Participatory Governance and Pro-Poor Targeting : Evidence from Central India

This paper studies the impact of a community-driven development program, District Poverty Initiatives Project (DPIP), implemented in the second largest state in India. In particular, it examines the impact on allocation of Below Poverty Line (BPL) cards that are targeted towards the most disadvantaged households. This is the first paper that establishes a causal relationship between local governance and the participatory elements of a CDD project. In particular, it examines the spillovers of DPIP on collective action and political activism. Another important contribution of this paper is that it studies the effectiveness of empowerment strategies as a means of improving local governance and identifies the mechanisms through which this comes about. Due to the non-randomness in the implementation of the project, I designed a survey based on a quasi-experimental technique, which exploits state borders as an exogenous source of variation in treatment assignment. This survey was conducted in 2006 and covered 6000 households across 300 villages. Findings show that the DPIP treatment improves targeting of BPL cards. When compared to the corresponding effect of literacy on targeting, the effect of DPIP is more than twice as large for landless households. This improvement in targeting is not because these villages are better able to follow the selection rule prescribed by the government but because of greater capacity for collective action. I find that households in DPIP villages are more likely to be active in village affairs and there is greater evidence of collective action. DPIP has a statistically significant and positive impact on households' knowledge of other government schemes as well. Finally, I examine if these targeting efficiencies are channeled through greater participation at the village council meeting. My findings suggest that households in DPIP villages have greater information about when these meetings are held and are more likely to actively participate conditional on attendance. This suggests that there might have been social barriers to truly participatory governance that were broken by the external influence of this CDD project