriculture would rise. The absorptive capacity of
allied activities like Dairy Development, cottage industries etc. will also not be high, if past
experience is any indication. Even if these sectors show a fantastic rate of growth, the
contribution to extra jobs created in absolute terms will be limited, as the base of these activities
is narrow. There is another difficulty in adopting intensive agriculture as the growth model. The
relative share of labour in total output is the outcome of output elasticity of employment and the
change in wage rate with respect to labour productivity. If the elasticity is less than unity and
wage rate remains constant, the share of labour income will obviously decline. Thus the rural
labour market fails to give the landless workers a proportionate share in what they produce even
when the farmers achieve large surpluses per unit of labour. Technical change causes an outward
shift in production function such that output per hectare rises at a much faster rate than labour
input per cropped hectare. In simple language, intensive agriculture intensifies disparities, as it
has done in Punjab and Haryana. This explains why a large section of rural community remains
marginalised and suffer from hunger and malnutrition at a time when the country is no longer
deficit in the supply of foodgrains. The question arises what should be the employment strategy
for those for whom agricultural development per se is not likely to benefit significantly. The
obvious answer is massive public works programmes. Other programmes meant for the poorer
sections such as IRDP have touched the labouring population only marginally. Employment
programmes were not perceived as major instruments of poverty alleviation until the beginning
of the 1980s. The two programmes of rural employment started in 1980, NREP and RLEGP,
were merged into JRY in 1989-90. The objectives of these programmes have been as follows:- ·
Creation of wage employment · Impact on the labour market & wage rate · Creation of
productive assets which will further create employment opportunities · Social infrastructure,
such as schools, to improve quality of life of the poor, and · May lead to organisation of the poor
Results based on state governments’ reports Since inception of JRY in 1989-90 till 1993-94,
against an availability of Rs.144.63 billion the states had utilised Rs.140.10 billion showing an
achievement of 96.86 per cent. During the same period, against the target of 4,332.38 million
mandays, the states had generated 4,282.59 million mandays showing an achievement of 98.85
per cent. In 1993-94, about 1000 million mandays of employment was generated. This needs to
be compared with the Planning Commisssion’s assessment that the extent of under-employment
in rural areas would require generation of 3000 million mandays through government
programmes. Thus these reports showed excellent progress. However, these reports need to be
taken with a pinch of salt, as the optimistic picture which comes out of these reports is not
supported by other more dispassionate evaluations. Field staff have learnt to report figures in the
manner expected of them, that is they must show that targets have been fully achieved
irrespective of what the ground situation is. Collectors are under pressure from the state
governments to furnish utilisation certificates, so that states could draw the next instalment from
GOI. Therefore money is considered to have been spent when it is alloted from the district to the
panchayats, even when no physical expenditure has taken place. There were two evaluations, one
by the Programme Evaluation Organisation (PEO) of the Planning Commission, and the other by
Social Science Institutions, called Concurrent Evaluation. The PEO reported that the scheme did
not provide employment to the extent expected, as the average number of days for which a
person got employment was 11.44 days during 1989-90, 15.68 days during 1990-91 and 12.81
days during 1991-92. Moreover, adequate attention was not given to the maintenance of assets.
Finally, contractors were engaged by some of the Gram Panchayats for execution of some works,
although the scheme bans their involvement.
Main Findings of the Concurrent Evaluation:

· Only 73 per cent of the available funds were spent by the Village Panchayats. · Priority was
given to the construction of rural link roads, Panchayats buildings, school buildings and the
community centres, and less to social forestry, soil conservation and water harvesting, which
would have improved productivity of private assets. · In almost all the States (except Punjab),
the average wages paid per manday to the unskilled workers were more or less equal to the
minimum wages prescribed under the Minimum Wages Act. · The wage, non-wage component
of the expenditure of JRY works undertaken by the Village Panchayats at the All-India level was
53:47, against the prescribed norm of 60:40. · In about 84 per cent of the cases, the Muster rolls
were maintained and were available with the Village Panchayats. · Of the total assets created,
roughly 74 per cent were found to be of good/satisfactory, 8 per cent of the poor quality and the
remaining 18 per cent were either incomplete or not according to the laid down norms. · At the
All-India level, during the last 30 days, preceding the date of the survey, a JRY worker got
roughly four days of employment and another one manday of employment was received by other
member of the family. · In majority of cases, the asset created were found to be maintained by
the Village Panchayats. However, in 17.5 per cent cases they were not maintained by any
agency. · In majority of cases, Panchayat Heads were not given any training for undertaking JRY
works. · The share of women in employment was only 20 per cent. · In some States viz. Assam,
Jammu & Kashmir, Tripura and Dadra and Nagar Haveli and Lakshadweep and Pondicherry, the
Annual Action Plans were not discussed at all in the Gram Sabha meetings. · In some States viz.,
Andhra Pradesh, Kerala, Maharashtra, Tamil Nadu and Pondicherry, there was disparity in the
average wage paid per manday to male and female unskilled workers. · The workers who
belonged to the category of 'ineligibles' also took advantage of the programme. · Most funds
were spent on construction projects which are capital intensive and generally benefit the rich.
Works like soil conservation, watershed development and afforestation were neglected. · Weak
linkages between different programmes and weak organisational base - use of contractors,
inappropriate timing, corruption, adhoc projects, delay in payment, poor participation of the
people.

Field inspections
In addition to these evaluation reports, Officers from GOI also visited many projects. Certain
highlights from their reports were:

1. Only current activities were looked into by them.\

2. In H.P. (Oct. 94), muster rolls were not maintained by Gram Pradhan, labourers were not sure
of the amount of wages, market rate was 35/40 as against government rate of 24/day, and thus
bogus reporting was done.

3. In Orissa, funds were utilised for augmenting State's ways and means. DRDAs were asked on
4.8.94 to deposit all sums in the PLA account, although this practice was banned by GOI vide
letter dated 12.7.94.

4. Unspent funds given to departments, such as Forest - to show utilisation, but no monitoring of
impact was done of this allocation.

5. Works were executed through contractors, who bring their own labour from outside and pay
lower wages of Rs. 25, as against State fixed wage of Rs. 40/-. Registered workers are not
getting employment because of involvement of contractors. Foodgrains are of poor quality.
Works inspected indicated that the estimates were very high, often fictitious and not based on
ground reality. "Therefore, there is a lot of leakage of JRY funds". Muster rolls were fabricated.
6. Extent of employment generated was not enough for a sizeable number of poor to cross the
poverty line. In Gujarat, it generated full employment for 2.2% of the poor, equivalent to 100
days of employment for 5.9% of the poor. Employment generation per beneficiary was around
30 days.

Problems in monitoring

In addition, there are certain common problems in implementation and monitoring and rural
projects. These are described below.

1. Vested interest all along the line in bogus reporting.

2. Complementarity with other programmes is ignored. For instance, IRDP requires the
provision of necessary infrastructure of marketing and technical services, which are not
monitored. The progress of many services is monitored, but whether all services are provided in
the same village is never known.

3. Field staff reports only on activities, it is not involved in impact assessment, or in qualitative
monitoring.

4. No indicators exist for assessing public participation or their awareness

5. No readiness to admit bad performance. The learning process of the organisation is thus
blocked.

6. Departments are not keen to take extra load of reporting and filling new formats.

7. Delayed evaluation serves little purpose, as officers have a short time perspective.

8. Donor agencies make little investment in improving M&E & analytical capability of
consultancy organisations.

9. Independent assessment by academics which is not sponsored by Ministry never reaches the
Ministry. Even senior officers were not aware of the evaluation studies published in EPW in Oct.
1995.

10. Even upto the highest level in government, raw and quantitative data is collected and looked
at. It is not possible to do both, collection and its analysis with limited staff. Ministry of
Programme Implementation duplicates the efforts of other Ministries.

11. Project and policy are seen as separate inputs, impact of projects is monitored, but not of
policy.

12. Giving of funds to consultancy organisations is looked upon as a patronage activity by the
State Governments. No interest is taken in ensuring the quality of the report.

13. Most time is spent by State and even by Government in collecting district, and sometimes
block level information, and little in analysis. Officers at all levels spend a great deal of time in
collecting and submitting information, but these are not used for taking corrective and remedial
action, but only for forwarding it to a higher level. This defeats the very purpose for which
information is collected.
14. Most schemes follow a blue print and top-down approach, with little flexibility given to field
staff. Any change in the scheme requires government level sanction which is time consuming.

15. Financial procedures - There are two important problems here. First relates to the timely
allocation of funds from Government, and the other to adequate financial delegation. There
appears to be uncertainty about both - availability of funds and its timing. Sanctions are issued in
the month of August or even later. A substantial part of the budget is sanctioned in March,
resulting in poor utilisation of funds in the stipulated time.

16. The primary monitoring activities have to do with fiscal accountability. While it is
necessary, it should not be allowed to overshadow the need for technical and resource
monitoring and planning work accordingly. At present, there is great pressure on the field staff as
a whole to account for money spent and mandays of jobs generated, etc. but not in terms of
longer-term results, because those are not monitored. Thus financial planning is divorced from
physical area planning

. 17. Under the current monitoring emphasis is laid only on the initial or current expenses. After
five years, little is done or monitored. Secondly, when money has been allocated for a particular
activity in a particular area, it is assumed that the work in question has been done, and that it was
sufficient. This ignores the fact that either of the above assumptions could be wrong.

18. Returns and meetings - Too many returns and meetings are prescribed, which serve no
purpose. These need to be reduced. Reporting workload should be standardised so as to be
compatible with computer based MIS. Absence of systems for storage and effective retrieval of
information results in re-reporting of information that has already been reported earlier. Other
problems with returns are:- ·

Duplicate reporting of same information in several reports. · Elaborate reporting of 'nil'

information. It is suggested all the 'nil' reports for the month be combined and reported as one nil
report instead of drawing cumbersome reports for each of them. · Lack of availability of pre-
printed stationery thus warranting manual preparation of cumbersome formats. This forces the
field personnel to spend money from their pockets and hence results in certain undesirable
practices. · Absence of clarity on 'information needs' at various levels.