"Capture" of anti-poverty programs: An Analysis of the National Rural Employment Guarantee Program in India

"Capture" of anti-poverty programs: An Analysis of the National Rural Employment Guarantee Program in India

By Raghbendra Jha, Sambit Bhattacharyya, Raghav Gaiha, and Shylashri Shankar
Journal of Asian Economics, 4 May 2009

Using pooled household level data for the Indian states of Rajasthan and Andhra Pradesh we find that the size of landholdings is a negative predictor of participation in the National Rural Employment Guarantee Program (NREGP). In state level analysis this pattern survives in Rajasthan but reverses in Andhra Pradesh where we notice a positive relationship. This paper examines whether this sign reversal in Andhra Pradesh is indicative of program capture in Andhra Pradesh and better targeting in Rajasthan. We compare land inequality, ratio of NREG and slack season agricultural wage rates, political interference, and geographical remoteness across the two states and conclude that program capture may be an issue in Andhra Pradesh, largely because of these reasons. We also find evidence of complementarity between NREGP and the Public Distribution System (PDS), implying that the real income transfer through food subsidy needs supplementation.