In the context of a distressed fiscal position that the state holds in terms of lower capacity to source funds through taxation and restrictions on borrowing funds, it is imperative for Kerala to ensure distributional efficiency of its funds. The state has largely used public expenditure as its major channel of redistribution. However, cases of exclusion from these achievements are not far from reality in Kerala, notwithstanding its development achievements. This study uses the benefit incidence analysis (BIA) on two separate rounds of the National Sample Survey data to assess the distributional effects of public spending on crop insurance and rural housing schemes in India, with special reference to Kerala. We find that the Crop Insurance Scheme shows a pro-rich trend. Agricultural development policies are effective only with adequate safety nets for small and marginal farmers; otherwise, in agriculture-distressed states like Kerala, regressive expenditure distribution may lead to negative impacts that overshadow positive outcomes. While rural housing demonstrates a pro-poor trend, with a heavy capturing of benefits by the high-income deciles, a strong decentralised government and private sector, and the self-selective nature of the scheme can be identified as some of the reasons for this trend. However, a higher elite capture in the case of a highly targeted scheme, such as rural housing, raises concerns about the state’s fiscal management.
AlamA., SatpatiL., & MandalI. (2022). A review of rural housing schemes in India for sustainable habitats. In KunduA., Ponce DentinhoT., MagsiH., BasuK., & BandyopadhyayS. (Eds.), Accessible housing for South Asia (pp. 127–143). https://doi.org/10.1007/978-3-030-88881-7_7
2.
AllansonP. (2008). On the characterisation and measurement of the redistributive effect of agricultural policy. Journal of Agricultural Economics, 59(1), 169–187. https://doi.org/10.1111/j.1477-9552.2007.00132.x
3.
AtkinsonA. B. (1983). Social justice and public policy. MIT Press.
4.
BaijuK. C., & VidyaP. V. (2021). Inequality in the distribution of consumption expenditure and wealth among social groups in Kerala: A comparative analysis. Artha Vijnana, 80(3), 238–262.
5.
BirdR. M., & ZoltE. M. (2005). Redistribution via taxation: The limited role of the personal income tax in developing countries. http://www.worldbank.org/lac
6.
BrewerM., BrowneJ., EmmersonC., HoodA., & JoyceR. (2015). The incidence of targeted housing subsidies: Evidence from reforms to UK housing benefit. https://www.gov.uk/government/statistics/benefit-expenditure-and-caseload-tables-2015
7.
CerraV., EichengreenB., El-GanainyA., & SchindleM. (Eds.). (2021). How to achieve inclusive growth (1st ed., Vol. 1). Oxford University Press.
8.
ChancelL., PikettyT., SaezE., & ZucmanG. (2022). World inequality report 2022. World Inequality Lab. https://wir2022.wid.world/www-site/uploads/2022/01/WIR_2022_FullReport.pdf
9.
ChathukulamJ., & JohnM. S. (2006). Issues in tribal development: The recent experience of Kerala. In RathG. C. (Ed.), Tribal development in India: The contemporary debate. Sage Publications.
10.
ClementsB. J., CoadyD., FabrizioS., GuptaS., AlleyneT., & SdralevichC. (2013), Energy subsidy reform: Lessons and implications (1st ed., Vol. 1). International Monetary Fund. https://doi.org/10.5089/9781475558111.071
11.
ClementsB., FrankJ. E., & GuptaS. (2014). Equitable and sustainable pensions: Challenges and experience (1st ed., Vol. 1). International Monetary Fund. https://doi.org/10.5089/9781616359508.071
12.
CongR.-G., & BradyM. (2012). How to design a targeted agricultural subsidy system: Efficiency or equity?PLoS One, 7(8), 1–12. https://doi.org/10.1371/journal.pone.0041225
13.
CorniaG. A., & StewartF. (1993). Two errors of targeting. Journal of International Development, 5(5), 459–496. https://doi.org/10.1002/jid.3380050503
14.
DattG., RayR., & TehC. (2022). Progressivity and redistributive effects of income taxes: Evidence from India. Empirical Economics, 63, 141–178. https://doi.org/10.1007/s00181-021-02144-x
15.
DavoodiH. R., TiongsonE. R., & AsawanuchitS. S. (2003). How useful are benefit incidence analyses of public education and health spending?[working paper no. 03/227]. IMF.
16.
de JanvryA., & SadouletE. (2009). Agricultural growth and poverty reduction: Additional evidence. World Bank Research Observer, 25(1), 1–20. https://doi.org/10.1093/wbro/lkp015
17.
DemeryL. (2000). Benefit incidence: A practitioner’s guide [working paper no. 35117]. Poverty and Social Development Group Africa Region, The World Bank.
18.
Directorate of Economics and Statistics. (2024). Building statistics 2021–2022. Government of Kerala. https://www.ecostat.kerala.gov.in/storage/publications/1715.pdf
19.
FanS., GulatiA., & ThoratS. (2008). Investment, subsidies, and pro-poor growth in rural India. Agricultural Economics, 39(2), 163–170. https://doi.org/10.1111/j.1574-0862.2008.00328.x
20.
GaihaR., ImaiK., & KaushikP. D. (2001). On the targeting and cost-effectiveness of anti-poverty programmes in rural India. In Development and change (Vol. 32, pp. 309–342). Blackwell Publishing Ltd.
21.
GopikuttanG. (2002). Public housing schemes for rural poor in Kerala: A critical study of their suitability [working paper no. 49]. Centre for Development Studies. www.krpcds.org
22.
Government of Kerala. (2016). Expert group report—Total housing mission. Kerala State Planning Board.
23.
Inequality and Fiscal Policy. (2015). In ClementsB. J., de MooijR. A., GuptaS., & KeenM. (Eds.), Inequality and fiscal policy. International Monetary Fund. https://doi.org/10.5089/9781513567754.071
24.
JacobyH. G. (1997). Self-selection and the redistributive impact of in-kind transfers: An econometric analysis. The Journal of Human Resources, 32(2), 233–249. https://www.jstor.org/stable/146214
25.
JayneT. S., & RashidS. (2013). Input subsidy programs in sub-Saharan Africa: A synthesis of recent evidence. Agricultural Economics (United Kingdom), 44(6), 547–562. https://doi.org/10.1111/agec.12073
26.
JhaP., & AcharyaN. (2011). Expenditure on the rural economy in India’s budgets since the 1950s: An assessment. Review of Agrarian Studies, 1(2), 134–156.
27.
JhaS., & MehtaA. (2008). Effectiveness of public spending: The case of rice subsidies in the Philippines[working paper no. 138]. Asian Development Bank.
28.
KarnamG., & AcharyaV. (2018). Karnataka state budgets: How far they have promoted inclusiveness. Journal of Social and Economic Development, 20, 24–42. https://doi.org/10.1007/s40847-018-0064-4
29.
KeeneyM. (2000). The distributional impact of direct payments on Irish farm incomes. Journal of Agricultural Economics, 51(2), 252–265. https://doi.org/10.1111/J.1477-9552.2000.TB01227.X
30.
KempP. A. (2000). The role and design of income-related housing allowances. International Social Security Review, 53(3), 43–57.
31.
Kerala State Planning Board. (2017). Thirteenth five-year plan working group on housing.
32.
KunhamanM. (2018). Exclusion through development: The Kerala experience. Research & Reviews: Journal of Social Sciences JSS, 1(4), 221–228. www.rroij.com
33.
KurienJ. (1995). The Kerala model: Its central tendency and the outlier. Social Scientist.
34.
LanjouwP. (2009). Constructing a consumption aggregate for the purpose of welfare analysis: Principles, issues and recommendations arising from the case of Brazil. Paper Presented at Conference ‘Measuring Poverty, Income Inequality and Social Exclusion: Lessons from Europe’. Paris.
35.
MeermanJ. (1979). Public expenditure in Malaysia: Who benefits and why. Oxford University Press. http://documents.worldbank.org/curated/en/829381468774588868/Public-expenditure-in-Malaysia-who-benefits-and-why
36.
MurrayM. P. (1980). Tenant benefits in alternative federal housing programmes. Urban Studies, 17, 25–34.
37.
MusgraveR. A. (1959). The theory of public finance: A study in public economy (Vol. 1). McGraw-Hill. http://digilib.fisipol.ugm.ac.id/handle/15717717/11954
38.
NIPFP Research Team. (2018). Impact of Pradhan Mantri Awaas Yojana-Gramin (PMAY-G) on income and employment.
39.
OgdenK., & PhillipsD. (2024). The distribution of public service spending. Oxford Open Economics, 3(S1), i1209–i1261. https://doi.org/10.1093/ooec/odae007
40.
OlfertR. M., & PartridgeM. D. (2010). Best practices in twenty-first-century rural development and policy. Growth and Change, 41(2), 147–164.
41.
OlsenE., & BartonD. M. (1983). The benefits and costs of public housing in New York city. Journal of Public Economics, 20, 299–332.
42.
PaternostroS., RajaramA., & TiongsonE. (2007). How does the composition of public spending matter?Oxford Development Studies, 35(1), 47–82. https://doi.org/10.1080/13600810601167595
43.
PietL., & DesjeuxY. (2021). New perspectives on the distribution of farm incomes and the redistributive impact of CAP payments. European Review of Agricultural Economics, 48(2), 385–414. https://doi.org/10.1093/erae/jbab005
44.
PraveenS. R. (2022). Microplans for extremely poor families to be prepared. The Hindu. https://www.thehindu.com/news/national/kerala/microplans-for-extremely-poor-families-to-be-prepared/article65619872.ece
45.
RajeshT., ShivaswamyG. P., AnujaA. R., SinghK. N., & KumarH. (2020). Public expenditure on agricultural inputs and farm support services in India—An overview. Annals of Agricultural Research New Series, 41(4), 418–423.
46.
RamanathaiyerS., & MacphersonS. (2000). Social development in Kerala: Illusion or reality?In Social development in Kerala: Illusion or reality? (1st ed.). Routledge.
47.
RamaswamiB. (2019). Agricultural subsidies (Study prepared for XV finance commission). Indian Statistical Institute.
48.
RavallionM., & DattG. (1995). Is targeting through a work requirement efficient? Some evidence for rural India. In van de WalleD. & NeadK. (Eds.), Public spending and the poor: Theory and evidence (Vol. 1, pp. 413–444). The Johns Hopkins University Press.
49.
RawlsJ. (1971). A theory of justice: Original edition. Harvard University Press. https://doi.org/10.2307/j.ctvjf9z6v
50.
SahayG. R. (2022). Agriculture and new farm laws in India: A study of probable impacts on marginal and small farmers. Sociological Bulletin, 71(4), 566–581. https://doi.org/10.1177/00380229221116930/FORMAT/EPUB
51.
SajidM. S. (2019). Exclusion and regional disparity in “Kerala Model” of development: A threat to the sustainable development. Population and Sustainable Development, 109–118.
52.
SchwartzG., & Ter-MinassianT. (2002). The distributional effects of public expenditure. Journal of Economic Surveys, 14(3), 337–358.
53.
SenA. (1985). Well-being, agency and freedom: The Dewey lectures 1984. The Journal of Philosophy, 82(4), 169–221.
54.
SinghS., SwaminathanM., & RamachandranV. K. (2013). Housing shortages in rural India. Review of Agrarian Studies, 53–72. http://www.fas.org.in/pages.asp?menuid=16
55.
SreerekhaM. S. (2010). Challenges before Kerala’s landless: The story of Aralam farm. Economic & Political Weekly, 45(21), 55–62.
56.
SRS., TBR., & AjayA. (2023). State led social security and inclusion of marine fisherfolk: Analyzing the case of Kerala, India. Marine Policy, 147, 105392.
57.
van de WalleD. (1995). Public spending and the poor: What we know and what we need to know. The World Bank.
58.
van OorschotW. (2002). Targeting welfare: On the functions and dysfunctions of means-testing in social policy. In TownsendP. & GordonD. (Eds.), World poverty: New policies to defeat an old enemy (pp. 171–193). The Policy Press.
59.
WangS. W., ManjurB., KimJ. G., & LeeW. K. (2019). Assessing socio-economic impacts of agricultural subsidies: A case study from Bhutan. Sustainability, 11(12), 1–12. https://doi.org/10.3390/SU11123266
60.
YaduC. R., & SatheeshaB. (2017). Evolving wealth inequality in Kerala: Mapping the winners and the losers. In LimaG. P. & MadiM. A. (Eds.), Capital and justice. World Economics Association Books.
