Decentralization, Democracy and Allocation of Poverty Alleviation Programmes in Rural India

This article investigates the effect of the devolution of power to the village-level government on the household-level allocation of poverty alleviation programmes, namely, Integrated Rural Development Programmes (IRDP) and Rural Public Works (RPW), drawing upon National Sample Survey data and the Election Commission's election data. First, we found that a greater inequality in land holdings generally leads to less provision of the programmes. Second, the disadvantaged groups were not necessarily the primary beneficiaries. Third, our natural experiment approach confirms that decentralization negatively affected the provision of IRDP, whereas it had a positive impact on the allocation of RPW when Madhya Pradesh was compared with Bihar. It has been suggested that the power and resources were captured by the local elite after decentralization in the case of IRDP, whereas this was not the case for RPW as it involved a self-targeting mechanism and discretionary manipulation by the local elite was likely to be difficult.