Effect of Structural and Conditional Rigidities on Moving a Beneficiary from Passive to Active State An Empirical Investigation in a Poverty Reduction Programme in Rural India Arindam Banik* and Pradip K Bhaumik** Most studies on poverty alleviation and reduction programmes emphasize structural bottlenecks, asymmetric information, and rent seeking behaviour. This paper provides an analytical characterization of the beneficiaries in a situation of much structural and conditional rigidity, where all beneficiaries do not move from a passive state to an active state and take advantage of the government intervention despite their having access to the benefit. From an ordered logistic analysis of primary data collected from the Supply of Improved Tool Kits to Rural Artisans (SITRA programme) in 2001-02, the study reveals that factors such as demographic characteristics, incomes from other sources, gender, and the quality of the tool kits are important variables affecting their economic behaviour. It argues that skill-biased technical change in this situation may have serious short comings. *International Management Institute (IMI), B-10, Qutab Institutional area, Tara Crescent, New Delhi 110016. Email: arindambanik@imi.edu ; ** IMI, New Delhi. Email: pkbhaumik@imi.edu . I Introduction The reduction of income poverty is largely associated with long-term economic growth. There seems to be a broad consensus among analysts and policy makers that per capita income growth is a major element of sustainable poverty reduction. However, similar rates of growth can have different impact on income poverty under different conditions and rigidities. A whole range of mixes of the two major approaches of higher economic growth and better income distribution has been used by different governments to achieve the objective of poverty reduction – again with mixed results [van de Walle, 1995]. While the East Asian countries have generally been very successful in eradicating poverty, the South Asian ones have been able to achieve rather modest successes. Latin American countries achieved little progress in poverty reduction, largely due to low economic growth, while Africa actually witnessed an increase in its poverty [Fan, 2003]. Over the years a welter of studies has explored the impact of poverty alleviation programmes – largely in developing countries [van de Walle and Nead, 1995; Fan and Rao, 2003; ADB, 1993]. In fact, impact assessment studies are routinely conducted for almost all poverty alleviation programmes at different stages of programme