C1.1: Sabyasachi Tripathi: Has Urban Economic Growth in Post-Reform India been Pro-poor Between...

Has urban economic growth in Post-Reform India been pro-poor between 1993-94 and 2009-10?

Dr. Sabyasachi Tripathi Fellow

Indian Council for Research on International Economic Relations New Delhi -110003

Email: [email protected]

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Prepared for the presentation in UNICEF and IDS Conference: Rethinking Urbanisation and Equity in Asia: Harnessing the Potential of Urban Living for All Children, Monday 9 June 2014, Institute of Development Studies, Brighton , UK.

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Stamp

Outline of the Presentation 1. An overview of India’s Urbanization, Urban Economic growth, Urban Poverty and Inequality 2. Review of literature, Research gap and Research questions : Pro-poor growth 3. Methodology and data used 4. Empirical results 5. Major Findings, Conclusions, and Policy Implication

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Motivations : From Indian Perspective : Urbanization

Census

Year

Urban population (in

million)

Percentage Urban

Annual Exponential

Growth Rate (%)

No. of towns/UAs

1961 78.94 17.97 - 2657

1971 209.11 19.91 3.23 3081

1981 159.46 23.34 3.79 3891

1991 217.18 25.72 3.09 4615

2001 286.12 27.86 2.75 5161

2011 377.10 31.16 2.76 7935

Figure 1: Proportion of Urban Population in different size categories

Notes: Based on population size Census classifies urban centres in to following six categories. Class I (100,000 or more), Class II (from 50,000 to 99,999), Class III (from 20,000 to 49,999) Class IV (from 10,000 to 19,999), Class V (from 5000 to 9999), and Class VI (below 5000). Source: Author’s estimation based on Indian Census data for various years

Table 1: Urbanization Trend in India (1961-2011)

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0%

20%

40%

60%

80%

100%

1961 1971 1981 1991 2001

Class VI

Class V

Class IV

Class III

Class II

Class I

3

Motivations : From Indian Perspective : Urban Economic Growth

0

200000

400000

600000

800000

1000000

1200000

1400000

1970-71 1980-81 1993-94 1999-2000 2004-05

Figure 2: Urban NDP at Broad Sector Values at constant (1999-00) prices (Rs. Crore)

Agriculture Industry Service Total NDP

4.9

39.4

55.7

5.4

37.4

57.2

4.6

32.5

63.0

3.5

25.3

71.2

2.4

25.6

71.9

Agriculture Industry Service

Figure 3: Urban NDP at Broad Sector % Share at Constant (1999-00) Prices

1970-71 1980-81 1993-94 1999-2000 2004-05

4.4 3

3.9 3.6

5.2 5.4

7.3 6.5

4.6 4.8

11.5

9.3

-0.8

7 6.9 6.7

Agriculture Industry Service Total NDP

1970-71 to 1980-81 1980-81 to 1993-94 1993-94 to 1999-00 1999-00 to 2004-05

Source: Author’s estimation based on National Accounts Statistics at various years

Figure 4: CAGR of Total Urban NDP At Constant (1999-2000) prices

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@ These poverty estimates are calculated following the new poverty lines as worked out by the Expert Group, which was set up by the Planning Commission of India in 2009 under the Chairmanship of Prof. Suresh Tendulkar which uses MPCE based on mixed reference period (MRP). The urban poverty lines as per the Tendulkar methodology were Rs. 578.8 and Rs. 859.6 in 2004-05 and 2009-10, respectively.

Table 2: Poverty and inequality situation: all-India Urban

Motivations : From Indian Perspective : Total urban poverty and inequality

Year Gini Coefficient Poverty head count ratio @

Total Adult Child Total Adult Child 1993-94 0.34 0.38 0.34 31.8 N.A. N.A. 2004-05 0.38 0.39 0.36 25.7 25.5 37.9 2009-10 0.39 0.39 0.36 20.9 20.5 31.2

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Source: Author’s calculation using NSS unit level data on MPCE for various years.

Years

All India: Adult

Adult

Social group Sex

ST SC OBC Others Male Female

Gini Coefficient

1993-94 0.38 0.32 0.31 NA 0.35 0.35 0.35 2004-05 0.39 0.34 0.32 0.34 0.38 0.38 0.38

2009-10 0.39 0.41 0.33 0.36 0.41 0.39 0.40

Poverty head count ratio @

1993-94 NA NA NA NA NA NA NA

2004-05 25.5 31.1 34.9 26.6 12.6 20.2 22.3

2009-10 20.5 26.6 28.7 21.4 9.6 16.9 17.9 Sample size

(Persons) 1993-94 116227 7509 12437 NA 96226 63172 58431

2004-05 126537 9420 17199 44945 54950 64453 62084 2009-10 116607 9818 16403 43760 51350 59150 57457

Table 3: Growth rate of poverty and inequality from 1993-94 to 2009-10 for Adult

Notes: NA: Not Available; @: Same as Table 1; OBC: Other Backward Classes; SC: - Scheduled Caste; ST: Scheduled Tribe


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Year

All India: Children

Social group Sex Education

ST SC OBC Others Male Female Not literate Primary Secondary

Higher Secondary

Gini Coefficient

1993-94 0.34 0.29 0.29 NA 0.33 0.33 0.33 0.31 0.32 0.30 0.36

2004-05 0.36 0.33 0.29 0.31 0.37 0.35 0.36 0.34 0.35 0.35 0.37

2009-10 0.36 0.33 0.30 0.34 0.38 0.36 0.38 0.36 0.35 0.34 0.36

Poverty head count ratio @

1993-94 NA NA NA NA NA NA NA NA NA NA NA

2004-05 37.9 40.3 47.4 38.7 22.2 31.9 35 45.8 31.2 13.8 8.2

2009-10 31.2 32.6 40.1 32.4 16.7 25.8 29.2 37.5 26.8 14.8 7.1 Sample size (Persons)

1993-94 80463 6212 10626 NA 63593 42604 37859 26656 13617 4968 1797

2004-05 79992 7363 12480 30004 30122 42100 37892 24247 14980 5654 2104

2009-10 64805 6259 9866 24425 24243 34428 30377 16852 10401 6025 2666

Table 4: Growth rate of poverty and inequality from 1993-94 to 2009-10 for Children

Notes: NA: Not Available; @: Same as Table 1; OBC: Other Backward Classes; SC: - Scheduled Caste; ST: Scheduled Tribe.


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Research Question: Has urban economic growth in Post-Reform India been pro-poor between 1993-94 and 2009-10?

Review of Literature: Main findings Datt and Ravallion (2009): Post reform growth process has become less pro-poor. Liu and Barrett (2013) : Current administrative rationing of MGNREGS is not pro-poor Dev (2002) : Growth rate of employment declined between 1994 and 2000.

Research gap in Indian context: Poverty figures are useful to design, monitor, and implement anti-poverty policies. However, little is known about distributional aspects of this phase of urban economic growth and how it compares with the previous growth periods in terms of poverty reduction.

8

Theoretical framework

For the measurement of pro-poor growth, we follow the the theoretical framework proposed by Duclos (2009) and Araar et al., (2007, 2009)

The relative approach, we label a growth process pro-poor if the growth rate of the poor exceeds some standard (usually the average growth rate – of the median or the mean), e.g., are the poor growing at 5 percent? The absolute approach, we label growth as pro-poor if the absolute incomes of the poor increase by at least some standard, e.g., have the incomes of the poor increased by Rs. 100? With either of these standards, there are two approaches: First Order approach: we require that all the poor grow at least at the standard imposed. Second Order approach we are willing to allow for some of the poor to fall short of the standard provided that those even poorer are growing at higher than the standard.

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for all

A movement from y1 to y2 will be judged as first order relatively pro-poor if

….. (1)

A distributional change is second-order relatively pro-poor if for all

….. (2)

Relative pro-poor judgments

A movement from y1 to y2 is deemed to be first-order absolutely pro-poor if

for all ….. (3)

Absolute pro-poor judgments

A movement from y1 to y2 is deemed to be second-order absolutely pro-poor if

….. (4)

Theoretical framework :

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Table 5: Growth in MPCEURP at current and constant prices since 1993-94 to 2009-10, all-India Urban

Data Used: Urban monthly per capita consumer expenditure (MPCE) data from 50th round for 1993-94, 61st round for 2004-05, and 66th round for 2009-10 are used.

Year Average MPCE URP (Rs.) Price deflator for urban sector #

Average MPCEURP Urban (Rs.): base 1987-88

1993-94 458 173 264.76

2004-05 1052 338 311.35

2009-10 1786 503 355.03

# derived from Consumer Price Index (CPI) for urban non-manual employees with base 1984-85 = 100


Figure 5: 1993-94 to 2004-05 is first-order absolutely pro-poor:

is shown on the vertical axis

-.04

-.02

0

.02.04

0 400 800 1200 1600 2000Poverty line (z)

Difference

Lower bound of 95% confidence interval

Null horizontal line

Empirical Results 1: For all age groups

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Source: Author’s calculation using DASP software and NSS unit level data on MPCE for various years

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Empirical Results 2: For all age groups -.1

5-.1

-.05

0

0 400 800 1200 1600 2000Poverty line (z)

Difference

Upper bound of 95% confidence interval



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Empirical Results 3: For all age groups -.2

-.15

-.1-.0

5

0

0 400 800 1200 1600 2000Poverty line (z)

Difference




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Figure 8: 1993-94 to 2004-05 is not statistically first-order relatively pro-poor:


-.02

0

.02.04

0 400 800 1200 1600 2000Poverty line (z)

Difference





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Figure 9: 1993-94 to 2004-05 is not statistically second-order relatively pro-poor:


-.05

0

.05

0 .19 .38 .57 .76 .95Percentiles (p)

DifferenceLower bound of 95% confidence interval




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Figure 10: 2004-05 to 2009-10 is first-order relatively pro-poor:



-.15

-.1-.0

5

0

.05

0 .19 .38 .57 .76 .95Percentiles (p)

Difference




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Figure 11: 1993-94 to 2009-10 is not first-order relatively pro-poor:



-.02

0

.02.04

.06

0 400 800 1200 1600 2000Poverty line (z)

Difference




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Figure 12: 1993-94 to 2009-10 is not second-order relatively pro-poor:



-.15

-.1-.0

5

0

0 .2 .4 .6 .8 1Percentiles (p)

Difference




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Children Adult All age groups A

bsol

ute

pro-

poor

gr

owth

1993-94 to 2004-05 Yes No Yes

2004-05 t0 2009-10 Yes Yes Yes

1993-94 to 2009-10 Yes Yes Yes

Rel

ativ

e pr

o-po

or

grow

th 1993-94 to 2004-05 Yes No No

2004-05 t0 2009-10 No No No 1993-94 to 2009-10 No No No

Table 6: Major findings: Comparison of pro-poor growth among children, adult and all age groups

Source: Author

Conclusions: Strong statistical evidence for all age groups that India’s urban

economic growth has been absolutely pro-poor but relatively anti-poor between periods 1993-94 - 2004-05, 2004-05 - 2009-10, and 1993-94 - 2009-10.

Table 7 : Major Recent Policies

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Policies and Programmes Main objectives

1 Nehru Rozgar Yojana (NRY) launched in October 1989

Providing of employment to the urban unemployed and underemployed poor

2 Urban Basic Services for the Poor (UBSP) implemented in Eight Five Year Plan (1992-97)

Community organisation, mobilisation and empowerment and convergence through sustainable support system

3 Prime Minister's Integrated Urban Poverty Eradication Programme (PM-IUPEP) launched in November, 1995

Small towns development

4 Swarna Jayanti Shahari Rozgar Yojana (SJSRY) operationalised on December 1, 1997

Gainful employment to the urban unemployed or underemployed poor by encouraging the setting up of self-employment ventures or provision of wage employment

5 The Twelfth Five Year Plan (2012-17)

Rajiv Awas Yojana (2013-22) : Supply of affordable housing, and expanded access of subsidized healthcare and education to the urban poor.

Main Problems: Very little recognition in the planning era than the requirement, lack of age specific policy, the policies are suffered due to limited funding and implementation problem, and lack of political will.

Source: Author’s compilation

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Policy Implications:

1. Aggregate level policy may not work. Need for effective urban poverty reduction policy and programmes especially by focusing on children. 2. City specific policies are needed as different size (measured by population) of cities show different levels of poverty and inequality (Tripathi, 2013). 3. Greater access to and better quality of education, job creation, skill development of the worker, access of better health, improvement of basic amenities (such as, water, electricity, roads, sanitation, and housing) by focusing on employees working in informal sector and living in urban slums. 4. Good political will

Future research : Some important case studies are required

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Thank you

C1.1: Sabyasachi Tripathi: Has Urban Economic Growth in Post-Reform India been Pro-poor Between...

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