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Chronic Poverty in India: Concepts, Incidence and Relevance

Chronic Poverty in India: Concepts, Incidence and Relevance. Amita Shah Gujarat Institute of Development Research May 22, 2009 IGIDR. Structure of the Discussion. * Poverty during Pre and Post Reforms Period: Trends, Evidence, Debates Chronic Poverty: Concepts & Measurement

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Chronic Poverty in India: Concepts, Incidence and Relevance

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  1. Chronic Poverty in India: Concepts, Incidence and Relevance Amita Shah Gujarat Institute of Development Research May 22, 2009 IGIDR

  2. Structure of the Discussion * Poverty during Pre and Post Reforms Period: Trends, Evidence, Debates Chronic Poverty: Concepts & Measurement Policy Options

  3. Poverty in India: Recapitulations of Trends

  4. Changes in Poverty (URP)

  5. Estimates Based on Mixed Reference Period

  6. Comparison of 1987-88 to 1993-94 and 1993-94 to1999-2000 • Rate of Decline was higher in the Post-reform period (low base) • Elasticity of Poverty Reduction with respect to Income had declined • Increased Inequality, associated with Growth had dampening impact on poverty reduction • Role of FDI is perceptible despite limited flow; the trickle down effect however, is slow.

  7. Decomposition of Poverty Reduction

  8. Calorie Intake at Official Poverty Line

  9. Debates • Non-Comparability of Data • Post Nineties Performed Better • Why have a Poverty Line • Whether to Raise Poverty Line • Line Vs. Identification

  10. Emerging Issues • Low Poverty with High Levels of Mal-Nutrition • Chronic Poverty is Hard to Hit • Entry of New Poor due to Structural Adjustment • Spatial and Social Dimensions of Concentration of the Poor • Poverty Vs. Multi-Dimensional Deprivation

  11. Chronic Poverty Concepts-1 Extreme Poverty that Persists Over Long Period –years, life, generations Multidimensional-economic, human capital related, socio-political Poverty That Causes Preventable Deaths Important as Analytical Categories

  12. What Causes CP? • Insecurity Traps • Limited Citizenship and Voice • Spatial disadvantages • Social Discrimination • Poor Work Environment

  13. Analysis of Poverty Dynamics • Entry- drivers and maintainers • Exit Ideally Need longitudinal-Panel Data Sets Alternative Approaches-Cohorts based, Recall and Stages Growth

  14. Why CP is Important? • If not addressed immediately, it becomes more intractable and costlier • Increased Period under CP reduces chances of exit • Worsens vicious cycle bet. Material Deprivation and Investment in Human Capital • Political Resistance may take a shape that may result into negative impact • Environmental degradation and CC • Demographic Window having Short Span

  15. Global Magnitude: Countries and Consistent Improvers

  16. CP in India-(Panel Data) • CP reduced from 28.4% to 24.3% during 1970/1-1980/1 to 1980/1-1998/9 • Over the entire period CP was 38%; TP 40%; NP 21% • CP as % to Poor Declined from 43% to 38.6% during the two sub-periods • CP was 38.6 % among SC; 27.9% in ST; and 22.2 among Others during 1980/1-1998/9

  17. CP in India (Panel Data 1981-98)

  18. Explanatory Factors • Caste alone has Marginal Impact • Composition vs. Size of the HHs is Important • Local level Infrastructure and Urban-linked Employment was the Most Significant Factor • CP Declined Initially and then Increased-Due to Declining Land Holding Size (?) • The Factors thus, vary Over Time

  19. Stages of Growth (Rural) • Food • Clothing • House Repairing • Education • Debt Payment • Buying a Small Piece of Land Health Missing in all ALTERNATIVE trajectories

  20. Distribution of Households Across Four Categories by States (% of hhs)

  21. Reasons for Escaping Poverty

  22. Vulnerability: 2004-05 Sengupta et. al)

  23. 1983 2004-05 States HCR Rank % share HCR Rank % Share Orissa 65.31 1 5.70 47.07 1 6.03 Bihar 62.71 2 14.64 41.53 2 16.53 Madhya Pradesh 49.23 5 8.61 37.21 3 10.79 Maharashtra 43.13 7 9.04 29.95 5 10.36 Uttar Pradesh 46.94 5 17.42 33.25 4 20.93 Tamil Nadu 53.48 4 8.47 28.31 6 6.10 West Bengal 53.60 4 9.77 25.67 7 7.23 All India 44.93 100 28.27 100 Table 1: Concentration of Poverty among Major States in India

  24. Sr. No. Regions in Descending Order Category of Region 1 Orissa-Southern Forest-based 2 Madhya Pradesh-South Central Forest-based 3 Madhya Pradesh-Chhatisgadh Forest-based 4 Orissa-Northern Forest-based 5 Madhya Pradesh-South western Forest-based 6 Maharashtra-Eastern Forest-based 7 Bihar-Southern Forest-based 8 Madhya Pradesh-Central Other 9 Bihar-Central Dry land 10 Uttar Pradesh-Central Other 11 Tamilnadu-Coastal Northern Forest-based 12 Bihar-Northern Other 13 Madhya Pradesh-Vindhya Forest-based 14 Madhya Pradesh-Malwa Platau Other 15 Uttar Pradesh-Eastern Dry land Table 3: List of 15 Regions Appearing in the Three NSSO-Rounds

  25. III. Way Forward • Inclusive Growth: XI Plan: More of the Same? (Fiscal, Financial, Trade Policies; Institutions; Broad-based Growth) • Focus on Agriculture Growth: Neglect of Dry Land Areas • NREGS and Universal PDS • Social Protection & Transfer of Minimum Income • Right to Decent Life

  26. THANKS

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