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![Page 1: Chronic Poverty in India: Concepts, Incidence and Relevance Amita Shah Gujarat Institute of Development Research May 22, 2009 IGIDR.](https://reader036.fdocuments.net/reader036/viewer/2022081603/56649e9a5503460f94b9ce7e/html5/thumbnails/1.jpg)
Chronic Poverty in India: Concepts, Incidence and
Relevance
Amita ShahGujarat Institute of Development Research
May 22, 2009
IGIDR
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Structure of the Discussion
* Poverty during Pre and Post Reforms Period: Trends, Evidence, Debates
• Chronic Poverty: Concepts & Measurement
• Policy Options
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Poverty in India: Recapitulations of Trends
HCR (URP – 30 Days)
1983 1993-94 2004-05
Rural
Poor 45.76 37.26 29.18
Very Poor 25.52 15.38 9.64
Urban
Poor 42.27 32.56 26.02
Very Poor 22.45 16.00 12.00
All
Poor 44.93 36.02 28.27
Very Poor 24.79 15.54 10.32
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Changes in Poverty (URP)
% Points Per Annum
Adjusted for Base Year
83-94 93-05 83-94 93-05
Rural -0.61 -0.73 -1.77 -1.97
Urban -0.92 -0.59 -2.18 -1.81
All -0.85 -0.70 -1.89 -1.94
Reduction of Urban Poor is Slower During the Post Reform Period
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Estimates Based on Mixed Reference Period
1993-94 to 1999-2000 0.69
1999-2000 to 2004-05 1.02
Nineties was a Lost Decade for Poverty Reduction Due to:
* High Rate of Inflation
* Jobless Growth
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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.
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Decomposition of Poverty Reduction
Total Change
Due to Growth
Due to Inequality
Rural -8.08 -10.88 2.80
Urban -8.08 -12.40 4.32
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Calorie Intake at Official Poverty Line
Poverty Line 2004-05 356.3
Poverty Ratio 2004-05 28.3
Calorie at OPL 1820
Direct (Calorie Based Estimates)
Calorie 1993-94 2004-05
<2400 74.5 87.0
< 2200 58.5 69.5
<1800 20.0 25.0
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Debates
• Non-Comparability of Data
• Post Nineties Performed Better
• Why have a Poverty Line
• Whether to Raise Poverty Line
• Line Vs. Identification
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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
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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
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What Causes CP?
• Insecurity Traps
• Limited Citizenship and Voice
• Spatial disadvantages
• Social Discrimination
• Poor Work Environment
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Analysis of Poverty Dynamics
• Entry- drivers and maintainers
• Exit
Ideally Need longitudinal-Panel Data Sets
Alternative Approaches-Cohorts based, Recall and Stages Growth
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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
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Global Magnitude: Countries and Consistent Improvers
Indicators Full CDCs
Full Cls
Number of countries 32 11
Population (% of total) 10 33
Child mortality (% of total) 36 6
Infant mortality (% of total) 30 11
US$ 1/day poverty (% of total) 17 22
US$ 2/day poverty (% of total) 13 28
Undernourishment (% of total) 23 23
Aid in 2002 (% of total) 29 14
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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
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CP in India (Panel Data 1981-98)
Always Poor (CP)
Transient Poor
(Poor at one Point)
Non-Poor All
S.C 38.6 40.0 20.9 100
S.T 27.9 44.4 27.6 100
O.C 22.2 37.8 39.9 100
Total 24.3 38.6 37.1 100
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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
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Stages of Growth (Rural)
• Food• Clothing• House Repairing• Education• Debt Payment• Buying a Small Piece of Land
Health Missing in all ALTERNATIVE trajectories
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Distribution of Households Across Four Categories by States (% of hhs)
HHS Categories Rajasthan (35 Vill-
ages)
Gujarat (20
Villages)
Andhra Pradesh
A. Remained Poor 17.8 49.8 NA
B. Escaping Poverty 11.1 9.2 14
C. Descended into
Poverty
8.0 7.3 12
D. Remained Non-poor 63.2 `33.6 NA
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Reasons for Escaping Poverty
Reasons % of HHs
Rajasthan Gujarat Andhra Pradesh
Health related 60 88 74
Social expenses 31 68 69
Funeral expenses 34 49 28
Interest payment 72 52 60
Drought/ Crop failure 18 - 44
Land exhaustion - - -
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Vulnerability: 2004-05 Sengupta et. al)
Categories of Poor % of Pop. AV. DPCE (US$)
Current Price
Extremely Poor & Poor 21.8 1.1
Marginal &Vulnerable 55.0 1.8
Middle Income 19.3 3.7
High Income 4.0 9.3
All 100 2.3
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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
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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
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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
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THANKS