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
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

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

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

V
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

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

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

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

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