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Poverty in India


Abstract

This paper tries to summarize the current state of knowledge about chronic poverty in India and identify the agenda for further research. An overview of the trends in incidence of income poverty in India is provided to place chronic poverty in context. It views chronic poverty in terms of severity, extended duration, and multidimensional deprivation. It tries to identify the states and regions that have a high incidence of people with incomes severely below the poverty line to focus attention on areas that are spatial poverty traps. Those unable to access even two square meals a day are the most severely deprived and hunger exists even in the supposedly better parts of India. Policy action is needed to address this. Attention is also drawn to the importance of identifying those who are vulnerable to extreme poverty due to inability to absorb the impact of shocks. The incidence of chronic poverty in the duration sense is studied based on analysis of panel data sets in the literature. Casual agricultural laborer are the largest group and cultivators the second largest among the chronically poor. The bulk of the chronically poor depend on wages. Poverty is the sum total of a multiplicity of factors that include not just income and calorie intake but also access to land and credit, nutrition, health and longevity, literacy and education and safe drinking water, sanitation and other infrastructural facilities. The paper presents and analyses estimates of multidimensional indicators of poverty that reflect human and

gender development and empowerment as also infant mortality estimates and female literacy. An attempt is made to see if areas suffering from a high incidence of severe income poverty also suffer deprivation in access to literacy, knowledge, nutrition, voice, and infrastructure. The disproportionately high incidence of chronic poverty among historically marginalized groups such as scheduled castes, scheduled tribes, the elderly, women, and the disabled are analyzed.

The multiple deprivations suffered by these groups make it harder for them to escape from

poverty. The paper tries to examine the extent and nature of chronic poverty within the spatial poverty traps or remote rural areas. Two sets of remote rural regions are considered: dryland regions characterized by frequent failure of crops and employment opportunities leading to high level of unprotected risks of livelihood security among the poor; and secondly, the `forest based economies, especially in hilly regions with predominance of tribal population with limited access to natural resources on the one hand, and information as well as markets on the other. Factors affecting chronic poverty in these regions are analyzed, the relationship between chronic poverty and agro-climatic conditions, agronomic features, human capabilities, social structure and infrastructure studied and variations in the dynamics of poverty across the two sets of regions are identified. The paper briefly looks at policy interventions in the context of poverty reduction as also attempts by communities to demand accountability and transparency in government 3 spending in the name of the poor. It concludes with a summary of the key findings and agenda for further research.


INTRODUCTION

Poverty has been described as a situation of “pronounced deprivation in wellbeing” and being poor as “to be hungry, to lack shelter and clothing, to be sick and not cared for, to be illiterate and not schooled…Poor people are particularly vulnerable to adverse events outside their control. They are often treated badly by institutions of the state and society and excluded from voice and power in those institutions.” (IBRD, 2000-2001: 15.) Using income as a measure of poverty, the World Development Report (2000-01: 3) refers to the “deep poverty amid plenty” in the world and states that a fifth of the world’s people live on less than $ 1 a day, and 44% of them are in South Asia. Lack of access to resources or asset lessness is a unifying characteristic

of poverty in all its manifestations. The poor lack ownership of or access to assets such as land, water, forest, dwelling units, credit, literacy, longevity, voice and capital-both physical and social. Those who are severely below the poverty line are largely involved in subsistence type activities for which they get exploitatively poor returns despite suffering extreme physical hardship and undertaking grave risks to earn a meagre income. Since earnings are below even the margins of existence, expenditure and survival needs exceed income. This often results in the need to borrow small amounts of money at usurious interest rates of as much as 120% per annum (Mehta, 1996b: WS 82) When borrowing is not possible, hunger is suffered. Their inability to change the power relationships results in scarcely available common resources (such as even drinking water) or public funds meant for poverty alleviation being misappropriated and diverted through manipulation by the locally powerful or corrupt. Since there are no mechanisms for grievance redressal this could result in social tension, despair, or a combination thereof. The poor can be classified into two subgroups - those who are poor over an extended duration or chronically poor and those who are transiently poor. The Chronic Poverty Research Centre tries to focus on the chronically poor segment of those who are deprived to draw attention to those who find it hardest to emerge from poverty. The Chronic Poverty Research Centre defines

chronic poverty in terms of – severe poverty, extended duration poverty and multidimensional poverty.

Severe poverty is viewed in three ways:

  • those who are chronically or severely below the poverty line or with incomes that are75% of the poverty line or less; and ii) those suffering hunger or not getting even two square meals a day as an extreme form of deprivation. iii) inability to absorb the impact of shocks can also lead to extreme poverty, starvation, and suicide.


Extended duration or non-transitory poverty can be estimated by looking at the same

households over the span of 5, 10, 15 or more years. This can be done 7 through use of panel data sets to identify households that have remained in poverty over time and supplemented based on life histories. Published literature on chronic or long duration poverty based on panel data will be used in this paper to draw some tentative inferences about those suffering non transitory poverty.

The chronically poor are likely to suffer deprivation in many ways. Poverty is the sum total

of a multiplicity of factors that include not just income and calorie intake but also access to

land and credit, nutrition, health and longevity, literacy and education and safe drinking

water, sanitation and other infrastructural facilities. Hence the need to look at

multidimensional indicators of poverty such as indicators reflecting human and gender

development and empowerment. State level estimates of HDI, GDI, GEM and HPI as also

infant mortality estimates are presented and analyzed to see if those located in areas that have a high incidence of severe income poverty also suffer deprivation in access to literacy,

knowledge, nutrition, voice and infrastructure. Section II of the paper provides an overview

of the trends in incidence of income poverty in India, in the states where most of India’s poor

are concentrated and that have a large percentage of their population in poverty, as also the

differentials in the extent to which different states have succeeded in decreasing the

proportion of their population that is in poverty. An attempt is then made to spatially map the chronically poor in the severity sense so as to try to identify the states that have high

incidence of people severely below the poverty line and the regions within these states that

are spatial poverty traps as well as those with a high incidence of people unable to access

even two square meals a day, as the starkest of indicators of chronic poverty in the severely

deprived sense. Attention is also drawn to the importance of identifying those who are

vulnerable to extreme poverty due to inability to absorb the impact of shocks. The section

then looks at the incidence of chronic poverty in the duration sense on the basis of analysis of panel data sets in the literature and before presenting an analysis of multidimensional

indicators of chronic poverty such as human and gender development indicators and infant

mortality rates. Section III focuses attention on the disproportionately high incidence of

chronic poverty among historically marginalized groups such as scheduled castes, scheduled

tribes, the elderly, women and the disabled and the fact that the multiple deprivations

suffered by these groups make it harder for them to escape from poverty. Section IV tries to

examine the extent and nature of chronic poverty within the spatial poverty traps or remote

rural areas. Two sets of remote rural regions are considered: firstly the large tracts of dryland

regions characterized by frequent failure of crops and employment opportunities and thereby leading to high level of unprotected risks of livelihood security among the poor; and

secondly, the `forest based' economies, especially in hilly regions with predominance of

tribal population with limited access to natural resources on the one hand, and information as well as markets on the other. Factors affecting chronic poverty in these regions are analyzed, the relationship between chronic poverty and agro-climatic conditions, agronomic features, human capabilities, social structure and infrastructure studied and variations in the dynamics of poverty across the two 8 sets of regions are identified. Section V provides a brief overview of policy interventions in the context of poverty and attempts by communities to demand accountability and transparency in government spending in the name of the poor. Finally, section VI provides the agenda for future research on chronic poverty in India based on the findings presented in this paper.

Trends and Incidence of Income Poverty in India

The Planning Commission estimates the incidence of poverty in India based on household

consumer expenditure surveys conducted by the National Sample Survey Organization. Six large sample consumer surveys have been conducted by the NSS on a quinquennial basis since 1973-74. During the period between 1973-74 and 1999-2000, the incidence of poverty expressed as a percentage of people below the poverty line declined continuously from 54.9 per cent to

supposedly 26 per cent. However, the pace of reduction in poverty varied considerably during this period with a large decline in the percentage of the population in poverty throughout the 1980s, a slowdown in the pace of poverty reduction in the early 1990s, and a reported but contested sharp 10% decline in poverty in the second half of the 1990s. No such secular decline occurred in the numbers of those in poverty. The number of people below the poverty line increased by 8 million during the 1970s, decreased by 21.8 million during the 1980s, increased by 13 million during the early 1990s and reportedly decreased by a massive 60 million during the mid to late 1990s.

Source: Planning Commission Draft Ninth Five Year Plan (1997-2002) and Government of

India, Poverty Estimates for 1999-2000, Press Information Bureau, 22nd February 2001.


Rural – Urban Distribution of the Poor

Over 80% of the poor were in rural areas in the 1970s. The substantial decrease in the number of rural poor by 32.4 million between 1977-78 and 1987-88 changed the distribution of the poor between rural and urban areas in that the proportion of the rural poor declined steadily from 80.3% in 1977-78 to 75.5% in 1987-88. The number of urban poor increased by 10.6 million during the same ten-year period partly due to migration of the poor from rural areas. There was therefore an increase in the relative share of urban poverty from 18.7% to 24.5% during the period from 197374 to 1987-88 and it has fluctuated around this estimate since then.

Source:

Planning Commission Draft Ninth Five Year Plan (1997-2002), Government of India,

Poverty Estimates for 1999-2000, Press Information Bureau, 22nd February 2001, and own

calculations


Poverty in the States

Where are India's poor spatially located? This section attempts to identify the states in which

1) the largest percentage of India's poor are in 1999-2000.

2) that had a large percentage of their own population in poverty in 1993-94.

3) that had a relatively poorer record of reducing the percentage of their population in poverty between 1973-74 and 1993-94.


In which states are most of India’s poor concentrated?

Almost half of India’s poor and one third of India's population are concentrated in the three states of Uttar Pradesh (including Uttaranchal), Bihar (including Jharkhand) and Madhya Pradesh (including Chhattisgarh). The exact estimates are 48% of India's poor and 35.6% of India's population are in these three states. Three states - Maharashtra, West Bengal, and Orissa - account for another 22.5% of those in poverty. 71.65% of India’s poor and half of the population are therefore located in six states. Further, while the share of the poor exceeds the share of the population in all these states except Maharashtra, in the case of Bihar, Madhya Pradesh and Orissa their relative share of those in poverty is substantially larger than their share of India's population.


No major reduction in poverty in India is possible unless interventions for poverty alleviation are intensified in these states. Future CPRC research will focus on the constraints on improved antipoverty interventions in some of these states.

Source: Calculated based on Government of India, Poverty Estimates for 1999-2000, Press

Information Bureau, 22nd February 2001, and Government of India, 2001 Provisional Population Tables.


Which states have a large percentage of their population in poverty?

In 1993-94, 37.2% of persons living in rural areas and 32.2% of persons in urban areas were

below the poverty line. The percentage of population of a state that was in poverty or the poverty ratio was above the all-India average for rural areas in seven states – Bihar, Orissa, Uttar Pradesh, Madhya Pradesh, Maharashtra, Assam, and West Bengal. Urban poverty was also above all India average for the first five of these states as also for Karnataka, Tamil Nadu, and Andhra Pradesh.

Chronic Poverty in India

The poor are a heterogeneous group and the use of the term “the poor” actually refers to

“different sociological realities”. (Gruppocerfe, 2001) The CERFE Research Program on Poverty draws attention to the need to differentiate between the following four categories:

1. The prone-to risk, who, not being poor, are subject to the risk of impoverishment.

2. The borderline poor, who are below the poverty line but whose capacity to control their

own environment is practically intact.

3. The overall poor, whose capacity to control the environment has been eroded, in relation

to their state of deprivation in terms of resources and/or social relations.

4. The extreme poor, who are distinguished by their incapacity to act and their extreme

vulnerability. On similar lines, Kozel and Parker (2001) point out that “poverty is not a

simple, one - dimensional or uniform phenomenon…. three distinct categories of the poor

emerged:


1. the destitute poor, who have experienced idiosyncratic shocks, catastrophes, or other

major problems that have left them without a livelihood or chronically indebted.

2. the structural poor. who not only lack economic resources but whose poverty is strongly

linked to social identity (caste was the primary determinate of social identity); and?

3. the “mobile” poor, who have more resources than either of the two other groups, are

virtually debt-free, and have the greatest potential for upward mobility. Risk and

vulnerability emerged as important concerns for all categories of the poor, but most

critically for the destitute and structural poor.”


The three subsections that follow try to focus attention on chronic poverty in the severity sense by drawing attention to some segments of the poor that suffer extreme poverty, i.e.:

a) the spatial distribution of those estimated to be earning incomes that are less than or equal to three fourths of the poverty line so as to try to identify the states that have high incidence of people severely below the poverty line and the regions within these states that are spatial poverty traps

b) those who are unable to access even two square meals a day, as the starkest of indicators of chronic poverty in the severely deprived sense.

c) those who are vulnerable to extreme poverty due to inability to absorb the impact of shocks.


Chronic Poverty and Wage Rates

Sheila Bhalla (2000c) identifies the poorest segments at the rural all India level as agricultural

laborer and construction workers. The NCAER panel data clearly show that income of the

chronically poor is critically dependent on increases in wages. Gaurav Datt and Martin Ravallion (1998:79-80) also establish the reduction in poverty incidence caused by higher real wages and higher farm yields, and with about the same elasticity. Between 1974-75 and 1986-87, the wages of agricultural workers adjusted for inflation, grew at a remarkable average rate of 5.35 per cent and this worked towards sharp reduction in poverty during this period. Between 1987-88 and 1990-91, real wages rose at 2.5 per cent. In 1991-92 these declined by an average of 6.3 per cent and decreased in 11 out of 17 states. This corroborates the increase in poverty in 1992. (Papanek, 1996). Dev (1988:14) attributes the higher incidence of poverty among agricultural labor households to their earnings from wage employment being too low to enable them to reach the poverty line and suggests that their annual earnings can be raised by increasing wages and/or

days of employment. Wages paid to agricultural labor in ten states (that account for three-fourths of agricultural labor households in rural India) are less than 3 kg. of cereals even for male workers, thereby leaving very little surplus over the cereal consumption for meeting food and non-food needs (Parthasarthy, G., 1996: 163). Large regional variations occur in wages. For instance, Acharya, (1989: 133) finds that the ratio of maximum to minimum wages is three to four times in the case of male wages and even higher for female wages. He attributes this to the general immobility of people and resources on the one hand and differential productivity (and demand) on the other. (Acharya, S.,1989:137). Fixation of minimum wages, their periodic revisions and most importantly use of bargaining power to demand their effective implementation become extremely important specially during the slack season when wages fall. (Parthasarthy, G., 1996). Since prices affect purchasing power of incomes and wages, higher prices of food and other essential items are likely to aggravate rural poverty unless the poor are protected from such price increases (Gaiha 1995). Sudden consumer price increases increase the hardships of especially low-income households as they are forced to buy daily even when prices are high (Gaiha 1989). Given the stickiness of money wage rates in the face of inflation, for most of the rural population, an increase in prices would erode real incomes and push them below, or further below, the poverty line. (Saith 1981). In distress situations those who get paid in kind such as sharecroppers, may be less affected by sharp increases in food prices than will agricultural labor that receives cash wages that are not indexed to inflation. IBRD (2000) India Country Study on Reducing Poverty provides some estimates of annual average growth in wage rates of unskilled male agricultural laborer. The data show that in real terms the rate of growth of

real daily wages in rural areas slowed in the 1990’s, suggesting that agricultural growth in the

1990’s may have been less poverty reducing (IBRD 2000).


Conclusion

The incidence of income poverty in India has declined steadily between 1973-74 and 1999-2000 but the pace of reduction in poverty has varied considerably. There was a large decline in the percentage of the population in poverty throughout the 1980s, a slowdown in the rate of poverty reduction in the early 1990s, and a reported but contested 10% decline in poverty in the second half of the 1990s. The share of urban poverty increased from 18.7% in1973-74 to 24.5% in 1987-88 and fluctuated around this since then. 71.65% of India’s poor and half the population are in six states - Uttar Pradesh, Bihar, Madhya Pradesh, Maharashtra, West Bengal, and Orissa. Several of these states have suffered long duration chronic poverty as more than 40% of their population has been in poverty for over 20 years. Assam gets added to this list since 41% of its population is in poverty. No major reduction in poverty in India is possible unless interventions for poverty alleviation are intensified in these states. The track record of different states in reducing poverty is very varied. While some states were able to accomplish a substantial reduction in the incidence of poverty, other states made less progress in poverty reduction during the last three decades. If severe poverty is estimated in terms of those earning incomes that are less than or equal to three fourths of the poverty line, around 130 million people can be identified as chronically below the poverty line in the severity sense. Rural poverty was severest or the proportion of those who were very poor was largest in South Western Madhya Pradesh, Southern Uttar Pradesh, Southern Orissa, Inland Central Maharashtra, Southern Bihar, Northern Bihar, and Central Uttar Pradesh. Urban poverty is especially severe in Inland Central, Eastern and Northern

Maharashtra, Southern Uttar Pradesh, Inland Northern Karnataka, South Western and Central

Madhya Pradesh and Southern Orissa. Hunger is a more serious problem in rural India and is

especially severe in rural Orissa, West Bengal, Kerala, Assam, and Bihar. Non-availability of

two square meals a day peaks in the summer months from June to September with longer

duration suffering in West Bengal and Orissa. Several of these states are among those with the highest income poverty. However, hunger exists even in the supposedly better parts of India and policy action is needed to address this. Recently there have been several reports in the media of starvation led suicide by power loom weavers of Sircilla, suffering from an economic shock.

Chronic conditions of ill health such as tuberculosis and HIV/AIDs can drive people into

poverty. Shocks can have long duration ramifications in terms of pushing households below the poverty line and can result from a variety of factors such as the withdrawal of state support, technological change and global competition changing market demand and rendering traditional skills redundant, development related displacement, ecological factors, etc. Casual agricultural laborer were the largest group and cultivators were the second largest among the chronically poor. The bulk of the chronically poor (over 79 per cent) 69 depended on wages. This implies that much of the change in the household income of the chronically poor depended critically on how the wage component changed over the period in question. Wages paid to agricultural labor leave very little surplus over the cereal consumption for meeting food and non-food needs.

Fixation of minimum wages, their periodic revisions and most importantly use of bargaining

power to demand their effective implementation become extremely important specially during the slack season when wages fall. Several of the high-income poverty states such as Uttar Pradesh, Madhya Pradesh, Bihar, Orissa, and Assam also have the worst record on

multidimensionality indicators such as HDI, GDI, GEM and HPI. Data pertaining to Infant

Mortality Rates reinforces this further with extremely high state averages of infant mortality for Orissa and Madhya Pradesh as also for many districts in Uttar Pradesh and Rajasthan. However, some states have managed to achieve more in reducing infant mortality than in reducing the incidence of poverty. High literacy is important in decreasing IMRs in most states. Chronic poverty in the duration sense is a characteristic that persists as a “hard core” in almost all the states of the country. However, the proportion of the poor who suffer long duration and inter generationally transmitted poverty is likely to be significantly higher in those parts of the country that suffer greater incidence of severe poverty and multi-dimensional deprivation. Chronic poverty seems to be disproportionately high among historically marginalized groups such as scheduled castes, scheduled tribes, the elderly, women and the disabled. The multiple deprivations suffered by these groups make it harder for them to escape poverty as different forms of disadvantages tend to be mutually reinforcing. Two regions that can be defined as remote rural areas likely to experience chronic poverty on the basis of agro-ecological and socio-

economic conditions are: ?? the large tracts of dryland regions characterized by frequent failure of crops and employment opportunities and thereby leading to high level of unprotected risks of livelihood security among the poor; and ?? the `forest based' economies, especially in hilly regions with predominance of tribal population with limited access to natural resources on the one hand, and information as well as markets on the other. Apart from land productivity, the major factors causing high incidence of poverty in states like Orissa, M.P. and Bihar is relatively lower labor productivity in agriculture resulting in lower earnings as well as lower wage rates from agriculture for rural wage laborer. This is an outcome of high demographic pressure accompanied by lower economic growth and limited workforce diversification in the states like Bihar, M.P. and Orissa in the `forest based category. Migration can be an effective strategy only when it is combined with alternative economic avenues in the growing industrial and tertiary sectors. Unless efforts are made to develop the home economy, out migration from drought prone regions may only shift 70 poverty from rural to urban or from dry land to agro-climatically better endowed regions. However, a higher level of industrial growth combined with market development may help improve the outcome of such migration. Mainstream development theories, policies and strategies supposedly analyze poverty through a neutral lens. However,

most approaches are in fact not neutral because they assume the average male actor as the

standard and consider the male actor as representative of the human actor. Consequently, policies that are supposedly neutral across all groups discriminate against vulnerable groups, whether identified in terms of caste or tribe or disability or age or gender. The anti-poverty programs of the Government of India are designed for generation of self-employment, wage employment and provision of safety nets through, for example, food subsidy programs. Several of these schemes have undergone reforms, rationalization, and better targeting with a greater role to local government for implementation and for beneficiary selection and monitoring. The reforms also lay stress on transparency, making information about the program’s public at the village level, and on the importance of physical, financial, and social audits. In the context of leakages and diversion of funds meant for poverty reduction, it needs to be recognized that state failure or governance failure can be corrected if empowered communities are willing to put in the time and effort needed to demand transparency and accountability.


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About The Author

Manish Bhardwaj

B.A. L.L.B. (Hons.) 9 th semester

Institute of Law

Kurukshetra University, Kurukshetra

Research intern,The Stambh Organisation ,India

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