Business News/ Opinion / Time to diversify pro-poor policies

Since the National Democratic Alliance government came to power in 2014, much of the debate on its successes and failures has centred on whether or not the government is pro-poor in its policy choices. What the debates miss for this government (and all other governments) is that it is not enough for the policies to simply be pro-poor—they must be targeted to address the diversity among the poor. The ministry of rural development’s recent efforts are a step in the right direction for addressing such diversity. A policy proposed by the ministry in June 2016, currently under consultation with states, attempts to address this need using rigorous evidence.

Poverty is rarely just a binary state of being poor or not. In reality, the poor may experience anything between destitution and moderate poverty, and their condition may change from one end of the spectrum to the other over time. The Socio Economic Caste Census (SECC), a database created by the ministry of rural development, attempts to identify such diversity by measuring various parameters according to which a household is deprived. As per SECC data, nearly half of the 18 crore rural households in the country are deprived according to one or more of the seven indicators. A staggering 75% of rural households have monthly income of less than 5,000 and around 38% of rural households are landless and dependent on manual casual labour as their main source of income. The figures show that the multiple social protection and livelihood programmes implemented by successive governments, such as the Mahatma Gandhi National Rural Employment Guarantee Act and National Rural Livelihoods Mission, have been unable to reach the extreme poor.

However, recent evidence from randomized evaluations, summarized in a paper published in the journal Science, suggests it is possible to gradually and successfully bring individuals out of extreme poverty by combining multiple approaches into one comprehensive livelihoods programme, also called the ‘graduation approach’. First developed in 2002 in Bangladesh by the Bangladesh Rural Advancement Committee (BRAC), it provides ultra-poor women with carefully sequenced support—a productive asset such as livestock or supplies for petty trade, technical skills training, savings support, temporary cash or in-kind support to tide over immediate consumption needs, and regular mentoring and coaching over 18-24 months—to attain sustainable livelihoods and ultimately graduate out of extreme poverty.

Six randomized evaluations of this programme by researchers affiliated with the Abdul Latif Jameel Poverty Action Lab (J-PAL) showed that it caused broad and long-lasting economic impacts in the lives of the ultra-poor in six countries—Ethiopia, Ghana, Honduras, India, Pakistan and Peru. The programme increased consumption both in the short term and long term—both two years and three years after the end of the programme.

These studies show that the ‘ultra-poor’ have little capital, minimal skills and are usually engaged in insecure and/or low-return occupations. They are unable to meet basic needs, are extremely vulnerable to unexpected life events such as health emergencies, and remain trapped in a cycle of poverty. While there is no universally accepted threshold for being ‘ultra-poor’, more than one-fifth of the world’s population and one-third of India’s rural population live on $1.90 (purchasing power parity) or approximately 130 a day or less—i.e., below the World Bank and United Nations’ threshold for extreme poverty.

In India, the impact evaluation of the programme was conducted in Murshidabad district of West Bengal, where one year after the programme ended, beneficiaries who participated in the programme (from a group of beneficiaries intended to receive the programme) saw a 20% increase in consumption as compared with households that did not receive the programme. Beneficiaries saw increased ownership of household and productive assets, higher food spending, and more households reported having enough food every day. Long-term follow-ups, both in India and in Bangladesh, suggest these gains are even bigger after seven years.

Given these robust findings from multiple countries, the ministry of rural development has recently incorporated this evidence into the design of a newly proposed scheme, tentatively named the Grameen Swarozgar Yojana (GSY). GSY proposes a diverse framework to achieve poverty-free panchayats through generation of self-employment opportunities for the poor. Keeping in mind a region’s natural resources and economic opportunities, GSY allows implementing partners to apply for government support in implementing self-employment generation projects specific to the needs of the ultra-poor, extremely poor and moderately poor without excluding any group.

A core and unprecedented component of GSY is a specific provision for the ultra-poor using the evidence from graduation approach. Through the proposed policy, approved implementation agencies will identify ultra-poor families using both the SECC data and community surveys. Thereafter, implementation agencies will receive government support to work with these families using the proven graduation approach.

If approved by the government of India, GSY will become the first government policy intervention backed by rigorous scientific evidence that will aim to provide sustainable livelihood opportunities to the ultra-poor at such a large scale. If India is to truly cater to the poor, such nuanced approaches are required to address the diversity within the country’s poverty. We can then expand debates with more faith while answering not only how pro-poor governments are, but what kind of poverty they cater to.

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Updated: 16 Jul 2016, 01:42 AM IST
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