The basic objective of the IRDP In India and Grameen Bank (GB) in Bangladesh is the endowment of income-generating asset to the poor. This is done by providing credit to the landless and the land-poor.¹ The Small Farmers’ Development Programme (SFDP) in Nepal is also a credit-based programme intended to raise the productivity of the small and marginal farmers.² All these three programmes have achieved varying degrees of success as far as their immediate objectives are concerned. For example, a sample survey of the beneficiaries of SFDP showed that their average farm size is 1.37 ha., while the average for the country is 1.14 ha.³ per rural household. In the case of IRDP in India a substantial percentage of the beneficiaries were small farmers who were not eligible for the assistance. The Grameen Bank in Bangladesh appears to have performed better in this respect. Even in that case, however, landless agricultural labourers (who are known to be amongst the poorest of the rural poor) constituted a small proportion of the loanees. Moreover, the preponderance of repeat loans to same individuals have precluded the possibility of spreading the net of the Bank to cover the poorest.⁴

¹ The IRDP in India also covers the small and marginal farmers and has an element of subsidy and training in it.

² This programme also covers the landless in some cases. For critical reviews of similar programmes in India (e.g, the Small Farmers’ Development Agency and the Agency for Marginal Farmers and Agricultural Labourers, see B.S. Minhas, ‘Rural Development for Weaker Sections: Experience and Lessons’ and A.K. Sen, ‘Poverty and Economic Development’ - both in Charan D. Wadhva (ed), Some Problems of India’s Economic Policy, Tata McGraw Hill, New Delhi, 1977; and A.K. Sen, Employment Technology and Development, Clarendon Press, Oxford, 1975. Appendix B.

³ See Chapter 5 of the present volume.

⁴ See Chapter 3 of the present volume as well as M. Muqtada, Special Employment Schemes in Rural Bangladesh: Issues and Perspectives, ARTEP Working Paper, Bangkok, December 1984.

In terms of raising the level of income, satisfaction of non-food basic needs, increasing the participation of females in economic activities and capital accumulation the success of Grameen Bank is quite notable. An evaluation of the Grameen Bank showed that the per capita income of the households who had obtained loan from the bank had increased by about 32 per cent between 1980 and 1982 when the per capita income in Bangladesh as a whole increased by only 2.6 per cent. An important factor behind the increase in income of loanee households was the additional employment generated for the adult females. The increase in income had a substantial impact on the satisfaction of non-food basic needs. Compared to a control group of households, the average expenditure of the loanee households was found to be 3.7 times for clothing, 2.4 times for housing and 2.3 times for health.¹

¹ See Chapter 3 for more details.

Similarly, an evaluation of the Small Farmers’ Development Programme (SFDP) in Nepal found that the average income of households who were members of the project was 24 per cent higher than the control group of (non-member) households. The contribution of livestocks in the income of project-group households was found to be much higher than in the case of other households. The average expenditure of households in the programme was also found to be substantially higher than that of other households. This had a noticeably favourable impact on the access to food of the small farmers included in the programme.²

² See Chapter 5 for more details.

In India, evaluation of the IRDP has been carried out - albeit in a scattered manner - in a few states. And most of them point to the success of the programme in raising the level of income of the beneficiaries. The IRDP has a component for the women also. Since this component called the Development of Women and Children in Rural Areas has started only recently on a pilot basis, it is too early to judge its impact on the women in poor households. The component on skill formation and upgradation has, however, achieved some success - at least in terms of the target for trained youth.³

³ See, also, Chapter 4.

Several questions nevertheless remain. First, these programmes basically are of one-shot injection of investment resources without proper provision for supporting them with working capital and consumption loans required to tide over critical periods⁴ (e.g., the gestation period between the time an investment is made and returns start flowing or a temporary period when flow of returns may stop). Moreover, the capital stock created may be too small and fragile; and the flow of new additional income may also be insufficient (due to low productivity of the activities) for enabling the poor to break the vicious circle of poverty. In such a situation, the poor may be compelled to return to the money-lender for additional funds. Second, without any land-base (i.e., at least a house site) the poor may remain vulnerable to the pressures of the landlord providing him the minimum needed. The capacity of the poor to retain and use the non-land asset may thus be adversely affected. Third, in some cases the utilisation of credit has been found to be heavily biased towards trade. An expansion of trade without a simultaneous growth of productive activities can only increase traders’ margin⁵ without helping the producers. Moreover, a proliferation of petty traders will only mean small increases in their incomes. Also, increases in traders’ margin without an increase in the volume of production may lead to an inflationary pressure which may eat up whatever little increase takes place in the income of the poor.⁶

⁴ The Grameen Bank of Bangladesh has, however, a ‘group fund’ which is created out of the savings of the loanees and is supposed to help them in ‘emergencies’.

⁵ This refers to total trade margin. A larger number of middlemen could of course lead to lower average margins.

⁶ See M. Muqutada, Special Employment Schemes, op. cit.