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Wednesday, 21 March 2012 01:05
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Faster poverty level fall with GDP rise for each social group

Had the Planning Commission come out with its latest poverty numbers a week ago, the Budget may have been quite different; instead of focusing on subsidies as a means to alleviate the sufferings of the poor, it would have focused on stimulating economic growth as a means of greater inclusion. For that’s what the poverty data shows. Though India’s poverty data overstates poverty because it underestimates consumption (by around 55%!), the data shows poverty levels fell by 2.33% per annum between 1993-94 and 2004-05 (from 47.8% to 37.1%) and this rose to 4.5% per annum between 2004-05 and 2009-10, the years of the highest GDP growth in the country—indeed, since 2009-10 was a drought year, chances are the fall in poverty would be much higher in 2010-11.

Though the Planning Commission hasn’t put out sufficient data to analyse the impact on different socio-economic groups, analysis by Sukhadeo Thorat and Amaresh Dubey (‘Castes of mind’, http://www.indianexpress.com/news/castes-of-mind/893639/0) shows that poverty levels have fallen the fastest for the more disadvantaged groups. Poverty levels for STs fell by 1.1% per annum between 1993-94 and 2004-05 but by 5.1% between 2004-05 and 2009-10; poverty levels for SCs fell by 2% and 4% in the two periods; and for Muslims, the relevant numbers are 2.1% and 5.8%, respectively.

Obviously, agricultural growth made a difference, and Bihar’s patchy agricultural growth (it fell 15.4% as compared to an all-India growth of 0.2% in 2009-10) is probably responsible for its stubborn poverty level despite its decent GDP track record.

Equally interesting, however, is the impact of urbanisation. A study by Anirudh Krishna and Devendra Bajpai (Economic & Political Weekly, September 17, 2011) finds that, from 1993-94 to 2004-05, poverty levels fell fastest for villages that were closer to towns and rose for those far away. Not enough analysis of this sort has been done for 2009-10 data, but states that have fared badly—Bihar and UP—have the lowest levels of urbanisation (11.3% for Bihar and 22.8% for UP) compared to those that have done well like Maharashtra (45.23% urban). In which case, more than the MGNREGA that some NAC members believed made all the difference (it was hardly even rolled out then!), it is probably more road building and urbanisation that played a larger role. That, and the fact that the economy was doing well—as a result, between 2004-05 and 2009-10, wages for casual female workers in rural areas, NSS data shows, rose 14.6% per annum as compared to just 3.5% per annum in the 1999-2000 to 2004-05 period. Hopefully someone in the NAC will see the writing on the wall.



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