takahiro sato

8/14/2019 Takahiro Sato

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Who are the Beneficiaries of the

Poverty Alleviation Programs inRural India?

Takahiro Sato (Osaka City University)

A Preliminary Analysis on theConsequences of the Decentralizationin the 1990s



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Outline• Section 1: Introduction

• Section 2: The institutional background of the73rd Constitutional Amendment and povertyalleviation programs.

• Section 3: Implications of the decentralization byreferring to the earlier studies. (But, today I skipthis section)

• Section 4 : Empirical investigation of theallocation of the poverty alleviation programs

before-and-after the decentralization.• Section 5: Concluding remarks.



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1 Introduction

• Does greater decentralization improvethe living condition of the poor, thewomen, or the minority groups in ruralIndia?

• The 73rd Constitutional Amendment

in 1993 →The elected Panchayatsdetermine the beneficiary selection for the poverty alleviation programs



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Advantage and disadvantage of decentralization

• Advantage:•

→Enhanced accountability• →Information advantage

• Disadvantage:• →Capture by local elite



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From the fields (1)

• “Decentralisation in Karnatakayielded paradoxical results. The

number of people involved incorrupt acts increasedsignificantly. But the overallamount of money stolen almostcertainly decreased - at leastmodestly” (Richard and Manor 1998: 61



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From the fields (2)• “A further step in democratization seems

to have taken place with the reformationof gram panchayat in 1993 with the 73rdAmendment to the Constitution Thereformation of panchayat system in 1993,together with the decline of factional

politics after liberalization policy, madethe gram panchayat meeting a moredemocratic place in terms of representation and functioning.” (Tanabe2004)



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This paper’s approach

• To use (1) household survey datafrom the National Sample SurveyOrganization (NSS), and

• (2) regionally aggregated election

data from the Election Commissionof India (ECI).



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This paper’s approach

• To focus on those who were the beneficiaries of the poverty

alleviation programs in rural India before-and-after decentralization.

• Difference-in-Difference Approach.



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Section 2 Institutional Context

• 2.1: Features of the 73rdConstitutional Amendment in1993 aiming at thedecentralization

• 2.2: Nature of poverty alleviation programs in rural area.



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2.1 The 73rd ConstitutionalAmendment

• Three-tier “Panchyati Raj” (local self-governance) system.

• →“Zilla Parishad” at district level,“Panchayat Samiti” at block level, and

“Gram Panchayat” at village level.• Persons selected by direct election fillall of the seats in a Panchayat.



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2.1 The 73rd ConstitutionalAmendment (Continued)

• Elections of Panchayats are heldregularly every five years.

• Political reservation for ST/SC andwomen.

• The Eleventh Schedule in theConstitution.

• →Poverty alleviation programme as

one of responsibilities of Panchayats.



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2.2 Poverty Alleviation Programs •

Integrated Rural DevelopmentProgramme (IRDP):• →aiming at generating sufficient

income to enable the rural poor to crossthe poverty line.• →providing the government subsidy

and bank credit to the poor for encouraging the self-employmentactivity.



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2.2 Poverty Alleviation Programs(Continued)

• Public works programs:• →National Rural Employment

Programme (NREP), Rural LandlessEmployment Guarantee Programme(RLEGP), Minimum Needs Programme

(MNP), and other schemes• →aiming at providing wageemployment to the poor.



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Section 4 Statistical Analysis• Data:

• →Main unit of observation: household• →National Sample Survey (NSS)'s 50th round

(1993-94), and 55th round (1999-2000)

• →including detailed socioeconomicinformation on approximately seventythousand rural households

• In addition,→ election data from the Election

Commission of India’s Statistical Report on

General Elections



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Table 1 Descriptive Statistics of the Main Variables

1993 1999variable NOB Average SD Min Max NOB Average SD

ird dm: IRDP=1 68923 0.05 0.21 0.00 1.00 71252 0.06 0.23 0.00 wdumm : ublic works=1 69301 0.04 0.19 0.00 1.00 71099 0.03 0.18 0.00

pwirdp: poverty alleviation programs(IRDP orublic works)=1 69301 0.09 0.28 0.00 1.00 70959 0.08 0.28 0.00

illiterac : illiterate=1 69219 0.48 0.50 0.00 1.00 71413 0.46 0.50 0.00 hohsex2: female headed household=1 69225 0.09 0.29 0.00 1.00 71466 0.10 0.30 0.00

an ownld1: landed=1 69230 0.95 0.23 0.00 1.00 71146 0.93 0.25 0.00 reli ion2: Muslim=1 69230 0.09 0.28 0.00 1.00 71392 0.11 0.31 0.00 s r 1: ST=1 69230 0.13 0.34 0.00 1.00 71349 0.14 0.35 0.00 s r 2: SC=1 69230 0.18 0.38 0.00 1.00 71349 0.18 0.38 0.00 hht e2: a ricultural labour household=169230 0.24 0.43 0.00 1.00 71327 0.26 0.44 0.00 hhtype4: agricultural self employment

household=1 69230 0.43 0.50 0.00 1.00 71327 0.38 0.49 0.00 a ehoh: a e of the head of household 69230 44.59 13.72 0.00 99.00 71461 45.27 13.91 0.00 numbadu: number of adult erson er household69230 3.28 1.76 0.00 45.00 71466 3.37 1.83 1.00 c ini: Gini coefficient of own land 68773 0.69 0.08 0.41 0.95 70968 0.71 0.09 0.41

voter turnout: voter turnout ratio 67952 0.57 0.12 0.22 0.85 70968 0.61 0.09 0.34 effnhd2: two art com etitiveness index67952 1.52 2.16 0.00 9.05 70968 0.87 1.52 0.00



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4.2 Estimation strategy (1)

• To find the characteristics of the beneficiaries and to examine the influencesof the socio political environments.

• →estimating the Probit model for 1993 as before decentralization and 1999 as after decentralization.

• →investigating the estimated coefficients.• →comparing the results of 1993 and 1999.



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Estimation Equation



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Table 2 Basic Probit Model

de endent variable IRDPyear=1993 year=1999NOB=67642 NOB=70252Wald chi2(30)=1389.14 Wald chi2(31)=802.74Prob>chi2=0 Prob>chi2=0Log pseudolikelihood=- 12551 Log pseudolikelihood=- 14794Pseudo R2=0.0555 Pseudo R2=0.0262

variable coefficient t-value p- value coefficient t-value p- valueeffnphd2 - 0.12 - 15.07 0.0% 0.01 1.62 10.6voterturn - 0.80 - 4.60 0.0% - 0.32 - 1.78 7.6pcgini - 0.46 - 3.10 0.2% - 0.15 - 0.94 34.8illitercy 0.03 1.74 8.1% 0.03 1.71 8.8hohsex2 - 0.25 - 7.02 0.0% - 0.05 - 1.74 8.1anyownld1 0.40 7.83 0.0% 0.10 2.74 0.6religion2 - 0.06 - 1.74 8.2% 0.00 0.06 94.9sgrp1 0.24 8.78 0.0% 0.24 9.91 0.0sgrp2 0.31 13.76 0.0% 0.14 6.34 0.0hhtype2 0.11 4.28 0.0% 0.01 0.42 67.6hhtype4 0.03 1.52 12.8% 0.03 1.45 14.7agehoh 0.00 - 1.50 13.5% 0.00 - 1.13 25.8numbadu 0.03 6.88 0.0% 0.01 1.08 28.0



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de endent variable ublic worksyear=1993 year=1999NOB=67938 NOB=70105Wald chi2(30)=1739.56 Wald chi2(31)=911.07Prob>chi2=0 Prob>chi2=0Log pseudolikelihood=- 9833 Log pseudolikelihood=- 9645Pseudo R2=0.0915 Pseudo R2=0.0502

variable coefficient t-value p- value coefficient t-value p- valueeffnphd2 - 0.05 - 6.60 0.0% - 0.03 - 3.28 0.1voterturn - 1.67 - 8.38 0.0% - 0.09 - 0.40 68.8pcgini 1.07 6.46 0.0% - 0.82 - 4.26 0.0illitercy 0.17 7.89 0.0% 0.00 0.02 98.6hohsex2 - 0.13 - 3.65 0.0% - 0.16 - 4.32 0.0anyownld1 0.13 2.86 0.4% 0.05 1.15 24.9religion2 0.05 1.40 16.3% 0.01 0.31 75.8sgrp1 0.10 3.55 0.0% 0.28 9.88 0.0sgrp2 0.10 3.96 0.0% 0.04 1.61 10.7hhtype2 0.08 3.03 0.2% 0.09 3.45 0.1hhtype4 - 0.20 - 8.33 0.0% - 0.22 - 8.99 0.0agehoh 0.00 - 4.60 0.0% 0.00 - 2.62 0.9numbadu 0.03 4.57 0.0% 0.02 3.55 0.0



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de endent variable overt alleviation ro rams IRDP or ublic worksyear=1993 year=1999NOB=67938 NOB=69972

Wald chi2(30)=2028.98 Wald chi2(31)=1165.84Prob>chi2=0 Prob>chi2=0Log pseudolikelihood=- 18709 Log pseudolikelihood=- 19267Pseudo R2=0.0534 Pseudo R2=0.0293

variable coefficient t- value p- value coefficient t-value p- valueeffnphd2 - 0.09 - 15.59 0.0% 0.00 - 0.37 71.4voterturn - 1.22 - 8.57 0.0% - 0.30 - 1.84 6.6pcgini - 0.19 - 1.59 11.2% - 0.60 - 4.19 0.0illitercy 0.11 6.90 0.0% 0.01 0.53 59.8hohsex2 - 0.20 - 7.00 0.0% - 0.09 - 3.43 0.1anyownld1 0.25 6.88 0.0% 0.09 2.84 0.4religion2 -0.01 -0.37 70.9% 0.00 -0.13 89.6sgrp1 0.17 7.23 0.0% 0.30 14.00 0.0sgrp2 0.24 12.21 0.0% 0.12 5.96 0.0hhtype2 0.09 4.35 0.0% 0.04 1.84 6.6hhtype4 - 0.09 - 5.24 0.0% - 0.08 - 4.33 0.0agehoh 0.00 - 4.49 0.0% 0.00 - 2.10 3.6numbadu 0.04 9.03 0.0% 0.01 2.48 1.3



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Summary of the Main Results

• (1) Regional socio political environment is likely to affectthe allocation of the poverty alleviation programs: Greater inequality and less political competition, less the provisionof the poverty alleviation programs.

• (2) The disadvantaged groups were not necessarily likely to be the primary beneficiaries of the poverty alleviation programs over others. The female headed household and thelandless group remained in a disadvantaged position in

participating such programs throughout the entire period.• (3) But, SC, ST, and agricultural labour household have

been in advantaged position to get the programs.



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4.3 Estimation strategy (2)

• Difference-in-Difference Approach

• Madhya Pradesh as ’treatment

group.’•

Karnataka, Kerala, and West Bengalas ’control group.’



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Why is MP treatment group?

• ’Article 243 G of the Constitution empoweredthe state legislatures to give panchayats somuch power as to make them the institutionsof self-government with powers to prepare

plans for economic development and social justice including the subjects listed in the 11thSchedule of the Constitution. But, with someexceptions in Kerala, Madhya Pradesh,Tripuraand West Bengal nothing worthwhile has beendevolved to the panchayats’ (Pal 2001) .



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Why is MP treatment group?• Before the Amendment, no serious decentralization in

MP. → The 73rd Constitutional Amendment treats MP.• Chief Minister of MP, Digvijay Singh’s political will.• The first state to conduct the Panchayats election in

1994 under the provision of the 73rd Constitutional

Amendment.• Vacancy rate of the representatives of the Panchayats isquite low.

• Only state to introduce of right to recall the member of

Gram Panchayats.• The advanced state in preparing the District Planning

Committee and the right to information.• See the Table 3.

Table 3 Progress of the Decentralization at the State Level



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g

DistrictPlanning

Committee

Statefinancialresource functions staff

AP 17% 45% 7% NoArunachal Pradesh 0% 0% 0% No

Assam 0% 0% 0% NoBihar 0% 0% 0% No J harkhand 0% 0% 0% NA

Goa 0% 0% 0% NoGujarat 0% 0% 0% No

Haryana 0% 55% 0% YesHP 7% 79% 24% No

Karnataka 100% 100% 100% YesKerala 52% 100% 52% Yes

MP 34% 79% 31% Yes

Chhattisgarh 34% 79% 31% NAMaharashtra 62% 62% 62% NoManipur 0% 76% 14% YesOrissa 17% 86% 10% YesPunjab 0% 24% 0% No

Rajasthan 0% 100% 0% YesSikkim 100% 100% 100% Yes

Tami Nadu 0% 100% 0% Yes Tripura 0% 41% 0% Yes

UP 41% 45% 31% Yes

Uttarakhand 41% 45% 31% NAWest Bengal 41% 100% 41% YesA & N Island 0% 0% 0% YesChandigarh 0% 0% 0% No

D & N Haveli 0% 10% 10% YesDaman & Diu 0% 100% 0% No

Delhi 0% 0% 0% NoLakshwdeep 0% 21% 0% YesPondicherry 0% 0% 0% No

J K NA NA NA No

Meghalaya NA NA NA NoMizoram NA NA NA NoNagaland NA NA NA No

progress of devolution to thePanchayats under the EleventhSchedule of the Constitution



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Why is Karnataka, Kerala and WestBengal control group?

• Commitment to the decentralization before the73rd Constitution Amendment.

• Good practice case of the decentralization inIndia since in these states the Panchayats haveworked very well.

• The decentralization of Karnataka is regarded as

a model case in preparing the 73rd ConstitutionalAmendments.• Implementing decentralization both before and

after the 73rd Constitution Amendment.



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Estimation strategy

Karnataka, Kerala, West BengalMP1999Karnataka, Kerala, West BengalMP1993

Control GroupTreatment Group

• Pooling the sample restricted toKarnataka, Kerala, West Bengal, andMP in both reference years.

• Estimating Probit model byemploying difference-in-difference

approach.



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Estimation Equation

Table 4 Probit Model of thedifference-in-difference approach



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Table 4 Probit Model of the difference in difference approach

de endent variable IRDP ublc works overt alleviation ro raNOB=29847 NOB=29846 NOB=29929Wald chi2(40)=230.35 Wald chi2(39)=184.94 Wald chi2(40)=248.36

Prob>chi2=0 Prob>chi2=0 Prob>chi2=0Log pseudolikelihood=-5867 Log pseudolikelihood=-2822 Log pseudolikelihood=Pseudo R2=0.0198 Pseudo R2=0.032 Pseudo R2=0.0165

variable coefficient t-value p-value coefficient t-value p-value coefficient t-value peffnphd2 0.00 0.01 99.5% 0.01 0.16 87.2% 0.01 0.23 81

voterturnout -0.16 -0.67 50.3% 0.94 2.54 1.1% 0.27 1.21 22pcgini -1.07 -4.21 0.0% -0.67 -1.83 6.7% -0.95 -4.10 0

illitercy ×DMPT 0.18 1.58 11.4% -0.01 -0.04 96.6% 0.09 0.91 36.2hohsex2 ×DMPT 0.00 -0.01 99.0% 0.09 0.31 76.0% 0.01 0.06 94.9

anyownld1 ×DMPT 0.26 1.07 28.4% 0.34 1.25 21.2% 0.31 1.55 12.2religion2 ×DMPT 0.28 0.91 36.2% 0.24 0.83 40.6

sgrp1 ×DMPT 0.26 1.62 10.5% -0.15 -0.65 51.4% 0.23 1.55 12.sgrp2 ×DMPT 0.25 1.78 7.6% -0.25 -1.25 21.2% 0.17 1.38 16.8

hhtype2 ×DMPT -0.32 -2.13 3.3% -0.01 -0.04 96.7% -0.19 -1.41 15hhtype4 ×DMPT -0.21 -1.46 14.5% 0.05 0.23 81.6% -0.14 -1.10 27.

DMPT -0.42 -1.66 9.7% -0.37 -1.30 19.3% -0.44 -2.11 3

Note: See Table 4 in m a er for checkin the results of the other variables.

S f th M i R lt



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Summary of the Main Results(1) The provision of the poverty alleviation program is

depressed by the decentralization.

(2) The decentralization allocates less IRDP to theagricultural labour households. The absolute poor inIndia are mainly from the agricultural labour households. This suggests that there is likely to be thelocal capture. The decentralization does not necessarilycontribute the improvement of the welfare of the socialdisadvantaged group.

(3) However, the decentralization allocate more IRDP toSC. This may indicate the effect on the political

reservation of the Panchayats for SC.(4) There is no influence of the decentralization on the provision of the public works. In general, the publicworks contain the self-targeting mechanism. There mayless discretionary manipulation of the public works bythe local elite.



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Section 5 Concluding Remarks • (1)The disadvantaged groups were not necessarily likely to

be the primary beneficiaries over others. →The female

headed household and the landless group remained in adisadvantaged position throughout the entire period.(Section 4.2)

• (2) The possibility of local capture by the decentralization.

But, public works are likely to be free from local capture.(Section 4.3)

• (3) The political reservation for the disadvantaged groupmay have the positive effect on the allocation of the

program in favor of that group. (Section 4.3)• (3) Regional socio political environment affects the

allocation of the poverty alleviation programs.→ Greater inequality, lesser the provision of the poverty alleviation

programs. (Section 4.2 and 4.3)



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Thank you.

takahiro sato

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