time to carefully monitor the quality of service provision in complex settings, e.g. if quality is not immediately obvious and monitoring characterized by scale economies (Olken 2006, Olken 2007).

All this implies that, without an institutional structure that provides checks, balances, and ways to translate information into sanctions at low-cost, knowledge about abuse may be deflected by those responsible through a combination of co-optation and bullying so that, instead of helping to improve service quality, it may lead to frustration and intra-community strife. Although quantitative assessments are rare, there is evidence that abuse of project resources can have large impact on outcomes; a recent study finds that up to two-thirds of the resources transferred to communities were dissipated in rent seeking. Together with potential negative externalities -in one case project managers could, after taking their cut, only afford to provide sick goats that infected and eventually killed much of the healthy onesthis can almost wipe out project benefits (Ensminger 2007). Careful assessment of the impact of CDD programs and the way in which these relate to complex local institutions will thus be of great importance (Conning and Kevane 2002).

# **2.2 Program characteristics**

We aim to evaluate the first three years’ implementation of the first phase of the IKP ( _Indhira Kranthi Patham_ ) program in Andhra Pradesh, also known as DPIP.<sup>1</sup> The program, which aims to build on AP’s tradition of SHGs to promote economic and social empowerment in a mutually reinforcing way, was supported by a US$ 110 million World Bank loan. A first phase, launched in October 2000, aimed to promote and strengthen self-help groups in the state’s six poorest districts.<sup>2</sup> A second phase, called RPRP (Rural Poverty Reduction Project), drew on a US$ 150 million loan to expand coverage to the state’s remaining 16 districts starting from July 2003.

At the start of the program, significant efforts were exerted in social mobilization to expand the outreach of SHGs beyond existing members to include the poor. To identify the target population, the state’s 2001 “below poverty line” census -routinely used to determine eligibility for government programs- was complemented by a large effort of participatory identification of the poor (PIP) that added vulnerability and social exclusion to quantitative census indicators and had the resulting lists confirmed by village assemblies. To enable participation by marginalized women from tribal areas and untouchable castes, campaigns on social issues to overcome caste and class barriers within the villages were launched and

> 1 DPIP is the acronym for District Poverty Initiatives Project. The program was implemented by mandal, an administrative unit between village and district in the six districts of Chittoor, Srikakulam, Adilabad, Vizianagaram, Mahabubnagar and Anantapur. It is implemented through an NGO, the Society for the Elimination of Rural Poverty (SERP) and builds on earlier interventions, in particular the South Asia Poverty Alleviation Program (SAPAP) which, through a focused formation of SHGs, had implied that in 2002, AP was home to 60% of all SHGs in India. 2 SHGs typically comprise some 15 women members who meet regularly on a weekly or monthly basis. A key purpose of such meetings, in addition to discussing social and economic issues, is for each member to make a small deposit (R 10-20, equivalent to US$0.25) into a common account. After an initial period of building up its capital stock, normally about six months, the SHG can access loans from the banking sector, normally in amounts proportional to the group’s equity.

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