A tale of two villages

Author:
Publication: The Economist
Date: November 17, 2012
URL: http://www.economist.com/news/asia/21566699-rural-india-there-hope-worst-policies-can-be-improved-tale-two-villages

A PAINTED milestone marks the turn-off to Kailashpur. The slab sports a poor likeness of Gandhi and announces “The Mahatma Gandhi National Rural Employment Guarantee Scheme. Rural road constructed from the curve at Pansara to Kailashpur forest road. Sanctioned: 2007-08. Cost: 4.3m rupees [$80,000].”

The road winds a few miles through the jungle and ends at the village’s new primary school, gaily painted with a rainbow, Tom and Jerry, and Mickey Mouse. The schoolteacher, Solomon Ming, busily shepherds his little charges back to their schoolroom after a free lunch. Outside, villagers trudge painstakingly back from the nearest town, balancing on their heads bundles of firewood each the size of desks. Inside, the girls chatter excitedly about new satchels which had arrived that morning. They came from the Chhattisgarh state government, and only the girls got them, for they are intended as inducements to boost female literacy. On the wall are a list of the 85 children at the school and details of the three teachers, their qualifications and when they started work. Another sign outside says “National Rural Employment Guarantee Act. Cost of levelling ground for a school: 25,000 rupees.”

It is all evidence of a quiet upheaval in Chhattisgarh, a state in central India. Over the past few years, the government in the capital, Raipur, 200 miles (320 kilometres) away, has been trying to improve India’s notoriously corrupt and ineffective social-safety nets. The system provides cheap food and make-work schemes for the poor. Yet a huge chunk of the money never reaches the intended beneficiaries. Determined to change that, the state government insisted the schemes be transparent and that people should know what the projects were up to. Hence the signs.

A hundred miles away in Maheshpur, in the neighbouring state of Uttar Pradesh, there are no such signs—and little to describe even if there were. The primary school is a patch of bare earth protected by a tarpaulin strung between trees. The children are at home because the teacher, from a nearby town, has not appeared. A few dredged ponds and levelled footpaths are the only products of make-work schemes.

Maheshpur is on the dusty plain and grows maize and lentils. Kailashpur sits at the base of lush hills, and villagers there plough rice paddies with buffalo. Yet in many respects, both are typical of tens of thousands of villages in central India. Each has about 500 households, and is dominated by marginal groups: mostly Dalits, the former untouchables, in Maheshpur, while in Kailashpur most villagers are Adivasis, or so-called scheduled tribes, the aboriginal population of India.

Crucially, though, the fact that the two villages are in different states means that their poverty is dealt with differently. In India state governments usually have more impact on the lives of poor people than does the national government. In theory, the country has an extensive system of social protection which, though people are rarely left to beg and starve, often fails the poorest. Recently, Jean Drèze of Allahabad University argues, the system has been improving, though not everywhere, nor at the same rate. Maheshpur and Kailashpur illustrate the discrepancies.

India’s main social-protection programmes are the Public Distribution System (PDS) which provides cheap food, and the National Rural Employment Guarantee Act, which provides up to 100 days of paid work to any rural household that asks for it. Both require identity cards. The number of cards in each state is determined nationally, based on a household survey conducted in 2002. But the number of cards in each village is fixed by state governments, which may add benefits on top of the national ones. The decision about which individuals get the cards is local, too.

Gulshan, a stick-thin labourer in his 50s, throws three cards down onto the divan outside his mud house in Maheshpur. Each is a dog-eared booklet, messily filled in to show purchases at the PDS shop. The cards belong to his two sons. One has died and the other has moved away, but Mr Gulshan uses the cards to feed his family. Urmila, the son’s widow, says that without cheap food her sons would go hungry. She worries about how long she will be allowed to keep her late husband’s card and whether she will ever get one of her own.

Three sorts of card exist in Maheshpur: one for those above the poverty line but who still need help; one for those below the poverty line (BPL); and one for the very poorest, which carries a bigger subsidy. In Uttar Pradesh, BPL holders can buy 20kg of rice a month at 6.15 rupees a kilo and 15kg of wheat at 4.65 rupees a kilo. Mr Gulshan’s are BPL cards, but he is unsure how much he is entitled to. Anyway, he says, sometimes nothing is available in the PDS shop. Confusion surrounds the cards. In theory everyone with a BPL card should be on a list. But some people who have cards are not on the list, and some who are on the list do not have cards. So coverage is patchy. For instance, Maheshpur has 179 BPL cardholders but villagers say there should be at least 500-600.

In Kailashpur Sabur Sai also has three cards: for his wife, daughter, and wife’s sister. Chhattisgarh has an even more complicated system than Uttar Pradesh: there are six, colour-coded cards, including special ones for widows and pensioners. Yet the basic entitlement is common to all and, unlike in Maheshpur, everyone knows it: 35kg of rice and 10kg of wheat (and “not a single grain less”, says Mr Sabur Sai), each for 2 rupees a kilo. Subsidised grain therefore costs less than half what it does in Uttar Pradesh. Mr Sabur Sai says he has stopped herding goats for others and has bought 40 of his own, several of which are nosing about his courtyard and knocking over furniture. Because he can keep an eye on them while working on his smallholding, his farm has flourished. He gestures to the other side of the valley where his brother-in-law is knee-deep in mud behind a buffalo, ploughing a field that once lay fallow.

Expanding safety nets does not have to be expensive: spending on cheap food is only 4% of Chhattisgarh’s budget. But by itself expansion would not have done much. Theft from anti-poverty programmes—reselling subsidised food and pocketing the difference—is endemic. An investigation by Bloomberg, a news agency, reckoned that $14.5 billion worth of food has been ripped off from the PDS in Uttar Pradesh alone in the past ten years.

The fraudsters operate with impunity, and expanding the programmes risks expanding corruption. So the Chhattisgarh government changed the system. The hope was that if beneficiaries knew what they were entitled to, they would kick up a fuss when money or food went missing. Millions of beneficiaries outnumber a few bribable civil servants.

Half the houses in Kailashpur have a small yellow plaque by the front door with the name and number of PDS cardholders living there. The walls of the village shop are also covered by names and numbers—the names of card holders, the prices of sugar and cereals, even a toll-free number in case of complaint. Local watchdog organisations say complaints through the helplines usually lead to some sort of redress. According to Reetika Khera, of the Indian Institute of Technology in Delhi, only 10% of PDS shops in Chhattisgarh reported that food had gone missing or been stolen in 2009-10, down from almost half in 2004-05. In Uttar Pradesh the theft rate remains stuck at about 60%.

The bigger change in Chhattisgarh was to the role of the middlemen who take food from government warehouses, transport it to villages and sell it. In Uttar Pradesh such middlemen are private dealers. Partly because they are not paid properly, they bilk the system and get away with it, thanks to political contacts.

There is no evidence that the shopkeeper in Maheshpur, Radhe Shyam Singh, is corrupt, but his background is typical. He has run the local PDS for nearly a quarter of a century, having got the job thanks to a political connection. In 1990 a member of his high-status Rajput caste was elected to the head of the council, or sarpanch. Along with the job, Mr Singh got a bank loan to finance start-up costs. He has not looked back. Most houses in the village have a couple of bare light bulbs. His is lit up like a Christmas tree and sports a satellite dish. Four buffaloes graze placidly out front, next to a rank of his motorcycles.

In Kailashpur his opposite number is Chintamani Singh, another Rajput. Yet he is not a private dealer. In the mid-2000s the Chhattisgarh government nationalised the distribution bit of the Public Distribution System and handed it over to local institutions or self-help groups. The main aim was political: to win village votes by improving social-safety nets. The move provoked a fierce fight that went all the way to the Supreme Court in Delhi, as dealers sought to protect their lucrative businesses. They lost. According to one survey, 97% of respondents in Chhattisgarh say they normally get their full entitlement of food, compared with only 77% in Uttar Pradesh. A spot check of shops showed that shop records and ration-card entries matched in 94% of cases in Chhattisgarh, but only half the time in Uttar Pradesh.

Though Kailashpur has none of the obvious attributes of wealth—it has no rural industry or large shops, for instance—its people seem better fed and better housed than in Maheshpur. Mr Drèze reckons that whereas the PDS has reduced the number of people below the poverty line by 15% in Uttar Pradesh, it has done so by 40% in Chhattisgarh. Two things, says Mr Singh, the PDS manager in Kailashpur, have got better over the past five years. The first is the government’s greater attention to programmes such as the PDS. Second, ordinary folk are better informed, and these days insist on their rights. “Sometimes”, Mr Singh says, “we can barely keep up.”