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There exist a large number of targeting programs in India of varying sizes,

channeled through different ministries of the central government, and

with different modalities of implementation. Some of these schemes are

implemented by the state governments while others have a larger proportion

of funds flowing directly from the center to district administrations.

Obviously, a comprehensive review of each and every targeted activity would

be neither feasible nor desirable. The discussion below therefore centers on a

select subset of the targeting programs, based upon their relative quantitative

importance, availability of information relating to their implementation

monitoring and evaluation, and relevance to the objectives of the present

analysis, based upon targeting design and effectiveness of the scheme. The

schemes chosen include examples of pure income transfers, food-for-work,

self-employment and infrastructure generation.

First, however, a brief discussion of targeting mechanisms in the Indian

context is useful. A widely used categorization of targeting mechanisms

that can be used to classify programs is given below (see also, Chapter 1,

this volume).

• Self-targeting: Such schemes rely on differential incentives of agents in

tackling the problem of asymmetric information between the principal

(the government providing poverty relief) and the agents (households

or individuals affected by the government schemes). The design of the

schemes has the objective of making the scheme worth participating

in only for those who are poor, not for others.

• Activity targeting: This relies on broad targeting, primarily through

subsidized provision of goods and services, whose benefi t incidence will

be progressive, that is falling largely on those who are poor rather than

better-off. Examples typically include primary education, provision

Table 2.6 Major poverty targeted programs of the Government of India

Ministry/Department Schemes Central % of total % of

funding expenditure GDP


(INR billions)

Ministry of Rural Development 1. Swarn Jayanti Gram Swarozgar Yojana (SGSY) 5.5 0.15 0.026

2. Jawahar Gram Samridhi Yojana (JGSY) 18.8 0.52 0.090

3. Employment Assurance Scheme (EAS) 18.8 0.52 0.090

4. Sampoorna Grameen Rozgar Yojana (SGRY) 87.5 2.41 0.418

5. Indira Awas Yojana (IAY) 16.9 0.47 0.081

6. National Social Assistance Program (NSAP) 6.4 0.18 0.031

7. Annapoorna Scheme 1.0 0.03 0.005

8. Pradhan Mantri Gram Sadak Yojana 25.0 0.69 0.120

9. Integrated Wastelands Development Program

(IWDP) 4.3 0.12 0.021

10. Drought Prone Areas Program (DPAP) 1.6 0.04 0.008

11. Desert Development Program (DDP) 1.2 0.03 0.006

Ministry of Urban Development 1. National Slum Development Program 2.8 0.08 0.013

and Poverty Alleviation (NSDP)

Department of Public 1.Targeted Public Distribution System (TPDS) 176.1 4.86 0.842

Distribution, Ministry of and Antyodaya Anna Yojana (AAY)

Consumer Affairs

Department of Education, 1. Non Formal Education (NFE) 4.0 0.11 0.019

Ministry of Human Resource 2. National Programme for Nutritional 9.3 0.26 0.044

Development Support to Primary Education

3. Operation Blackboard Scheme 5.2 0.14 0.025

4. Sarva Shiksha Abhiyan 5.0 0.14 0.024

Department of Fertilizers 1. Retention Pricing Scheme (RPS) 73.7 2.03 0.352

2. Concession Scheme for de-controlled fertilizers 45.2 1.25 0.216

Ministry of Agro and Rural 1. Prime Minister’s Rozgar Yojana 1.9 0.05 0.009

Industries 2. Rural Employment Generation Programme 1.2 0.03 0.006


3. Khadi and Village Industries Commission 2.5 0.07 0.012


Ministry of Social Justice and 1. Special Central Assistance To Special 4.5 0.12 0.022

Empowerment Component Plan For Scheduled Castes

Department of Women and 1. Integrated Child Development services 12.2 0.34 0.058

Child Development, Ministry (ICDS) Scheme

of Human Resource


Source: Various documents of Government of India. Percentages with respect to GDP and total government expenditure derived from National

Accounts Statistics.

of primary health care and basic health services in rural areas, and

broadly targeted subsidies for irrigation, power and fertilizers. As

noted already, most of these broadly targeted interventions are not

discussed in detail here.

• Location targeting: This is based on the geographical distribution of

poverty, seeking to target interventions in geographic areas with high

concentration of the poor.

• Indicator targeting: This relies on non-income indicators that are

meant to be correlated with poverty. These can include lack of or

size of ownership of land, form of dwelling, social status and gender

of head of household.

Asymmetric information between the government, seeking to provide

transfers to the poor, and individuals or households in the economy who

can legitimately or otherwise seek these transfers, is the raison d’être of

targeting. The underlying rationale of these targeting mechanisms is that

administrative and other costs of identifying those who are poor are high,

potentially reducing the resources that would be transferred to the poor

under the scheme. Targeting mechanisms are a program-design innovation

in response to the information asymmetry and the high costs of overcoming

the information barrier.

However, this framework is implicitly less than comprehensive in

approach, in the sense of focusing only on one scheme at a time. In a context

where the principal (in a principal–agent context) has several schemes in

operation, the administrative costs per scheme (of overcoming information

asymmetry) can get diluted substantially, thereby vitiating the need for

indirect targeting mechanisms for any specifi c scheme. Put alternatively,

the issue of whether or not the administrative costs of identifying the poor

are undertaken by the government usually does not depend on any specifi c

scheme. In an inter-temporal context, where the government does not

know what specifi c schemes it may want to implement in the near future,

‘tagging the poor’, which is known in the Indian context as ‘administrative

identifi cation’, may provide externalities in terms of greater choice of

schemes and their design.

This is an important issue, as shown by the Indian experience where a

large number of government poverty-targeted schemes rely on administrative

identifi cation to select benefi ciaries. The most common criterion used in

government schemes is that benefi ciaries should be households classifi ed as

below the poverty line. Other criteria, such as focusing on Scheduled Castes

or Tribes (which would represent indicator targeting in the Indian context)

are overlaid onto poverty status. As mentioned above, it may be argued

that with an aggregate annual budget on CSS schemes exceeding Rs 250

billion, it may be worthwhile for the government to undertake some form

of poverty classifi cation to better target the poor. Indeed, analytically it is

perhaps more pertinent to ask why other targeting mechanisms should exist

at all once the administrative identifi cation process has been undertaken.

For example, some schemes rely on self-selection (food-for-work and

rural employment schemes), geographical location, and the use of social

category like caste as indicators. Use of indirect targeting mechanisms

in conjunction with administrative identifi cation may refl ect in part the

recognition that classifi cation of the poor may be imperfect due to various

reasons. In particular, the process itself may suffer from high type one and

type two errors, as discussed below, resulting in exclusion of many poor and

inclusion of many non-poor. In addition, the frequency of identifi cation

is necessarily spread apart in time, which would make it impossible to

differentiate between transient and chronic poverty, that is to differentiate

the needy seeking food-for-work in the face of natural calamity from the

longer term destitute.