Targeting Efficiency: How Well Can We Identify the Poor?

This paper evaluates the targeting efficiency of various assistance programs operated by the Government of India. It also compares that government programs to the program operated by Bandhan, a Kolkata based MFI. It notes that while the methods used by government programs fail to identify the poorest of the poor, Bandhan's process, including a Participatory Rural Appraisal (PRA), successfully targets a group that appears poorer in various respects. The paper stresses that effective identification of the target population is crucial to the success of aid programs. Findings include:

• Evidence that the targeting efficiency of aid programs is less than perfect, implies that even if an aid program is theoretically claimed to be effective, the impact of the program can be diluted if the program does not reach the intended population; and
• PRAs can generate a reasonably good indicator of economic well-being and can serve as the basis for identifying the target population.