Impacts of the Andhra Pradesh Rural Poverty Reduction Program

Society for Elimination of Rural Poverty National Rural Livelihood Mission Impacts of the Andhra Pradesh Rural Poverty Reduction Program Summary of key outcomes of Rural livelihoods programs in Andhra Pradesh Impact Evaluation Conference, Sep 4 th, 2014

Context Indira Kranthi Pratham(earlier called Velugu) is the biggest self-help group & livelihoods program in the world A multi-sectoral program with interventions ranging from group building to technical training Project design and approach scaled-up to rest of India as National Rural Livelihoods Mission Next phase of livelihoods interventions in AP under design Development of large agriculture producer groups Village-level nutrition and sanitation infrastructure & linkages with agriculture Improvements in last mile service delivery through ICT

Overall Project Strategy & Sequencing New groups were mobilized Existing groups were strengthened Basic group management training Group savings and interloaning Book-keeping Revolving fund Bank linkages Financial Management Capacity Building Partnerships with various public and private sector to provide technical training Group Mobilization & strengthening Financial Inclusion Capacity Building & Skill training

Overall Project Strategy & Sequencing New groups were mobilized Existing groups were strengthened Basic group management training Group savings and interloaning Book-keeping Revolving fund Bank linkages Financial Management Capacity Building Partnerships with various public and private sector to provide technical training Group Mobilization & strengthening Financial Inclusion Capacity Building & Skill training

Overall Project Strategy & Sequencing New groups were mobilized Existing groups were strengthened Basic group management training Group savings and interloaning Book-keeping Revolving fund Bank linkages Financial Management Capacity Building Partnerships with various public and private sector to provide technical training Group Mobilization & strengthening Financial Inclusion Capacity Building & Skill training Sustainable and Resilient Institutions for Poor Enhanced and expanded livelihood services

Social Mobilization Formation of a four-tiered community-based institutions 11.2 million(10.2 mn households) women mobilized into 1.17 mn self-help groups Affinity based SHGs further federated into village, subdistrict and district level federations. Over 90% percent of poor households in the state have participated in the program 173,841 community resource person hired to provide support to these institutions Source: Project MIS Data 1.17 mn SHGs with 11.1 million members Savings Quality control of SHGs Quality control of VOs Quality Control of MSs Internal Lendings On-lending community investment fund to SHGs CIF Management Insurance and safety nets 38,375 VOs 1098 MSs Auditing SHGs and VOs 22 ZSs Accessing Credit from banks Collective procurement Managing bulk milk collection units Providing jobs to youth Financial Literacy Handling health and social issues Handling social issues Convergance with government departments

Credit Mobilization Creation of an ecosystem of social capital based financing in the state Facilitating bank-linkages through bank-mithras Encouraging poor to invest their own money in community-based institutions US$1 billion mobilized in internal savings US$12 billion cumulative credit flow from commercial banks US$21 leveraged for every US$1 invested by the government Source: Project MIS Data, commercial banks

Key Outputs and Impacts Social mobilization has created a big social network enabling a large institutional platform for rural poor Through a mix of savings, revolving fund & bank linkages, capital constraint has been reduced significantly Repayment rates have remained above 95% even during the peak of the financial crisis Several livelihoods interventions have been piloted and scaled-up on this institutional platform Sustainable Agriculture (CMSA) Livestock and Dairy Transition to formal sector through skill-based training and improved access to higher education Consumption, assets and financial behavior have improved Household level impact can only assess the impact of initial set of activities: group formation, credit, and basic financial management skill training Eventually the poor have been able to gain a higher market share for poor in the rural livelihoods economy

Household level Impact Source: Prennushi & Gupta

Background of the study Household survey conducted by CESS focusing on interventions between 2004-2008 mobilization savings bank loans ("bank linkage") skills training (productive activities and services at a very early stage) Following outcomes have been looked at Financial Balances : savings, loans, and net debt Assets indicators: Livestock, durables, non-farm, farm assets, land operated and land owned Consumption indicators: Total food, education, health and total consumption Human Development: Education, health and gender empowerment

Empirical Analysis Methodology: Propensity score matching + difference-indifference Various definitions of participants vs. non-participants, looking at the impact of time spent in the program Early over 4 years Mid 2-4 years Late less than 2 years Three categories of households: Poorest, Poor and Not poor

Caveats This is not a randomized control trial We can only compare SHG participants with nonparticipants in villages with the program biases We cannot fully rule out self-selection bias Participants also accessed several other programs Some of the benefits of the program might have occurred to non-participants in program villages

Interpreting Differences-in-Differences(DiD) Total monthly expenditure per capita, 2004 Rs. Poorest program participants Poorest program non-partic., matched 2004 484 482 2 2008 716 643 73 Difference 2004-08 232 161 71* Annual rate of growth 9.1% 6.6% Difference 71/161=44% DiD: the difference between participants and non-participants in the increase (difference over time) in consumption is 44% of the increase for non-participants (for "early joiners": participants exposed to the program for more than 4 years) Participants experiences an increase 44% larger than non-participants 1 US$= INR60

Borrowing & Assets Overall borrowing was higher for participants On average they could borrow INR 6500(~US$108) more over two years Higher savings amongst participants On average early participants had INR1800(~US$30) more savings Poorest households were able to operate a little more land 0.25 acres more than non-participants Interestingly, only the non-poor could increase land ownership when compared to non-poor non-participants Most participants (and especially STs) accumulated more livestock than non-participants

Consumption Poorest: Early joiners saw total expenditures increase (44%) more than non-participants The 44% difference is quite large: almost 24% of the 2004-05 poverty line. Impacts for poor and not-so-poor are not uniformly positive/significant Education expenditures were higher for poor and poorest participants Differences vary from INR144-240 (US$2.4-4) per capita per year- not irrelevant Two years of exposure to the program were sufficient to see differences

Consumption (2) No significant effects on food consumption & health expenditures But consumption of some food items (such as milk) was higher Lack of impact on health expenditures (and measured health outcomes) may have had to do with significant shortcomings in service delivery

Effects on Other Program Participants On average participation was associated with higher participation in other government programs Participation in IKP led to higher participation in NREGS, schoolmeal program, housing program and the local health program NREGS Midday meal, hostels Housing ICDS Poorest Early Joiners 31*** 21*** 5-2 Mid Joiners 24*** 13 12** 5 Late Joiners 15*** 12** -1 6 Poor Early Joiners 22*** 9* 10*** -3 Mid Joiners 17*** 19*** 21*** 11*** Late Joiners 25*** 15*** 4 6 Not so poor Early Joiners 18*** 0 11*** 5** Mid Joiners 13* 8 11*** -3 Late Joiners 18*** 10* 14*** 7** Note: Significance levels: *: 10 percent, **: 5 percent, ***: 1 percent.

Effects on other Program Participants Large and significant difference in access to NREGS (a large social protection program in India) amongst participants NREGS has contributed to some of the economic effects But so has self-help group participation Effect of NREGS and IKP disentangled in the following way: Exploiting Phasing of NREGS: IKP impacts remain positive and significant even where NREGS had just begun Exploiting non-participation in NREGS: Effects still positive and significant amongst NREGS non-participants

Empowerment Improvement in women s ability to go out without permission Greater autonomy and participation in village meetings No increase in women s ability to save money aside for personal use IKP participants Nonparticipants Difference partic. vs. non-partic. To the market 75 72 3 To visit friends 68 62 6* To visit relatives 61 52 9*** To the local health center 72 65 7** To fields outside the village for work 48 42 6* To the community center/ park/ plaza in the village 44 38 6* To community functions 36 31 5* Note: Results for all poverty categories and lengths of exposure combined. Significance levels: *: 10 percent, **: 5 percent, ***: 1 percent.

Other Impacts Education Higher education expenditure have translated into better school enrollment Health No significant improvements, nor differences in health indicators

Conclusion Poorest benefit the most Increased ability to borrow, which is invested in livestock and leased land Length of exposure matters Consumption expenditures are significantly higher with time

Methodological Insights Successfully conducting Randomized Control Trials requires a great deal of interaction and joint work with program implementers Program implementers are subject to many demands, some of which may turn out not be compatible with randomization Process data are crucial to conduct good IEs; survey data alone are not enough MIS and qualitative data has to be accompanied with it.

Thank you