IFPRI Report

Volume 20, Number 1
February 1998

Book Identifies Policies to Help the Poorest of the Poor in India

Devising Policies to Help the Poor in South India, by Neal Bliven and Sudhir Wanmali of IFPRI and C. Ramasamy of Tamil Nadu Agricultural University, was recently published in India. The book, which identifies policies most likely to alleviate poverty in the North Arcot region of India, finds that policies to encourage input-intensive cultivation of fruits and vegetables, groundnut and sesame seed, and rice for export have the greatest potential for alleviating poverty in the region, increasing the average net income of small farm households as much as 15 percent.

Other promising policies for alleviating poverty include rural public works policies for constructing infrastructure using poor rural people and income subsidy policies that transfer income to the poorest rural households.

The book is based on the premise that fundamental measures of household well-being include consumption and expenditure levels and the ability to generate income from production, labor, and financial assets (or a combination of these). The authors first determine which of the household types in the region are the poorest according to a number of welfare and equity indicators. They find that households of rural farm laborers, rural noncultivators, and rural small-scale farmers, could be characterized as “the poorest of the poor.” To directly affect targeted households through economic policies, it is important to know how each type of household is connected to the economy. Based on Green Revolution surveys of the North Arcot region in 1982/83, economic linkages between households and other economic entities in North Arcot are measured and policies to help the poor are derived from this linkage analysis. In looking at linkages, the book examines forward linkages (the goods and services generated from production and labor assets and the money provided from financial assets) and backward linkages (the household’s demand for labor and nonlabor factors of production, for goods and services, and for credit and charity).

Looking at past policies, the authors conclude that the trickledown policies of the 1950s and 1960s did not reach the poorest of the poor. In the 1970s policies began to be targeted to the poor. Targeting is asserted to be effective provided the policies are accurately directed to the poor, targeted to rural areas, and include the poor in decisionmaking. Improved administration of programs is also essential to prevent the diversion of benefits to the wealthy. However, leakage is not a major reason for concern in the surveyed region, because leakage is likely to go to those who are only slightly less poor than the targeted households.

All of the policies considered in this volume hold out help to many poor households, but none on its own is sufficient to lift the households of rural farm laborers above the poverty line. The authors suggest that a more radical Green Revolution is still required.