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Abhishek Shaw
IIM Ahmedabad
Sawan Rathi
IIM Ahmedabad
Anindya S. Chakrabarti
IIM Ahmedabad
Working Paper
JEL Codes:
D31, E21, E26, O23
● Land-holding Inequality and Responses to Government Interventions
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Do households at different wealth levels respond differently to identical government interventions? In this paper, we consider the case of Telangana, an Indian state, which saw implementation of a property rights verification program reducing uncertainty in wealth level, coupled with an unconditional cash transfer for agricultural land-owners with the goal of getting them out of debt trap. The direct effect, if any, would impact organized farmers who own large amountsof land, and small and marginal farmers with smaller amounts of land. The indirect effect could impact the local landless laborers due to increase in local employment. We exploit a difference-in-differences design with border districts of Telangana with the neighboring state districts as a control group, to show that the direct effects were large both the organized farmers and small and marginal farmers responded by consuming more and borrowing more, and the effects onlandless laborers were insignificant. But small and marginal farmers responded with more intensity in most of the dimensions especially, their switch from self-help groups to formal banking sources for borrowing, is quite prominent. Overall, the announcement of the policy had no effect as the timing was not specified, but the implementation did.

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