A Livelihood Programme That Works for India’s Ultra-Poor: New study in Science
May 15, 2015 New Delhi, India - A new six-country study shows a comprehensive approach for the ultra-poor, the approximately one billion people who live on less than $1.25 a day, boosted livelihoods, income, and health. Published in Science, the research tested the effectiveness of an approach known as the “Graduation model” in six countries, including India, by following 21,000 of the world’s poorest people for three years. The data show this approach led to large and lasting impacts on their standard of living. In a country like India, which has close to one-third of the world’s poor, this proven anti-poverty strategy is particularly relevant as policymakers look towards effectively reaching poorest of the poor.
Previous efforts by governments and aid groups to reduce poverty among the ultra-poor have not been proven to work. Addressing this gap, the new study reports on a six-country evaluation, including one in India in West Bengal, of a comprehensive approach that addresses the many challenges of poverty simultaneously. According to study co-author Abhijit Banerjee, Professor of Economics at the Massachusetts Institute of Technology (MIT) and Director of Abdul Latif Jameel Poverty Action Lab (J-PAL), "The ultra-poor face several challenges, beyond just not having sufficient income. They don’t have adequate food or means to save, and suffer from low morale to escape from their current situation”. He added, "The approach we evaluated addressed several of these factors at once, and the positive gains in income, livelihoods and health persisted even one year after the programme ended”.
Under the Graduation model approach to poverty alleviation, identified ultra-poor women beneficiaries receive a carefully sequenced set of services, including a productive asset grant such a livestock or goods for trade, training on managing this asset, temporary consumption support to reduce the incentive to sell the asset in case of an emergency, frequent personal mentoring and coaching (usually weekly), health education, and savings services over 18-24 months period. Banerjee added, “This programme’s approach differs from that of microcredit or Self Help Groups to foster self-employment activities among the poor, as households are not required to repay the asset cost. Further, the training and intensive handholding helps beneficiaries fully benefit from their chosen self-employment activities.”
In Ethiopia, Ghana, Honduras, India, Pakistan, and Peru, researchers tracked over 21,000 people to test how much the Graduation approach improved their lives and their families’ welfare. Researchers used a randomised controlled trial methodology wherein they tracked both people invited to participate in the two-year programme and a similar group who was not, and compared how their lives changed up to a year after the programme ended. Those in the programme group had significantly more assets and savings, spent more time working, went hungry on fewer days, and experienced lower levels of stress and improved physical health. For example in India, where the model was implemented by Bandhan-Konnagar, the not-for-profit arm of Bandhan Financial Services Ltd., participants’ consumption was 26 percent higher by the end of the programme.
The programme is cost effective, with positive returns in five of six countries, ranging from 133 percent in Ghana to 433 percent in India that were sustained one year after the end of the programme. In other words, for every rupee spent on the programme in India, ultra-poor households saw 4.33 rupees in long term benefits. “The Graduation approach has led to broad improvements in key dimensions of economic and non-economic well-being in most countries where it was tested,” said study co-author Esther Duflo of MIT's economics department and Director, J-PAL. Duflo added, “For a country like India, it would be useful for the government, both at the Centre and the State, to see how they can better integrate this approach into their existing livelihood programmes, especially to effectively reach the very poor.”
Buoyed by these findings, some governments, aid agencies and donors have already started supporting this approach. The programme is being scaled up in Pakistan and the government of Ethiopia plans to expand the programme to benefit an estimated three million people through the country’s Productive Safety Net Program. In India, scale up efforts are predominantly being led by Bandhan-Konnagar, which has been implementing the Graduation Model through its Targeting-the-Hardcore Poor programme since 2006 and has reached over 30,000 households till date.
Mr. Chandra Shekhar Ghosh, Chairman and Managing Director, Bandhan Financial Services Ltd. said, “The Graduation programme, which has been tested rigorously by world-class economists and found to be effective, targets extremely poor women in rural areas who have no asset base and mainly depend on begging and wage labour as their primary source of income. Very few programmes are designed for this segment of the poor. For a total cost of Rs 24,000 over two years, this programme provides a sustainable path out of poverty to such households.”
Ghosh added, “We are currently implementing this programme in 28 districts across six states, including Assam, Bihar, Madhya Pradesh, Odisha, Tripura and West Bengal. We hope to continue scaling up the programme throughout India with the support of government, CSR donors and other non-government organisations to help poor rural women move out of extreme poverty and embark on a sustainable growth path.”
Banerjee, Abhijit, Esther Duflo, Nathanael Goldberg, Dean Karlan, Robert Osei, William Parienté, Jeremy Shapiro, Bram Thuysbaert, and Christopher Udry. 2015. “A Multi-faceted Program Causes Lasting Progress for the Very Poor: Evidence from Six Countries.” Science.
Ms. Sharanya Chandran, Abdul Latif Jameel Poverty Action Lab (J-PAL) South Asia at IFMR, [email protected]
Mr. Debashish Roy Choudhuri, CEO, Bandhan-Konnagar, [email protected]
Abdul Latif Jameel Poverty Action Lab (J-PAL) was established in 2003 as a research center at MIT’s Department of Economics. Since then, it has built a global network of 120 affiliated professors and regional offices in Africa, Europe, North America, South Asia, Southeast Asia, and Latin America and the Caribbean. J-PAL South Asia is based out of the Institute for Financial Management and Research (IFMR), a business school in Chennai. J-PAL’s mission is to reduce poverty by ensuring that policy is informed by scientific evidence. It does this by working with governments, non-profits, foundations and other development organizations to conduct rigorous impact evaluations in the field, policy outreach to widely disseminate the lessons from research, and building the capacity of practitioners to generate and use evidence. Over 202 million people have been reached by the scale-up of programs evaluated by J-PAL and found to be effective. www.povertyactionlab.org.
Bandhan-Konnagar, founded in 2002, an NGO based in Kolkata, is already implementing TUP programme in 6 states across Assam, Bihar, Tripura, Odisha, West Bengal and Madhya Pradesh. It also has several other programmes in the areas of health, education, livelihoods, and the organization has reached over 6,60,000 beneficiaries till date. www.bandhanmf.com
Implementing Partners by country:
Relief Society of Tigray, Ethiopia; Presbyterian Agricultural Services and IPA, Ghana; Proyecto MIRE, Honduras; Bandhan, India; Pakistan Poverty Alleviation Fund, Agha Khan Planning and Building Services, Badin Rural Development Society, Indus Earth Trust, Sindh Agricultural and Forestry Workers
Coordinating Organization, Pakistan; Association Arariwa, PLAN International, Peru.
This press release is an adaptation of “Anti-poverty strategy offers sustained benefit for world’s ultra-poor, says new study in Science”, a media release by Innovations for Poverty Action (IPA), the Abdul Latif Jameel Poverty Action Lab at MIT, and the Consultative Group to Assist the Poor (CGAP).