The project investigates to what extent traditional contractual arrangements, which are intertwined with kinship and caste relationships and may have an exploitative character, can explain the comparative lack of economic progress in the rural sector. And we investigate to what extent better outside options, whether in the rural or the urban economy, change these relations. We study two government programs that may improve the outside options, the NREGS rural employment guarantee scheme and the PMGSY provision of all-weather roads. We combine theoretical and empirical analysis of rural contracts and markets, using panel-data collected by the team in upland Orissa. We find that rural roads lead to a decline in morbidity, with the likely explanation being that people get earlier treatment for communicable diseases. While the employment program seems to be a substitute for insurance, people take up smaller consumption loans if they are employed in the NREGS public works program.
We will investigate to what extent traditional contractual arrangements, which are intertwined with kinship and caste relationships and may have an exploitative character, can explain the comparative lack of economic progress in the rural sector. We will also investigate the flip-side of that coin: to what extent will better options outside traditional arrangements, whether in the rural or the urban economy, change power relations in remote rural areas? The two government interventions that mainly concern us here are the rural employment guarantee scheme and the provision of all-weather roads. We will pay particular attention to how their effects differ across castes and social groups. The project will thus contribute to our understanding of the link from national economic growth to poverty reduction among different social groups in remote villages. The analysis will be based on panel data from rural Orissa, whereby a new round will be added to surveys previously conducted by team members. Proceeding from the panel, we will interview both parties to the, often informal and interlinked, contracts that rule in labor, credit, insurance and related transactions, especially those between the poor and their wealthier neighbors in Indian villages.