Drought, distress, and a conditional cash transfer programme to mitigate the impact of drought in Bihar, India
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Paddy - Bihar's staple crop - is vulnerable to drought, primarily due to the high cost of irrigation. In 2008, the Bihar government launched a conditional cash transfer scheme to subsidize diesel for irrigation in drought-affected areas. We show that this scheme has not been effective in mitigating the impact of drought on paddy production. A primary survey of potential and actual beneficiaries shows that low awareness and penetration among smallholders, alongside uncertainties and delays in the disbursal of the subsidy, make it ineffective. We suggest that in states with limited capacity, such ad hoc subsidies are unlikely to protect smallholders from weather shocks.
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