For Jayanti Maitee, a 41-year-old woman who lives at Ersama, about 100 km from Bhubaneswar, making ends meet was a struggle.
Ersama, in Jagatsinghpur district of Odisha , was one of the worst hit by the super cyclone of 1999 that ravaged the state. With their livelihood's destroyed , the escape route from poverty virtually disappeared overnight for many.
But, for Jayanti, all that changed in 2013. She joined Maa Sitala, a self-help group (SHG), part of the World Bank-funded Odisha Rural Livelihoods Project . She took a loan of Rs 5,000 to reconstruct a pond for fishing. There has been no looking back since then. She subsequently availed a number of loans, gradually diversified into poultry, cashew nut cultivation, and pisciculture (fish farming). The rise in income has helped her support her two children.
Cases where the World Bank-funded project has had profound impact on the lives of the poor are numerous in the districts of Jagatsinghpur and Puri, providing grist to the mill of aid advocates.
The efficacy of aid is perhaps one of the most enduring questions in development economics, with supporters and critics of aid marshalling evidence to support their claims.
Critics of aid argue that a part of the problem stems from the failure to account for irrational human behaviour. Economists assume that people will behave rationally. But people might simply choose not to act in their best interest.
Take the case of the mosquito nets in Africa. Malaria is the scourge of the continent. So one would naturally assume that providing mosquito nets would help in solving the problem. However, interventions might not always help. As William Easterly points out in The White Man's Burden: "When aid agencies hand them out in poor countries, nets are often diverted to the black market... or wind up being used as fishing nets or wedding veils."
Recently, the World Bank had come under the scanner after a report of the International Consortium of Investigative Journalists claimed projects funded by the Bank have displaced 3.4 million people across the world.
In India, many argue the poor simply squander away cash support given by the government on alcohol.
In an influential study, Reserve Bank Governor Raghuram Rajan and Chief Economic Advisor Arvind Subramanian found little evidence of a positive relationship between aid inflows into a country and its economic growth. They also found no evidence that aid works better in good policy or geographical environments, or that certain forms of aid work better.
However, it's difficult to square off anecdotal evidence on the efficacy of projects with research that challenges the effectiveness of aid.
A recent visit to Jagatsinghpur and Puri to understand the dynamics of the World Bank-funded project, now being rolled out across the state, threw up numerous examples of how aid has benefited the poor.
Take the case of Sakuntala Sethy, who availed two loans totalling Rs 9,000 for a sewing machine and for dairy development. Such access to credit has helped her and many like her create assets and develop income streams. Credit provided by World Bank-aided SHGs seems to have been judiciously used to build assets. Landless labourers in Puri, by availing these loans, have resorted to cooperative farming, distributing work responsibility. Mud houses have been replaced by brick houses - a sign of rising income levels.
There are indications of profound social change as well. A welcome, but perhaps unintended, consequence of the project is female empowerment. There are instances when the close-knit SHG community has given shelter to members facing domestic violence and helped them with grants. Villagers say cases of domestic violence have gone down.
The project seems to have tackled the issue of financial inclusion, too. To tackle harassment by bank officials, the project has sought to appoint Bank Mitras - elected representatives, inside bank branches - who will guide villagers through the various procedures. The move, also implemented in states such as Andhra Pradesh, is likely to help in ensuring greater engagement of the poor with the formal financial system.
While improvements in the economic and social well-being of these villagers might not be captured in cross-country, macro-level studies on aid effectiveness, it is difficult to deny their impact on the ground.
The real test of the efficacy of the project will be when the donors withdraw, later this year. The villagers are being conditioned for the withdrawal but what is less clear is whether the apparent success will continue once the aid stops. Even after five years of the model being adopted, members still don't appear comfortable or well-versed with financial matters.
The author was part of a media team that visited Jagatsinghpur and Puri to observe the World Bank-funded project. Business Standard bore the travel and accommodation expenses
The other issue is how best to extend the model to other districts. Perhaps, mindful of the challenges that may arise with scaling up the project, the donors have put together a team of villagers to visit other districts and educate people there. However, their success in transferring the knowledge is debatable.
To transpose a successful project from one area to another without an adequate understanding of the internal dynamics of the place is not advisable, say economists. Many advocate that the focus should rather be on piece-meal approaches than on a grand overarching solution. However, without an independent evaluation of programmes, it is difficult to get a clearer idea of which interventions are most cost-effective and which ones can be replicated.
The author was part of a media team that visited Jagatsinghpur and Puri to observe the World Bank-funded project. Business Standard bore the travel and accommodation expenses
