Deaton Dreze Poverty India

Special articles
Poverty and Inequality in India

A Re-Examination
This paper presents a new set of integrated poverty and inequality estimates for India
and Indian states for 1987-88, 1993-94 and 1999-2000. The poverty estimates are broadly
consistent with independent evidence on per capita expenditure, state domestic product
and real agricultural wages. They show that poverty decline in the 1990s proceeded more or
less in line with earlier trends. Regional disparities increased in the 1990s, with the
southern and western regions doing much better than the northern and eastern
regions. Economic inequality also increased within states, especially within urban areas, and
between urban and rural areas. We briefly examine other development indicators,
relating for instance to health and education. Most indicators have continued to improve in
the nineties, but social progress has followed very diverse patterns, ranging from
accelerated progress in some fields to slow down and even regression in others. We find
no support for sweeping claims that the nineties have been a period of
‘unprecedented improvement’ or ‘widespread impoverishment’.
ANGUS DEATON, JEAN DREZE
P
overty trends in India in the nineties sustained poverty decline in most states The evidence on inequality is discussed
have been a matter of intense con- (and also in India as a whole) during the in Section III, where we focus mainly on
troversy.1 The debate has often reference period. It is important to note, the period between 1993-94 and 1999-
generated more heat than light, and con- however, that the increase in per capita 2000. Based on further analysis of Na-
fusion still remains about the extent to expenditure associated with this decline in tional Sample Survey data and related
which poverty has declined during the poverty is quite modest, e g, 10 per cent sources, we argue that there has been a
period. In the absence of conclusive evi- or so between 1993-94 and 1999-2000 at marked increase in inequality in the nine-
dence, widely divergent claims have flour- the all-India level. ties, in several forms. First, there has been
ished. Some have argued that the nineties In Section II, we consider related evi- strong ‘divergence’ of per capita expen-
have been a period of unprecedented im- dence from three additional sources: the diture across states, with the already better-
provement in living standards. Others have Central Statistical Organisation’s ‘national off states (particularly in the southern and
claimed that it has been a time of wide- accounts statistics’, the ‘employment-un- western regions) growing more rapidly
spread impoverishment.2 Against this employment surveys’ of the National than the poorer states. Second, rural-urban
background, this paper presents a reassess- Sample Survey, and data on agricultural disparities of per capita expenditure have
ment of the evidence on poverty and in- wages. We find that these independent risen. Third, inequality has increased within
equality in the nineties. sources are broadly consistent with the urban areas in most states. The combined
So far, the debate on poverty in the revised poverty estimates presented in effects of these different forms of rising
nineties has focused overwhelmingly on Section I. In particular, real agricultural inequality are quite large. In the rural areas
changes in the ‘headcount ratio’ – the wages in different states (which are highly of some of the poorest states, there has
proportion of the population below the correlated with headcount ratios of rural been virtually no increase in per capita
poverty line. Accordingly, we begin (in poverty) have grown at much the same rate expenditure between 1993-94 and 1999-
Section I) with a reassessment of the as the corresponding NSS-based estimates 2000. Meanwhile, the urban populations
evidence on headcount ratios and related of per capita expenditure in rural areas. of most of the better-off states have en-
poverty indexes, based on National Sample While each of these sources of informa- joyed increases of per capita expenditure
Survey (NSS) data. In particular, we present tion, including the National Sample Sur- of 20 to 30 per cent, with even larger
a new series of internally consistent vey, has important limitations, they tend increases for high-income groups within
poverty indexes for the last three ‘quin- to corroborate each other as far as poverty these populations.
quennial rounds’ (1987-88, 1993-94 and decline is concerned, and the combined Section IV takes up some qualifications
1999-2000). The broad picture emerging evidence on this from different sources is and concerns. We pay special attention to
from these revised estimates is one of quite strong. the apparent decline of cereal consumption
Economic and Political Weekly September 7, 2002 3729

in the nineties, which is not obviously indeed, in the last of these, the 54th Round, Briefly, the problem is as follows. After
consistent with the notion that poverty has the survey was only in the field for six the 50th Round, the National Sample
steadily declined during that period. We months rather than the customary year and Survey introduced an experimental ques-
also consider the possibility of impover- is therefore most unlikely to be compa- tionnaire with different recall periods for
ishment among specific regions or social rable with any previous survey. These thin different classes of goods, in addition to
groups, in spite of the general improve- rounds suggested not only that poverty the traditional ‘30-day recall’ question-
ment in living conditions. Finally, we remained more or less unchanged between naire. The experimental questionnaire used
comment on the unresolved puzzle of the 1993-94 and the first six months of 1998 a seven-day recall period for food, pan, and
‘thin rounds’. (the reference period for the 54th Round), tobacco, as well as a 365-day recall period
In Section V, we argue for supplement- but also that average per capita expendi- for less frequently purchased goods such
ing expenditure-based data with other in- ture stagnated during this period of rapid as durables, clothing, footwear, educational
dicators of living standards, focusing for economic growth. This is very difficult to and institutional medical expenditures.
instance on literacy rates, health achieve- square with independent evidence, e g, Prior to 1999-2000, the traditional ‘30-day
ments, nutritional levels, crime rates, and from national accounts statistics. As things recall’ questionnaire and the experimental
the quality of the environment. This broader stand, we do not have a good understand- questionnaire were administered to differ-
approach sheds a different light on poverty ing of why the thin rounds give what appear ent (and independent) samples of house-
trends in the nineties. In particular, it to be anomalous results, and until that holds. These alternative questionnaires
prompts us to acknowledge that social puzzle is resolved, our confidence in our produced two independent series of ex-
progress has been uneven across the dif- other results must remain qualified. We penditure estimates, with a fairly stable
ferent fields. For instance, the nineties shall return to this issue in Section IV.3, ‘ratio’ of the lower estimates based on the
have been a period of fairly rapid increase and ignore the thin rounds in the mean- traditional questionnaire to the higher
in literacy and school participation. On the time. estimates based on the experimental ques-
other hand, there has been a marked slow- In contrast to the thin rounds, the official tionnaire. In 1999-2000, the 30-day recall
down in the rate at which infant mortality counts from the latest quinquennial round and seven-day recall periods for food,
has been declining, and a significant in- (the 55th Round, pertaining to 1999-2000) pan and tobacco were used for the same
crease in economic inequality. An inte- suggest considerable poverty decline be- households, in two adjacent columns on
grated assessment of changes in living tween 1993-94 and 1999-2000. According the same pages of a single questionnaire.
conditions has to be alive to these diver- to official estimates, widely relayed, the This effectively ‘new’ questionnaire de-
sities. We also discuss other implications all-India headcount ratio declined from 36 sign led to a sudden ‘reconciliation’ of the
of this broader approach to the evaluation to 26 per cent over this short period. As is results obtained from the two different
of living standards, going beyond the well known, however, the 55th Round is recall periods, perhaps reflecting efforts
standard poverty indexes. not directly comparable to the 50th Round, to achieve ‘consistency’ on the part of
The concluding section sums up the due to changes in questionnaire design. investigators and/or respondents. This
insights of this enquiry.
Table 1a: All-India Headcount Ratios
(Per cent)
I
Poverty Indexes in the 1987-88 1993-94 1999-00
Nineties Rural
Official estimates 39.4 37.1 26.8
Adjusted estimates:
I.1 Official Estimates Step 1: Adjusting for changes in questionnaire design 39.4 37.1 30.0
Step 2: Revising the poverty lines 39.4 33.0 26.3
We begin with an examination of house- Urban
hold per capita consumption and the as- Official estimates 39.1 32.9 24.1
sociated poverty estimates. Consumption Adjusted estimates:
Step 1: Adjusting for changes in questionnaire design 39.1 32.9 24.7
is only one element of well-being, but it Step 2: Revising the poverty lines 22.5 17.8 12.0
is an important element, and much interest
is rightly attached to the Planning Source: Planning Commission, Press Releases (March 11, 1997, and February 22, 2001), Deaton
(2001a, b), and Table 2a below.
Commission’s periodical estimates of
poverty-based on National Sample Survey
data. The most widely-used poverty indi- Table 1b: All-India Poverty-Gap Indexes
cator is the ‘headcount ratio’ (hereafter 1987-88 1993-94 1999-00
HCR), i e, the proportion of the population
Rural
below the poverty line. Estimates from unadjusted data and official poverty lines 9.4 8.4 5.2
The latest year for which relatively Adjusted estimates:
uncontroversial HCR estimates are avail- Step 1: Adjusting for changes in questionnaire design 9.4 8.4 6.4
able is 1993-94, corresponding to the 50th Step 2: Revising the poverty lines 9.4 7.0 5.2
Urban
Round of the National Sample Survey, a Estimates from unadjusted data and official poverty lines 10.4 8.3 5.2
‘quinquennial’ round. This round was Adjusted estimates:
followed by a series of so-called ‘thin Step 1: Adjusting for changes in questionnaire design 10.4 8.3 5.9
Step 2: Revising the poverty lines 4.8 3.7 2.3
rounds’, involving smaller samples and
somewhat different sampling designs; Source: Authors’ calculations from unit record data from the 43rd, 50th, and 55th Rounds of the NSS.
3730 Economic and Political Weekly September 7, 2002

reconciliation is likely to boost the expen- indicator, the ‘poverty-gap index’. Each questionnaire. The second is that the re-
diture estimates based on 30-day data, and of these departures calls for further lation between intermediate-goods expen-
therefore to pull down the official poverty discussion. diture and total expenditure is much the
counts, which are based on these 30-day The possibility of ‘adjusting’ the 1999- same in 1999-2000 as in 1993-94.5 The
expenditures. In addition, only the 365- 2000 poverty estimates arises from the fact second assumption would be undermined
day questionnaire was used for the less that the 55th Round questionnaire retained by a major change in relative prices of the
frequently purchased items, and this aban- the ‘30-day recall’ (and 30-day recall only) intermediate goods relative to other goods
donment of the traditional 30-day recall approach for a number of items such as in the late 1990s. It can be checked to some
for durables and other items also brings fuel and light, non-institutional medical extent by applying the proposed method
down the poverty count. Indeed, most care, and large categories of miscellaneous to the ‘thin rounds’ instead of the 55th
people report no such purchases over 30 goods and services. Further, it turns out Round, and comparing the predicted dis-
days, but report something over 365 days. that expenditure on this intermediate group tribution of total expenditure with the actual
The bottom tail of the consumption distribu- of commodities is highly correlated with distribution. These checks suggest that the
tion is thereby pulled up, reducing both total expenditure.4 Expenditures on these correction procedure works reasonably well
poverty and inequality compared with the comparably surveyed goods can therefore [Deaton 2001a, Tarozzi 2001]. However,
previous design. For this reason, as well be used to get an idea of trends in total this should not be regarded as a definitive
as because of possible reconciliation be- expenditures, and hence, of trends in validation of the proposed method, given
tween seven-day and 30-day reports, the poverty. the ambiguities associated with the thin
latest headcount ratios are biased down This procedure is valid if two assump- rounds (Section IV.3). There are other
compared with what would have been tions hold. The first is that reported ex- possible approaches to adjustment that have
obtained on the basis of the traditional penditures on the intermediate goods, for not yet been explored, and further work
questionnaire. which the recall period is unchanged, are may lead to different conclusions. Mean-
There is another, quite different problem unaffected by the changes elsewhere in the while, we regard our adjusted figures as
with the official estimates, which does not
concern the 55th Round specifically. This Table 2a: State-Specific Headcount Ratios
relates to the state and sector specific (Per cent)
poverty lines that are used by the Planning
Official Methodology Adjusted Estimates
Commission to compute the poverty es- 1987–88 1993–94 1999–00 1987–88 1993–94 1999–00
timates. In several cases the poverty lines
Rural
are implausible, particularly the very much Andhra Pradesh 21.0 15.9 10.5 35.0 29.2 26.2
higher urban than rural lines in several Assam 39.4 45.2 40.3 36.1 35.4 35.5
states. The source of the problem lies in Bihar 53.9 58.0 44.0 54.6 48.6 41.1
the use of defective price indexes in ad- Gujarat 28.6 22.2 12.4 39.4 32.5 20.0
Haryana 15.4 28.3 7.4 13.6 17.0 5.7
justments of the poverty line over time and Himachal Pradesh 16.7 30.4 7.5 13.3 17.1 9.8
between states. In the next section, we Jammu and Kashmir 25.9 30.4 4.7 15.3 10.1 6.1
discuss ways of overcoming this problem Karnataka 32.6 30.1 16.8 40.8 37.9 30.7
and other limitations of the official poverty Kerala 29.5 25.4 9.4 23.8 19.5 10.0
Madhya Pradesh 42.0 40.7 37.2 43.7 36.6 31.3
estimates. Maharashtra 41.0 37.9 23.2 44.3 42.9 31.9
Orissa 58.7 49.8 47.8 50.4 43.5 43.0
I.2 Proposed Adjustments Punjab 12.8 11.7 6.0 6.6 6.2 2.4
Rajasthan 33.3 26.4 13.5 35.3 23.0 17.3
Tamil Nadu 46.3 35.9 20.0 49.0 38.5 24.3
In this paper, we present a new series Uttar Pradesh 41.9 42.3 31.1 34.9 28.6 21.5
of consistent poverty estimates for the most West Bengal 48.8 41.2 31.7 36.3 25.1 21.9
recent quinquennial rounds (1987-88, All-India Rural 39.4 37.1 26.8 39.0 33.0 26.3
Urban
1993-94 and 1999-2000).3 Essentially, Andhra Pradesh 41.1 38.8 27.2 23.4 17.8 10.8
these involve four major departures from Assam 11.3 7.9 7.5 13.6 13.0 11.8
the official estimates. First, an attempt is Bihar 51.9 34.8 33.5 38.1 26.7 24.7
made to ‘adjust’ the 55th-Round estimates Gujarat 38.5 28.3 14.8 16.4 14.7 6.4
Haryana 18.4 16.5 10.0 11.8 10.5 4.6
to achieve comparability with the earlier Himachal Pradesh 7.2 9.3 4.6 1.7 3.6 1.2
rounds. Second, we use improved price Jammu and Kashmir 15.0 9.3 2.0 3.8 3.1 1.3
indexes to update the ‘poverty line’ over Karnataka 49.2 39.9 24.6 26.0 21.4 10.8
Kerala 39.8 24.3 19.8 21.0 13.9 9.6
time, and to derive state-specific poverty
Madhya Pradesh 47.3 48.1 38.5 20.7 18.5 13.9
lines from the all-India poverty line. Third, Maharashtra 40.3 35.0 26.7 21.2 18.2 12.0
a similar procedure is used to derive an Orissa 42.6 40.6 43.5 20.8 15.2 15.6
explicit estimate of the appropriate gap Punjab 13.7 10.9 5.5 6.6 7.8 3.4
Rajasthan 37.9 31.0 19.4 19.8 18.3 10.8
between rural and urban poverty lines (in Tamil Nadu 40.2 39.9 22.5 26.2 20.8 11.3
contrast with the often implausible rural- Uttar Pradesh 44.9 35.1 30.8 29.3 21.7 17.3
urban gaps that are implicit in the official West Bengal 33.7 22.9 14.7 22.3 15.5 11.3
estimates). Fourth, in addition to corrected Delhi 15.1 16.1 9.2 4.7 8.8 2.4
All-India Urban 39.1 32.9 24.1 22.5 17.8 12.0
‘headcount ratios’, we present estimates
of a potentially more informative poverty Source: Authors’ calculations based on NSS unit record data from 43rd, 50th and 55th Rounds.

the best currently available in terms of deflator of the urban poverty line. The prices used in the official deflators are
dealing with the change in questionnaire price indexes for each state show rather outdated.
design, without pretending that they rep- modest differences from one state to The third departure concerns the gap
resent the final word on the topic. another. They also differ from those im- between rural and urban poverty lines.
Turning to the price adjustments, one plicit in the official poverty lines, although From the mid-1970s until the early 1990s,
limitation of the price indexes that have the two sets of deflators are correlated. there were only two poverty lines for India,
been traditionally used to update poverty This pattern is consistent with the fact one for rural and one for urban. The urban
lines over time (e g, the Consumer Price that relative prices across states vary some- line was around 15 per cent higher than
Index for Agricultural Labourers) is that what over time, and that the interstate the rural line, and both were held fixed in
they are based on fixed and frequently
outdated commodity ‘weights’. It is pos- Table 2b: State-Specific Poverty-Gap Indexes
sible to calculate alternative price indexes
Official Methodology Adjusted Estimates
using the information in the consumer 1987-88 1993-94 1999-00 1987-88 1993-94 1999-00
expenditure surveys themselves. For more
than 170 commodities, households report Rural
Andhra Pradesh 4.4 2.9 1.8 8.0 5.8 4.8
both quantities and expenditures, and the Assam 7.4 8.3 8.5 6.5 5.7 6.1
ratio of the latter to the former provides Bihar 12.9 14.7 8.7 13.2 10.7 8.5
an estimate of the price paid. These prices Gujarat 5.5 4.1 2.2 8.4 6.8 3.8
Haryana 3.6 5.6 1.3 2.8 3.0 0.7
can then be combined into consumer price Himachal Pradesh 2.6 5.6 1.0 2.1 3.0 1.5
index numbers that allow comparisons Jammu and Kashmir 4.5 5.6 0.6 2.4 1.6 0.7
across states, and if we use data from Karnataka 7.9 6.3 2.7 10.5 8.6 6.1
different rounds, for states and the whole Kerala 6.4 5.6 1.5 4.8 3.9 1.7
Madhya Pradesh 10.6 9.5 7.7 11.2 8.2 6.6
country at different points in time. One Maharashtra 9.6 9.3 4.4 10.8 11.2 7.6
limitation of these price indexes is that Orissa 16.3 12.0 11.7 13.0 9.7 10.5
their coverage of commodities is only Punjab 2.0 1.9 0.8 1.0 1.0 0.3
partial (a little more than half the budget Rajasthan 8.6 5.2 2.1 9.2 4.4 3.0
Tamil Nadu 12.6 7.3 3.8 13.7 9.1 4.6
in the 55th Round, though more in earlier Uttar Pradesh 9.9 10.4 5.8 7.5 5.8 3.9
rounds), so that they cannot capture price West Bengal 11.6 8.3 6.5 7.7 4.2 3.5
changes in important items such as trans- All-India Rural 9.4 8.4 5.2 9.2 7.0 5.2
Urban
portation, housing, most non-food goods,
Andhra Pradesh 10.6 9.3 5.6 4.9 3.4 1.9
and services. However, CPIAL data sug- Assam 1.5 0.9 1.5 2.0 2.0 1.9
gest that the inflation rate for the uncov- Bihar 13.0 7.9 6.7 8.2 5.6 5.0
ered items is not very different from that Gujarat 8.2 6.2 2.4 2.8 2.6 1.0
Haryana 3.6 3.0 2.0 2.3 1.9 0.7
applying to the covered items.6 The price Himachal Pradesh 0.7 1.2 0.6 0.2 0.5 0.2
indexes from the surveys have the advan- Jammu and Kashmir 2.4 1.2 0.2 0.5 0.5 0.2
tage of being based on several million Karnataka 14.1 11.4 5.6 5.7 4.5 2.1
actual purchases in each round. They also Kerala 10.4 5.5 3.9 4.5 2.7 1.7
Madhya Pradesh 13.6 13.4 9.5 4.1 3.5 2.6
make it possible to use formulas for su- Maharashtra 12.3 10.1 6.7 5.3 4.6 2.8
perlative indexes, such as the Fisher ideal Orissa 11.1 11.4 11.1 4.2 3.0 3.0
index or the Törnqvist index, that allow Punjab 2.3 1.7 0.6 1.0 1.1 0.4
for substitution behaviour as households Rajasthan 9.6 7.0 3.4 4.0 3.2 1.7
Tamil Nadu 11.5 10.2 4.8 6.2 4.5 2.0
adapt to relative price changes over time. Uttar Pradesh 12.2 9.0 6.6 6.3 4.6 3.3
The calculated Törnqvist indexes for the West Bengal 7.4 4.5 2.5 4.2 2.9 1.9
43rd and 50th Rounds are reported in Delhi 2.8 3.9 1.5 0.7 1.7 0.4
All-India Urban 10.4 8.3 5.2 4.8 3.7 2.3
Deaton and Tarozzi (2000), and were
updated to the 55th Round by Deaton Notes to Table 2:
(2001b).7 These price indexes differ from Table 2a. The headcount ratios labelled “official methodology” are computed from the unit record
data using the official poverty lines, as well as the official procedures for assigning poverty rates (or
the official indexes in a number of ways. poverty lines) to small states. We have also followed the official treatment of Jammu and Kashmir.
In particular, they rise somewhat more The all-India poverty rates are computed by adding-up the number of poor in each state and dividing
slowly over time than do the official price by the total population. Because the Planning Commission uses interpolation rather than computations
indexes, especially in the rural sector. For from the unit record data, there are minor differences between these numbers and those published in
the official releases. The adjusted estimates are computed as described in the text (and more fully in
example, the all-India rural Törnqvist index Deaton and Tarozzi, 2001, and Deaton, 2001b); they use price indexes computed from the unit record
rises by 69.8 per cent from 1987-88 to data, and correct for the changes in questionnaire design in the 55th Round. The final column is a
1993-94 and by a further 54.5 per cent somewhat refined version of the corresponding column in Deaton (2001b). The estimates for Jammu
and Kashmir are calculated directly, and not by assuming the poverty line or poverty rate for any
from 1993-94 to 1999-2000, compared other state (as in the official methodology).
with 78.7 per cent and 59.1 per cent for Table 2b. The poverty-gap indexes labelled “official methodology” are computed from the unit record
the deflators implicit in the official all- data using the official poverty lines, and using rules for assigning poverty-gap indexes to small states
India rural poverty line. For the urban (and to J and K) that mirror the rules used by the Planning Commission for computing the official
headcount ratios. The adjusted indexes use the recomputed price indexes to update the poverty lines,
sector over the two periods, the Törnqvist and correct for the changes in questionnaire design in the 55th Round. All numbers are directly
price indexes rise by 73.8 and 57.7 per cent computed from poverty lines and unit record data for each state, and the all-India estimates are
versus 73.5 and 61.4 per cent for the implicit calculated as weighted averages of the state estimates.

real terms, with updating on the basis of compare private consumption levels across properties. For instance, an income trans-
approximate price indexes such as the sectors, bearing in mind that this is at best fer from a very poor person to someone
Wholesale Price Index or the CSO’s pri- a partial picture of the relevant differences who is closer to the poverty line may lead
vate consumption deflator. The initial rural- in living standards.9 These comparisons to a decline in the headcount ratio, if
urban gap of 15 per cent is anchored in can be made by anchoring poverty estima- it ‘lifts’ the recipient above the poverty
1973-74 calorie consumption data, but it tes in a single poverty line, adjusted where line. Similarly, if some poor households
is essentially arbitrary since the urban and appropriate to take into account rural-urban get poorer, this has no effect on the
rural ‘calorie norms’ themselves (2,100 price differences, using the same method headcount ratio.
and 2,400 calories per person per day, as that described earlier for adjusting A related issue is that changes in HCRs
respectively) have a fragile basis.8 More poverty lines over time and between states. can be highly sensitive to the number of
recently, the Planning Commission has Based on this procedure, the urban poverty poor households near the poverty line (since
adopted a modified version of the poverty line tends be about 15 per cent higher than changes in the HCR are entirely driven by
lines recommended by a 1993 Expert Group the rural poverty line, though there are ‘crossings’ of the poverty line). If poor
[Government of India 1993]. The Expert variations across states. As it turns out, this households are heavily ‘bunched’ near the
Group retained the original rural and urban rural-urban difference in poverty lines is poverty line, a small increase in average
lines, but adjusted them for statewise broadly consistent with the original per capita income could lead to a mislead-
differences in price levels, separately for methodology used before the adoption of ingly large decline in the headcount ratio.
urban and rural sectors, using estimates of the Expert Group recommendations. This ‘density effect’ has to be kept firmly
statewise price differences calculated from To recapitulate, the revised poverty lines in view in the context of comparisons of
NSS data on expenditures and quantities used in this paper, which are presented in poverty change, involving questions such
using similar methods to those adopted in full in Table 4 of Deaton (2001b), are as “has there been more poverty decline
this paper. The Expert Group lines used derived as follows. Our starting point is in Bihar than in Punjab during the nine-
the then best-available information on price the official rural all-India poverty line for ties”, or “has poverty declined faster in the
differences across states, both urban and the 43rd Round (1987-88): 115.70 rupees nineties than in the eighties?” Often such
rural, but the information was outdated, per person per month.10 Rural poverty questions are answered by looking at, say,
especially for the rural sector. lines for each state for the 43rd Round are the respective changes (absolute or pro-
Because the statewise adjustments were obtained by multiplying this base poverty portionate) in headcount ratios. These
done separately for urban and rural house- line by the rural price indexes for each state changes, however, are difficult to interpret
holds, the price differences between the relative to all-India. The urban poverty in the absence of further information about
urban and rural sectors of each state were lines for the 43rd Round, for each state as the initial density of poor households near
derived only implicitly, and some are rather well as for all-India, are calculated from the poverty line in each case.
implausible, particularly the very much the rural poverty lines by scaling up by the One way forward is to use more sophis-
higher urban than rural lines in several respective urban relative to rural price ticated poverty indexes such as the Foster-
states. For example, the most recent urban indexes. In all cases, we use the relevant Greer-Thorbecke (FGT) indexes or the Sen
poverty lines for Andhra Pradesh and Törnqvist price indexes.11 To move to the index. In this paper, we focus on the sim-
Karnataka are around 70 per cent higher 50th Round, the original all-India rural plest member of the FGT class (other than
than the corresponding rural lines, with the line, 115.70 rupees, is scaled up by the the headcount ratio itself), the ‘poverty-
uncomfortable result that urban poverty is Törnqvist index for all-India rural for the gap index’. Essentially, the poverty-gap
much higher than rural poverty in these 50th Round relative to the 43rd Round, index (hereafter PGI) is the aggregate
two states (see Table 2 in the next section). 1.698, to give an all-India rural poverty shortfall of poor people’s consumption
In Assam, by contrast, the rural poverty line for the 50th Round. This number is from the poverty line, suitably normal-
line is actually higher than the urban line, then used to generate rural and then urban ised.13 The PGI can also be interpreted as
and based on these odd poverty lines, Assam poverty lines for each state, following the headcount ratio multiplied by the mean
turns out to be one of India’s highest- exactly the same procedure as for the 43rd percentage shortfall of consumption from
poverty states for rural areas but lowest- Round. Finally, poverty lines for the 55th the poverty line (among the poor). This
poverty states for urban areas. It is hard Round are calculated in the same way from index avoids the main shortcomings of the
to accept these and other implications of an all-India rural line, which is the 50th headcount ratio, is relatively simple to
the Expert Group poverty lines. Round all-India rural line scaled up by the calculate, and has a straightforward inter-
There are grounds, of course, for ques- value of the Törnqvist index between the pretation.14
tioning whether it is even possible to derive two surveys.12
comparable rural and urban poverty lines. The motivation for the fourth departure I.3 Adjusted Estimates
Comparisons of living standards in rural (or rather extension) arises from the limi-
and urban areas are inherently difficult, tations of the headcount ratio as an indi- Table 1a presents official and adjusted
since there are large intersectoral differ- cator of poverty. The headcount ratio has estimates of the all-India headcount ratio.
ences not only in the patterns of consump- a straightforward interpretation and is easy In each panel, the first row gives the official
tion but also in lifestyles, public amenities, to understand. In that sense it has much estimates; the second row retains the of-
epidemiological environments, and so on. ‘communication value’. Yet, the HCR has ficial poverty lines but adjusts the 1999-
One way forward is to avoid such com- serious limitations as a poverty index. For 2000 estimates for the change in question-
parisons altogether, and to focus on sector- one thing, it ignores the extent to which naire design in the way described earlier;
specific (rural or urban) poverty estimates. different households fall short of the the third row gives fully-adjusted poverty
Yet there is a case for attempting to poverty line. This leads to some perverse estimates, which combine the adjustments

for questionnaire design and for price in- Figure 1: Official and Adjusted Headcounts Ratios
dexes. Table 1b gives the corresponding
poverty-gap indexes. 60
As the first two rows of each panel
indicate, the official estimates are quite
misleading in their own terms: the 1999-
Headcount ratio (per cent)

2000 poverty estimates are biased down- 50
ward by the changes in questionnaire Official counts
design. For headcount ratios, the estimates
Thin rounds
adjusted for changes in questionnaire
40
design ‘confirm’ about two-thirds of the
official decline in rural poverty between
1993-94 and 1999-2000, and about 90 per
cent of the decline in urban poverty. For 30
poverty-gap indexes, the corresponding Adjusted counts
proportions (62 per cent and 77 per cent)
are lower, especially for the urban sector.
The fully-adjusted estimates in the last 20
row of each panel show somewhat lower 1970 1980 1990 2000
rural poverty estimates and much lower Year
urban poverty estimates for 1999-2000 Source: Planning Commission, Press Releases ( March 11, 1997, and February 22, 2001), Deaton (2001a,
than even the official estimates. Note, b), and Table 2a of this paper.
however, that because we are recalculating
the poverty lines back to the 43rd Round, because we treat the rural poverty line in has the highest level of rural poverty among
a good deal of the decrease took place in the 43rd Round as our baseline so that, all Indian states, according to the adjusted
the six years prior to 1993-94, not only in with larger rural-urban gaps in the poverty 1999-2000 estimates.17 Reassuringly, the
the six years subsequent to 1993-94. The estimates, we estimate lower poverty ‘anomalies’ noted earlier with respect to
fully-adjusted estimates for the headcount overall. If instead, we had taken the urban rural-urban gaps in specific states tend to
ratios and poverty gap indexes suggest that poverty line as base, the adjusted figures disappear as one moves from official to
poverty decline has been fairly evenly would have been higher than the official adjusted estimates.
spread between the two sub-periods (be- figures. From 1987-88 to 1993-94, the Table 2b shows the corresponding pov-
fore and after 1993-94), in contrast with adjusted headcount ratio falls more rapidly erty-gap indexes. The general patterns are
the pattern of ‘acceleration’ in the second than the official headcount; this is because very much the same as with headcount
sub-period associated with the official our price deflators are rising less rapidly ratios; indeed the PGI series are highly
estimates. than the official ones. From 1993-94, the correlated with the corresponding HCR
The rural-urban gaps in the poverty adjusted figures fall more slowly because series, with correlation coefficients of 0.98
estimates are also of interest. Looking first the effects of the price adjustment are more for rural and 0.95 for urban. Even the HCR
at the base year (1987-88), the rural-urban than offset by the correction for question- and PGI changes between the 50th and
gap based on adjusted estimates is much naire design. The estimates for the thin 55th Rounds are highly correlated; the
larger than that based on official estimates. rounds – which look very different – are correlation coefficient between changes in
Indeed, the latter suggest no difference included to remind us of the residual HCR and changes in PGI is 0.95 for the
between rural and urban poverty in that uncertainty about our conclusions, and rural sector, and 0.96 for the urban sector.
year. This is hard to reconcile with inde- will be discussed further in Section IV.3 Thus, in spite of its theoretical superiority
pendent evidence on living conditions in below. over the headcount ratio, the poverty-gap
rural and urban areas, such as a life- index gives us very little additional insight
expectancy gap of about seven years in I.4 Regional Contrasts in this case.
favour or urban areas around that time.15 In interpreting and comparing poverty
Our low estimate of the urban headcount State-specific headcount ratios are pre- declines over time, it is useful to supple-
ratio relative to the official estimate (22.5 sented in Table 2a.16 The table has the ment the poverty indexes with information
per cent versus 39.1 per cent), and similar same basic structure as Table 1a, except on the growth rate of average per capita
differences in 1993-94 and 1999-2000, that we jump straight from official to fully- consumption expenditure (hereafter
come from the fact that we take the rural adjusted estimates. The latter suggest that APCE). State-specific estimates of APCE
poverty line in 1987-88 as our starting the basic pattern of sustained poverty growth between 1993-94 and 1999-2000
point, and peg the urban poverty lines decline between 1987-88 and 1999-2000, are shown in Table 3, where states are
about 15 per cent higher than the rural discussed earlier at the all-India level, also ranked in ascending order of APCE growth
poverty lines, in contrast to the much larger applies at the level of individual states in for rural and urban areas combined.18
differentials embodied in the official lines. most cases. The main exception is Assam, Here, a striking regional pattern emerges:
Figure 1 shows the new estimates of the where poverty has stagnated in both rural except for Jammu and Kashmir, the low-
headcount ratios together with the official and urban areas. In Orissa, there has been growth states form one contiguous region
estimates going back to 1973-74. The fully very little poverty decline in the second made up of the eastern states (Assam,
adjusted figures are lower throughout sub-period, with the result that Orissa now Orissa and West Bengal), the so-called

Figure 2: ‘Divergence’ of Per Capita Expenditure Across States, 1993-94 to 1999-00
relatively large absolute declines in the
headcount ratio.
6 An alternative approach is to look at
proportionate changes in HCRs or PGIs.
These turn out to be highly correlated with
the corresponding growth rates of APCE.
DE
The point is illustrated in Figure 3, where
Average annual growth (per cent)
HA
we plot the proportionate decline in the
rural headcount ratio in each state against
4
the growth rate of APCE in rural areas. The
TN
correlation coefficient between the two
PU series is as high as 0.91. This reflects the
GU KE
HP
fact that poverty reduction is overwhelm-
KA MA
ingly driven by the growth rate of APCE,
rather than by changes in distribution – we
2 shall return to this point in Section III.
UP AI
From these observations, it follows that if
MP
BI RA we accept ‘proportionate change in HCR’
AP
(or PGI) as an index of poverty reduction,
JK then the broad regional patterns identified
OR WB earlier for the growth rate of APCE also
AS tend to apply to poverty reduction. In
0
particular: (1) most of the western and
200 300 400 500 600 southern states (with the important excep-
Geometric mean PCE in 1993-94, rupees per head tion of Andhra Pradesh) have done com-
paratively well; (2) the eastern region has
Source: Authors’ calculations using unit record data from the 50th and 55th Rounds of the National Sample achieved very little poverty reduction
Survey.
AI = All India; AP = Andhra Pradesh; AS = Assam; BI = Bihar; DE = Delhi; GU = Gujarat; HA = Haryana;
between 1993-94 and 1999-2000; and
HP = Himachal Pradesh; JK = Jammu and Kashmir; KA = Karnataka; KE = Kerala; MA = Maharashtra; (3) there is a strong overall pattern of ‘di-
MP = Madhya Pradesh; OR = Orissa; PU = Punjab; RA = Rajasthan; TN = Tamil Nadu; UP = Uttar Pradesh; vergence’ (states that were poorer to start
WB = West Bengal. with had lower rates of poverty reduction).
This reading of the evidence, however,
BIMARU states (Bihar, Madhya Pradesh, across Indian states in the nineties.20 The remains somewhat tentative, since there is
Rajasthan and Uttar Pradesh), and Andhra point is illustrated in Figure 2, which plots no compelling reason to accept the pro-
Pradesh. The high-growth states, for their the average growth in APCE for each state portionate decline in HCR (or PGI) as a
part, consist of the southern states (except between 1993-94 and 1999-2000 against definitive measure of poverty decline.
Andhra Pradesh), the western states the geometric mean of APCE in 1993-94. We end this section with a caveat. From
(Gujarat and Maharashtra) and the north- It is worth asking to what extent these Table 2 and Figure 1, it may appear that
western region (Punjab, Haryana and regional patterns, based on APCE data, are the ‘pace’ of poverty decline in the nineties
Himachal Pradesh). Further, it is interest- corroborated by regional patterns of pov- has been fairly rapid. It is important to
ing to note that this pattern is reasonably erty decline. One difficulty here is that note, however, that the associated increases
consistent with independent data on growth there is no obvious way of ‘comparing’ the in per capita expenditure have been rather
rates of per capita ‘state domestic product’ extent of poverty decline across states. For modest in most cases. For instance, the
(SDP); these are shown in the last column instance, looking at absolute changes in decline of 6.6 percentage points in the all-
of Table 3. With a couple of exceptions (say) HCRs would seem to give an unfair India HCR (from 29.2 per cent to 22.7 per
on each side, all the states in the ‘low ‘advantage’ to states that start off with cent) between 1993-94 and 1999-2000 is
APCE growth’ set had comparatively low high levels of poverty, and where there driven by an increase of only 10.9 per cent
rates of per capita SDP between 1993-94 tends be a large number of households in average per capita expenditure – not
and 1999-2000 (say below 4 per cent per close to the poverty line. To illustrate, the exactly a spectacular improvement in
year), and conversely, all the states in the absolute decline of the rural HCR between living standards. Similarly, Table 2a sug-
‘high APCE growth’ set had compara- 1993-94 and 1999-2000 was about twice gests that Bihar achieved a large step in
tively high annual growth rates of per as large in Bihar (7.4 percentage points) poverty reduction in the nineties, with the
capita SDP (the correlation coefficient as in Punjab (3.8 points), yet over the same rural HCR coming down from 49 per cent
between the two series is 0.45).19 period APCE grew by only 6.9 per cent to 41 per cent. Yet, as Table 3 indicates,
This broad regional pattern is a matter in Bihar compared with 20.2 per cent average APCE in rural Bihar increased
of concern, because the low-growth states in Punjab, with virtually no change in by only 7 per cent between 1993-94 and
also tend to be states that started off with distribution in either case.21 The reason 1999-2000.
comparatively low levels of APCE or per- for this contrast is that Bihar starts off in Why are small increases in APCE asso-
capita SDP. In other words, there has been 1993-94 with a very high proportion of ciated with substantial declines in poverty
a growing ‘divergence’ of per capita ex- households close to the poverty line, so indexes? It is tempting to answer that the
penditure (and also of per capita SDP) that small increases in APCE can produce distribution of consumer expenditure

must have improved in the nineties. As Figure 3: HCR Declines and APCE Growth, 1993-94 to 1999-2000
discussed in Section III, however, this is (Rural)
not the case: indeed economic inequality
has increased rather than decreased in the 70
nineties. The correct answer relates to the
HA
‘density effect’ mentioned earlier (see 60 PU
Section I.2): when many poor households
Proportionate decline in rural headcount ratio

are close to the poverty line, modest in-
50
creases in APCE can produce substantial KE
declines in standard poverty indexes. One HP
reason for drawing attention to this is that 40 GU
JK
the official poverty estimates have some- TN
times been used to claim that the nineties 30
have been a period of spectacular achieve- RA UP
ments in poverty reduction. In fact, when INDIA
MA
20
the relevant adjustments are made, and BI KA
the poverty indexes are read together with WB
MP
the information on APCE growth, poverty 10
AP
reduction in the nineties appears to be
OR
more or less in line with previous rates of 0
progress. AS
–10
II
Further Evidence 0 5 10 15 20 25 30
Six-year growth of rural APCE

II.1 National Accounts Statistics Source: Tables 2a and 3.
There has been much discussion of the

consistency between National Sample consumption expenditure’. Over time, the exactly the same, and also that there are
Survey data and the ‘national accounts’ CSO estimates have tended to grow faster major methodological differences between
published by the Central Statistical than the NSS estimates, leading some com- the two sources. The NSS figures are direct
Organisation (CSO).22 The latter include mentators to question the reliability of estimates of household consumption ex-
estimates of ‘private final consumer ex- National Sample Survey data. penditure. The CSO figures include sev-
penditure’, which is frequently compared It is important to note that these two eral items of expenditure that are not
with NSS estimates of ‘household notions of ‘consumer expenditure’ are not collected in the NSS surveys; examples are
expenditures by non-profit entreprises, as
Table 3: Growth Rates of APCE and Per Capita SDP, 1993-94 to 1999-2000 well as imputed rent by owner occupiers
and ‘financial intermediation services
Six-Year Growth of APCE (‘Adjusted’), 1993-94 to 1999-2000 Annual Growth Rate of
Rural Urban Combined Per Capita SDP,
indirectly measured’ (the last item is es-
1993-94 to 1999-2000 sentially the net interest earned by finan-
cial intermediaries, which is counted as
Assam 0.9 8.8 1.7 0.58
Orissa 1.4 –0.0 3.3 2.34
expenditures on intermediation services
West Bengal 2.1 11.5 3.3 5.48 by households). According to Sundaram
Jammu and Kashmir 5.4 8.0 5.3 2.49 and Tendulkar (2002), who quote a recent
Bihar 6.9 4.8 7.1 2.10 cross-validation study by the National
Madhya Pradesh 6.6 14.1 7.8 2.78
Andhra Pradesh 2.8 18.5 8.3 3.57 Accounts Department, the last two items
Rajasthan 7.0 15.4 8.6 4.60 account for 22 per cent of the difference
Uttar Pradesh 8.3 10.1 9.0 2.99 in levels between CSO and NSS estimates
India 8.7 16.6 10.9 4.36
Karnataka 9.5 26.5 14.0 5.82
of consumer expenditure. Further, the CSO
Maharashtra 14.1 16.7 15.9 3.53 estimates are ‘residual’ figures, obtained
Gujarat 15.1 20.9 16.8 4.88 after subtracting other items from the
Himachal Pradesh 16.2 28.5 17.6 5.06 national product. Leaving aside these
Tamil Nadu 15.7 25.1 18.9 5.39
Kerala 19.6 18.2 19.6 4.01
comparability issues, there is indeed a gap
Punjab 20.2 17.9 19.9 2.74 between the CSO-based and NSS-based
Haryana 31.0 23.0 29.2 3.05 growth rates of consumer expenditure.
Delhi – 30.7 30.7 5.69 According to CSO data, per-capita con-
Note: The states are arranged in ascending order of the growth rate of APCE for rural and urban area sumer expenditure has grown at much
combined. the same rate as per capita GDP between
Sources: For APCE: Authors’ calculations from unit record data for the 50th and 55th Rounds of the National
Sample Survey. For SDP: Authors’ calculations based on unpublished data kindly supplied by the
1993-94 and 1999-2000 – about 3.5 per
Planning Commission. The figures in the last column should be taken as indicative, given the cent per year in real terms.23 The cor-
significant margin of error involved in SDP estimates. responding NSS-based estimate associated

with our ‘adjusted’ APCE figures is around (CPIAL). The quality of this information headcount ratios in different states was
2 per cent.24 is not entirely clear, but available evidence 0.79 in absolute value, rising to 0.91 if
This is quite different from the situation suggests that it is adequate for the purpose Kerala is excluded. In 1993-94, the cor-
that prevailed prior to the 55th Round, of broad comparisons.27 relation coefficient was 0.87 in absolute
when consumer expenditure was hardly As Figure 4 illustrates, real agricultural value, with or without Kerala. Interest-
growing at all according to the NSS ‘thin wages in different states are highly cor- ingly, if ‘official’ HCRs are used instead
rounds’ but galloping forward according related with expenditure-based poverty of our adjusted HCRs, the correlation
to the CSO data. Today, in the light of more indexes (here and elsewhere in this sec- coefficients come down quite sharply (e g,
recent estimates, the discrepancy looks tion, the focus is on rural poverty). The from 0.91 to 0.73 in 1999-2000 and from
much smaller. That discrepancy calls for main ‘outlier’ is Kerala, where real wages 0.87 to 0.54 in 1993-94, without Kerala
further scrutiny and resolution, but mean- are far above the ‘regression line’; it seems in both cases). This can be tentatively
while, it can hardly be regarded as an that the power of labour unions in Kerala regarded as a further indication of the
indictment of National Sample Survey data. has raised agricultural wages well above plausibility of the proposed adjustments.
For one thing, the reference categories are the level found in any other Indian states, Given the close association between real
not the same. For another, there is no but that this does not translate into a wages and rural poverty, the growth rates
reason to believe that the CSO estimates correspondingly low level of rural poverty, of real wages over time provide useful
are more accurate than the NSS estimates; possibly because high wages are partly supplementary evidence on poverty trends.
indeed the cross-validation exercise raised offset by high unemployment, or because According to recent estimates based on
serious questions about a number of the other determinants of rural poverty are also AWI data, real agricultural wages were
consumption categories in the CSO data.25 at work. In 1999-2000, the correlation growing at about 5 per cent per year in the
coefficient between real wages and eighties and 2.5 per cent per year in the
II.2 Agricultural Wages
Table 4: Growth and the Headcount Ratio, 1993-94 to 1999-2000
Agricultural wages provide an impor- HCR50 Derivative with Six Years Change in Change in
tant source of further information on Respect to Growth Growth HCR55 HCR55,
Inequality Fixed Actual
poverty. There are, in fact, two ways of
thinking about the relevance of this infor- Rural
mation. First, real agricultural wages are Andhra Pradesh 29.2 –0.90 2.8 –2.5 –3.0
Assam 35.4 –1.27 0.9 –1.4 0.1
highly correlated with standard poverty Bihar 48.6 –1.06 6.9 –8.2 –7.4
indexes such as headcount ratios: where Gujarat 32.5 –0.91 15.1 –12.1 –12.4
poverty is higher, wages tend to be lower, Haryana 17.0 –0.63 31.0 –12.9 –11.3
and vice versa. Based on this statistical Himachal Pradesh 17.1 –0.75 16.2 –8.3 –7.3
Jammu and Kashmir 10.1 –0.50 5.4 –2.6 –4.0
association, real wages can be used to Karnataka 37.9 –0.91 9.5 –9.0 –7.2
provide some information about other Kerala 19.5 –0.62 19.6 –10.3 –9.5
poverty indexes. Second, it is also possible Madhya Pradesh 36.6 –0.93 6.6 –6.5 –5.3
Maharashtra 42.9 –0.81 14.1 –10.9 –11.0
to think about the real wage as a rough Orissa 43.5 –1.04 1.4 –1.2 –0.5
poverty indicator in its own right. The idea Punjab 6.2 –0.34 20.2 –4.0 –3.8
is that, if the labour market is competitive Rajasthan 23.0 –0.78 7.0 –5.5 –5.7
(at least on the supply side), then the real Tamil Nadu 38.5 –0.90 15.7 –13.3 –14.1
Uttar Pradesh 28.6 –0.79 8.3 –6.6 –7.2
wage measures the ‘reservation wage’, i e, West Bengal 25.1 –0.97 2.1 –2.0 –3.2
the lowest wage at which labourers are All-India 33.0 –0.88 8.7 –6.8 –6.7
prepared to work. This has direct eviden- Urban
tial value as an indication of the deprived Andhra Pradesh 17.8 –0.62 18.5 –9.0 –6.9
Assam 13.0 –0.64 8.8 –3.1 –1.2
circumstances in which people live (the Bihar 26.7 –0.79 4.8 –4.0 –2.0
more desperate people are, the lower the Gujarat 14.7 –0.55 20.9 –8.7 –8.3
reservation wage), independently of the Haryana 10.5 –0.47 23.0 –6.3 –6.0
Himachal Pradesh 3.6 –0.26 28.5 –2.9 –2.4
indirect evidential value arising from the Jammu and Kashmir 3.1 –0.15 8.0 –0.4 –1.8
statistical association between real wages Karnataka 21.4 –0.60 26.5 –12.9 –10.6
and standard poverty indexes such as the Kerala 13.9 –0.46 18.2 –7.1 –4.2
headcount ratio. Madhya Pradesh 18.5 –0.63 14.1 –8.0 –4.6
Maharashtra 18.2 –0.45 16.7 –6.1 –6.2
Detailed information on agricultural Orissa 15.2 –0.54 0.0 0.1 0.4
wages is available from Agricultural Wages Punjab 7.8 –0.38 17.9 –4.9 –4.4
in India (AWI), an annual publication of Rajasthan 18.3 –0.59 15.4 –8.4 –7.5
the Directorate of Economics and Statis- Tamil Nadu 20.8 –0.66 25.1 –12.9 –9.6
Uttar Pradesh 21.7 –0.59 10.1 –6.0 –4.4
tics, Ministry of Agriculture. The data West Bengal 15.5 –0.56 11.5 –5.8 –4.3
initially come in the form of district- Delhi 8.8 –0.26 30.7 –5.7 –6.4
specific money wages.26 These are typi- All-India 17.8 –0.56 16.6 –7.4 –5.9
cally aggregated using the numbers of agri- Source: Authors’ calculations from the unit record data of the 43rd , 50th , and 55th Rounds of the NSS.
cultural labourers in different districts as Note that the hypothetical all-India figures are calculated on the counterfactual asssumption that
each household received the state growth rate. They therefore do not show what would have
weights, and deflated using the Consumer happened had growth been more equally distributed across the states: see the text for this
Price Index for Agricultural Labourers alternative calculation.

nineties.28 Thus, real agricultural wages Figure 4: Agricultural Wages and Rural Poverty, 1999-2000
were growing considerably faster in the 50
eighties than in the nineties. But even the
reduced growth rate of agricultural wages OR
in the nineties, at 2.5 per cent per year, BI
40
points to significant growth of per capita
expenditure among the poorer sections of AS
Rural headcount ratio (adjusted)

the population and reinforces our earlier MP
findings on poverty reduction. In fact, this 30 MA
reduced growth rate is a little higher than KA
the growth rate of average per capita INDIA
AP
expenditure (1.5 per cent per year) that TN
sustains our estimated declines of rural 20 UP WB
GU
headcount ratios and headcount indexes
RA
between 1993-94 and 1999-2000.
The data on real wages also provide
some independent corroboration of the 10 KE
state-specific patterns of poverty decline.
This is illustrated in Figure 5, where we HA
PU
plot state-specific estimates of the growth
0
rate of real agricultural wages in the nine-
ties against the estimated proportionate 0 2 3 4 5 6 7 8
Real agricultural wage
decline in the headcount ratio (a very similar
pattern applies to the poverty-gap index). Source: Drèze and Sen (2002), Statistical Appendix, Table A 3, and Table 2a of this paper. The “real
Here the two main outliers are Punjab and agricultural wage” is a three-year average ending in 1999-2000.
Haryana, where the headcount ratio has
declined sharply without a correspond- estimates, based as they are on data for two frequency items, for which the reporting
ingly sharp increase in real wages (indeed years only. Yet it is reassuring to find that period was 30 days in the 50th Round and
without any such increase, in the case of they are consistent with the AWI-based 365 days in the 55th Round. As we have
Punjab). Leaving out these two outliers, estimates. already noted, the 365-day reporting pe-
the association between the two series is riod for these items pulls up the lower tail
remarkably close (with a correlation co- II.3 The ‘Employment- of the consumption distribution, and thus
efficient of 0.88). Unemployment Surveys’ biases down the headcount ratio compared
An interesting sidelight emerging from with earlier methods. However, Sundaram
Figure 5 is that a healthy growth of real The National Sample Survey’s 1993-94 and Tendulkar note that the 50th Round
agricultural wages appear to be a ‘suffi- and 1999-2000 employment-unemploy- contained both 30-day and 365-day report-
cient’ condition for substantial poverty ment surveys (EUS) also include consumer ing periods for the low frequency items.
decline in rural areas: all the states where expenditure data. These can be used for Hence, by recalculating the 50th Round
real wages have grown at more than, say, further scrutiny of poverty trends. This headcounts using the 365-day responses,
2.5 per cent per year in the nineties have task has been undertaken in a recent paper they can put the 50th and 55th Rounds on
experienced a comparatively sharp reduc- by Sundaram and Tendulkar (2002). They a roughly comparable basis. When they do
tion of the rural headcount ratio. Con- note that the consumption survey in the this, they find that, in both rural and urban
versely, in states with low rates of reduc- 1999-2000 EUS uses the traditional 30- sectors, they can confirm a little more than
tion of the headcount ratio (say, 15 per cent day reporting period, but differs from the three-quarters of the official decline in the
or less over six years), real wages have standard questionnaire by only asking an headcount ratios between the two rounds
invariably grown at less than 2 per cent abbreviated set of questions. However, the [Sundaram and Tendulkar 2002:
per year. This applies in particular to the authors find that, in those cases where the Table III.8]. These calculations are not
entire eastern region (Assam, Orissa, West questions have comparable coverage, the identical to our first-step adjustments (see
Bengal and Bihar) and also to Andhra means from the EUS, using the traditional Table 1a), but they are close enough to
Pradesh and Madhya Pradesh. 30-day reporting period, are typically close inspire some confidence that both sets of
Independent evidence on the growth rates to those from the 30-day questionnaire in results are in the right range.
of real wages has recently been presented the main consumption survey. Based on To sum up, the all-India poverty indexes
by K Sundaram (2001a, 2001b), based on this correspondence, they argue that the presented earlier in this paper are broadly
the ‘employment-unemployment surveys’ 30-day questions in the main 1999-2000 consistent with independent evidence from
(EUS) of the National Sample Survey for survey were not much distorted by the the national accounts statistics and the
1993-94 and 1999-2000. For the present seven-day questions that were asked along- employment-unemployment surveys, as
purpose, these surveys are comparable. side them. In this version of events, the well as with related information on agri-
Sundaram estimates that the real earnings major source of incomparability between cultural wages. There is also some congru-
of agricultural labourers have grown at the 55th and 50th Rounds is not the con- ence between the inter-state contrasts
about 2.5 per cent per year between 1993-94 tamination of the 30-day questions, but emerging from NSS data and independent
and 1999-2000. These are tentative rather the revised treatment of the low information on state-specific growth rates

Figure 5: Wage Growth and Poverty Decline, 1993-94 to 1999-2000 between these last two columns is the
change in the headcount ratio that is at-
80 tributable to changes in the shape of the
consumption distribution.
It is important to note that the last two
columns are highly correlated. The corre-
HA lation coefficients across the states are
60 PU 0.97 (rural) and 0.93 (urban), so that growth
Proportionate decline in rural HCR
alone can predict much of the cross-state

pattern of reduction in HCRs. Nevertheless,
KE
the estimates are far from identical. In
40 TN particular, the all-India calculations show
GU that ‘growth alone’ would have reduced the
poverty rate by more than actually hap-
MA UP
pened, implying that there was an increase
RA
20 in inequality that offset some of the effects
BI INDIA
MP KA of growth, or put differently, that APCE
WB growth among the poor was less than the
AP average. These inequality effects vary
OR somewhat from state to state and are much
0 AS
weaker in rural than in urban areas. In
–4 –2 0 2 4 6 8 10 urban India, increasing inequality moder-
Growth rate of real agricultural wage
ated the decline in the headcount ratio in
Source: See Figure 4. all states except Delhi, Maharashtra, and
Jammu and Kashmir. In some cases, such
of ‘state domestic product’ and real agri- distribution, would have led to a decline as urban Kerala and Madhya Pradesh, the
cultural wages. The combined evidence of 0.9 percentage points in the rural ‘moderating effect’ is pronounced, with
from these different sources is fairly strong, headcount ratio.29 This derivative depends actual rates of reduction only a little over half
even though each individual source has positively on the fraction of people who those predicted by the growth in the mean.
significant limitations. are at or near the poverty line, which is For the urban sector as a whole (the last
typically larger in the poorer states. The row of the table), the actual decline in the
III figures in column 2 vary from –1.27 in HCR is one and a half points lower (5.9
Economic Inequality in the rural Assam to –0.15 in urban Jammu and versus 7.4 per cent) than would have been
Nineties Kashmir. Column 3 reproduces the total the case had growth been equally distrib-
percentage growth between 1993-94 and uted within each state. This estimate, which
III.1 Growth, Poverty 1999-2000 from Table 3. is the population-weighted average of the
and Inequality If we multiply the second column (the corresponding numbers for each state,
derivative with respect to growth) by the calculates what would have happened if
It is possible to think about poverty third column (the amount of growth), we each household in each state had experi-
decline, as captured by standard poverty get an estimate of the amount of poverty enced the average growth for that state. An
indexes, in terms of two distinct compo- reduction that we would expect from growth alternative, and equally interesting, counter-
nents: a growth component and a distri- alone, in the absence of any change in the factual is what would have happened if,
bution component. The growth compo- shape of the distribution. This is an ap- between 1993-94 and 1999-2000, each
nent reflects the increase of average per proximation, because the derivative is likely household in the country had experienced
capita expenditure. The distribution com- to change as the headcount ratio falls. In the countrywide growth rate of 10.9 per
ponent captures any change that may take column 4, we report a more precise cal- cent. Such a calculation yields an all-India
place in the distribution of per capita ex- culation: an estimate of what the headcount HCR of 21.4 per cent (for rural and urban
penditure over households. ratio would have been in 1999-2000 if the areas combined), compared with an actual
This decomposition exercise is pursued distributions of consumption in each state all-India HCR of 22.7 per cent based on
in Table 4, with reference to the headcount were identical to those in 1993-94, but had the 55th Round. In other words, the all-
ratio (very similar results apply to the been shifted upwards by the amount of India HCR in 1999-2000 was 1.3 percent-
poverty-gap index). The first column re- growth in real per capita expenditure that age points higher than it would have been
peats the headcount ratio for 1993-94 actually took place. This can be readily (with the same growth rate of APCE) in
from Table 2. The second column (labelled calculated by reducing the 1993-94 pov- the absence of any increase in inequality.
‘derivative with respect to growth’) shows erty lines by the amount of growth, and
our estimate of the percentage-point re- re-estimating the headcount ratios from III.2 Aspects of Rising Inequality
duction in HCR associated with a distri- these adjusted lines and the 1993-94 ex-
bution-neutral, 1 per cent increase in APCE penditure data. These hypothetical changes Three aspects of rising economic in-
in the relevant state. To illustrate, in rural can then be compared with the actual equality in the nineties have come up so
Andhra Pradesh a 1 per cent increase in reductions in the headcount ratios, shown far in our story. First, we found strong
APCE in 1993-94, with no change in in the final column. The difference evidence of ‘divergence’ in per capita

consumption across states. Second, our our findings on rising economic inequality occupation groups. Since agricultural
estimates of the growth rates of per capita within the urban sector are consistent with labourers and public sector employees
expenditure between 1993-94 and 1999- recent work by Banerjee and Piketty (2001), typically reside in rural and urban areas,
2000 (Table 3) point to a significant in- who use income tax records to document respectively, this finding may just be
crease in rural-urban inequalities at the all- very large increases in income among the another side of the coin of rising rural-
India level, and also in most individual very highest income earners. They show urban disparities. Even then, it streng-
states. Third, the decomposition exercise that, in the 1990s, real incomes among the thens the evidence presented earlier on
in the preceding section shows that rising top one per cent of income earners in- aspects of rising economic inequality in
inequality within states, particularly in the creased by a half in real terms, while those the nineties.
urban sector, has moderated the effects of of the top 1 per cent of 1 per cent increased To sum up, except for the absence of
growth on poverty reduction. by a factor of three in real terms. clear evidence of rising intra-rural in-
Table 5 provides more systematic evi- Second, it is interesting to compare the equality within states, we find strong indi-
dence on recent changes in consumption growth rate of real wages for agricultural cations of a pervasive increase in eco-
inequality within each sector of each state labourers with that of public sector sala- nomic inequality in the nineties. This is
using two different measures of inequality. ries. As we saw earlier, real agricultural a new development in the Indian economy:
We show the logarithm of the difference wages have grown at 2.5 per cent or so until 1993-94, the all-India Gini coeffi-
of the arithmetic and geometric means in the nineties. Public sector salaries, for cients of per capita consumer expenditure
(approximately the fraction by which the their part, have grown at almost 5 per cent in rural and urban areas were fairly stable.31
arithmetic mean exceeds the geometric per year during the same period.30 Given Further, it is worth noting that the rate of
mean), as well as the variance of the that public-sector employees tend to be increase of economic inequality in the
logarithm of per capita expenditure. much better off than agricultural labourers, nineties is far from negligible. For in-
The table shows that the correction for this can be taken as an instance of rising stance, the compounding of inter-state
questionnaire design is critical for under- economic disparities between different ‘divergence’ and rising rural-urban
standing what has been happening. (Note
that the correction for prices has no effect
Table 5: Inequality Measures
within sectors and states.) The direct use
of the unit record data in the 55th Round, logAM¥logGMa Variance of Logs
50th Round 55th Round 55th Round 50th Round 55th Round 55th Round
with no adjustment, shows a substantial Adjusted Adjusted
reduction in inequality within the rural
sectors of most states, with little or no Andhra Pradesh 0.14 0.09 0.13 0.24 0.17 0.22
Assam 0.05 0.07 0.06 0.10 0.13 0.11
increase in the urban sectors. With the Bihar 0.08 0.07 0.08 0.16 0.13 0.16
correction, we see that within-state rural Gujarat 0.10 0.09 0.11 0.17 0.18 0.18
inequality has not fallen, and that there Haryana 0.16 0.10 0.23 0.28 0.19 0.31
Himachal Pradesh 0.13 0.10 0.14 0.22 0.17 0.24
have been marked increases in within-state Jammu and Kashmir 0.10 0.06 0.07 0.16 0.12 0.14
urban inequality. We suspect that the main Karnataka 0.12 0.10 0.12 0.21 0.18 0.22
reason why the unadjusted data are so Kerala 0.15 0.14 0.16 0.26 0.24 0.27
misleading in this context is the change Madhya Pradesh 0.13 0.10 0.12 0.22 0.18 0.22
Maharashtra 0.16 0.11 0.16 0.27 0.20 0.28
from 30 to 365 days in the reporting period Orissa 0.10 0.10 0.12 0.18 0.18 0.21
for the low frequency items (durable goods, Punjab 0.13 0.10 0.14 0.22 0.19 0.24
clothing and footwear, and institutional Rajasthan 0.12 0.07 0.10 0.20 0.14 0.18
medical and educational expenditures). The Tamil Nadu 0.16 0.14 0.15 0.27 0.23 0.24
Uttar Pradesh 0.13 0.10 0.12 0.23 0.18 0.21
longer reporting period actually reduces West Bengal 0.11 0.09 0.08 0.17 0.15 0.15
the mean expenditures on those items, but All-India Rural 0.14 0.11 0.14 0.23 0.21 0.24
because a much larger fraction of people Andhra Pradesh 0.17 0.16 0.17 0.30 0.29 0.33
Assam 0.13 0.16 0.14 0.25 0.30 0.27
report something over the longer reporting 0.17 0.17 0.27 0.30 0.30
Bihar 0.15
period, the bottom tail of the consumption Gujarat 0.14 0.14 0.14 0.25 0.25 0.26
distribution is pulled up, and both inequal- Haryana 0.13 0.14 0.15 0.24 0.27 0.28
ity and poverty are reduced. Whether 365- Himachal Pradesh 0.38 0.16 0.42 0.37 0.29 0.40
Jammu and Kashmir 0.13 0.09 0.12 0.24 0.16 0.21
days are a better or worse reporting period Karnataka 0.16 0.18 0.17 0.31 0.32 0.34
than 30-days could be argued either way, Kerala 0.20 0.17 0.22 0.31 0.32 0.37
but the main point here is that the 55th and Madhya Pradesh 0.18 0.17 0.18 0.29 0.29 0.33
50th Rounds are not comparable, and that Maharashtra 0.21 0.21 0.21 0.40 0.36 0.40
Orissa 0.15 0.14 0.16 0.29 0.26 0.29
the former artificially shows too little Punjab 0.13 0.14 0.14 0.23 0.25 0.25
inequality compared with the latter. Once Rajasthan 0.14 0.13 0.14 0.25 0.23 0.26
the corrections are made, we see that, in Tamil Nadu 0.21 0.27 0.20 0.39 0.34 0.35
Uttar Pradesh 0.17 0.18 0.19 0.31 0.31 0.34
addition to increasing inequality between
West Bengal 0.19 0.20 0.19 0.34 0.31 0.35
states, there has been a marked increase Delhi 0.29 0.21 0.30 0.43 0.39 0.46
in consumption inequality within the All-India Urban 0.19 0.20 0.21 0.34 0.34 0.37
urban sector of nearly all states. All-India 0.17 0.18 0.19 0.29 0.29 0.32
Two further pieces of evidence are Note: a AM is the arithmetic mean and GM is the geometric mean: the difference in their logarithms is the
worth mentioning in this context. First, mean relative deviation, a measure of inequality.

Figure 6: Food Intake for Different Per Capita Income Groups, as a Proportion seventies and eighties, when poverty was
(Per Cent) of Average Intake (1996-97) certainly declining. Hanchate and Dyson’s
250.0 (2000) recent comparison of rural food
consumption patterns in 1973-74 and
1993-94 sheds some useful light on this
200.0
matter. As the authors show, during this
period per capita cereal consumption in
150.0
rural areas declined quite sharply on av-
erage (from 15.8 to 13.6 kgs per person
per month), but rose among the poorest
100.0 households. The decline in the average is
driven by reduced consumption among the
higher expenditure groups.35
50.0 The average decline is unlikely to be
driven by changes in relative prices;
indeed, there has been little change in food
0.0 prices, relative to other prices, in the inter-
Cereals and millets Fats and oils Sugar and Jaggery Milk and milk products
vening period. Instead, this pattern ap-
Per capita income groups (Rs/cap/month) less than 90 90-150
pears to reflect a substitution away from
150-300 300-600 more than 600
Source: Calculated from National Nutrition Monitoring Bureau (1999), Table 6.9. The data relate to rural
cereals to other food items as incomes rise
areas of eight sample states. (at least beyond a certain threshold). The
consumption of ‘superior’ food items such
disparities produces very sharp contrasts real agricultural wages slowed down con- as vegetables, milk, fruit, fish and meat did
in APCE growth between the rural sectors siderably. And cereal production barely rise quite sharply over the same period,
of the slow-growing states and the urban kept pace with population growth.33 across all expenditure groups. Seen in this
sectors of the fast-growing states (Table 3). The virtual stagnation of per capita cereal light, the decline of average cereal con-
This is further compounded by the accen- production in the nineties has been accom- sumption may not be a matter of concern
tuation of intra-urban inequality, which is panied by a gradual switch from net imports per se. Indeed, average cereal consump-
itself quite substantial, bearing in mind to net exports, and also by a massive tion is inversely related to per capita in-
that the change is measured over a short accumulation of public stocks. Correspond- come across countries (e g, it is lower in
period of six years (Table 5). ingly, there has been no increase in esti- China than in India, and even lower in the
It might be argued that a temporary mated per capita ‘net availability’ of cereals United States), and the same applies across
increase in economic inequality is to be (Table 6). If anything, net availability states within India (e g, cereal consump-
expected in a liberalising economy, and declined a little, from a peak of about 450 tion is higher in Bihar or Orissa than in
that this trend is likely to be short-lived. grams per person per day in 1990 to 420 Punjab or Haryana).
Proponents of the ‘Kuznets curve’ may grams or so at the end of the nineties. This Food intake data collected by the Na-
even expect it to be reversed in due course. is consistent with independent evidence, tional Nutrition Monitoring Bureau
However, China’s experience of sharp and from National Sample Survey data, of a (NNMB) shed further light on this issue.
sustained increase in economic inequality decline in per capita cereal consumption Aside from detailed information on food
over a period of more than 20 years, after in the nineties. Between 1993-94 and 1999- intake, the NNMB surveys include rough
market-oriented economic reforms were 2000, for instance, average cereal con- estimates of household incomes. These are
initiated in the late 1970s, does not inspire sumption per capita declined from 13.5 kg used in Figure 6 to display the relation
much confidence in this prognosis.32 It is, per month to 12.7 kg per month in rural between per-capita income and food in-
in fact, an important pointer to the pos- areas, and from 10.6 to 10.4 kg per month take, for different types of food. The sub-
sibility of further accentuation of economic in urban areas.34 This comparison is stitution from cereals towards other food
disparities in India in the near future. based on the ‘uncorrected’ 55th Round items with rising per-capita income emerges
data, and the ‘true’ decline may be larger quite clearly.36 This pattern, if confirmed,
IV still, given the changes in questionnaire would fit quite well with the data on change
Qualifications and Concerns design (Section I.1). over time.37 It also implies that the decline
The reduction of cereal consumption in of average cereal consumption in the nine-
IV.1 Food Consumption the nineties may seem inconsistent with ties is not inconsistent with our earlier
the notion that poverty has declined during findings on poverty decline.38
There have been major changes in India’s the same period. Indeed, this pattern has
food economy in the nineties. The eighties been widely invoked as evidence of ‘im- IV.2 Localised Impoverishment
were a period of healthy growth in agri- poverishment’ in the nineties. If cereal con- and Hidden Costs
cultural output, food production, and real sumption is declining, how can poverty
agricultural wages. During the nineties, be declining? The overall decline of poverty in the
however, productivity increases slowed It is worth noting, however, that the nineties does not rule out the possibility
down in many states. The quantity index decline of cereal consumption is not new. of impoverishment among specific regions
of agricultural production grew at a lame A similar decline took place (according to or social groups. That possibility, of course,
2 per cent per year or so. The growth of National Sample Survey data) during the is not new, but it is worth asking whether

Figure 7:Progress of Selected Social Indicators in the 1980s and 1990s are poorly captured, if at all, in standard
(Per Cent Per Year)
poverty indexes or for that matter in the
6.0 other social indicators examined in this
5.5 paper. Examples of such costs include
irregular school attendance, the spread of
5.0
HIV/AIDS, the disruption of family life,
and rising urban congestion.42 Similarly,
4.0 1980s involuntary displacement of persons af-
1990s fected by large development projects such
2.9
as dams and mines tends to have enormous
3.0 2.8
2.5
human costs. These, again, are largely
hidden from view in income-based analy-
2.0 1.7 1.8 ses of poverty. In fact, the incomes of
1.5 1.5 displaced persons often rise (with ‘cash
compensation’) even as their lives are being
1.0
shattered.43 The ‘informalisation’ of labour
markets is another example of economic
0.0 change with substantial hidden costs (e g,
Increase of real Decline of infant Decline of total Decline of longer working hours, higher insecurity,
agricultural wages mortality rate fertility rate illiteracy rate
lower status, and deteriorating work con-
Source: Drèze and Sen (2002), chapter 9. ditions).44 These issues are not new, but
it is important to acknowledge the possi-
its scope has expanded during the last considerable disruption of earlier liveli- bility that the hidden costs of economic
decade. As the economy gives greater room hood patterns. Examples include a deep growth have intensified in the nineties.
to market forces, uncertainty and inequal- recession in the powerloom sector, a se- This acknowledgement helps to recon-
ity often increase, possibly leading to rious crisis in the edible oil industry after cile the survey-based evidence reviewed
enhanced economic insecurity among those import tariffs were slashed, periodic waves earlier with widespread media reports, in
who are not in a position to benefit from of bankruptcy among cotton growers, the recent years, of sectoral economic crises
the new opportunities, or whose liveli- displacement of traditional fishing by and localised impoverishment.45 This
hoods are threatened by the changes in the commercial shrimp farms, and a number issue calls for further scrutiny, based on
economy. The increase of economic in- of sectoral crises associated with the abrupt more focused analysis of survey data as
equality in the nineties, noted earlier, lifting of quantitative restrictions on im- well as on micro-studies.
suggests that tendencies of this kind may ports in mid-2001.40 The destruction of
well be at work in India today. Adverse local environmental resources is another IV.3 The ‘Thin’ Rounds: An
trends in living standards could take several common cause of disrupted livelihoods in Unresolved Puzzle?
distinct forms, including: (1) impoverish- many areas.
ment among specific regions or social A related issue is the possibility of ‘hidden We have so far said very little about the
groups, (2) heightened uncertainty in hardships’ associated with recent patterns ‘thin’ rounds, and the poverty estimates
general, and (3) growing ‘hidden costs’ of of economic development. To illustrate, that can be calculated from them. Yet
economic development. there is much evidence that, in many of Figure 1 shows that the recent thin rounds,
In connection with the first point, we the poorer regions of India, further impov- from the 51st through the 54th Round,
have already noted that some of the poorer erishment has been avoided mainly through generate poverty estimates that are hard to
states, notably Orissa and Assam, have not seasonal labour migration.41 The latter reconcile with the quinquennial ‘thick’
fared well at all in the nineties. It is quite often entails significant social costs that rounds. If we were to connect up these
possible that the poorer regions within
these states have done even worse, to the Table 6: Cereal Availability in the Nineties
(Grams per person per day)
point of absolute impoverishment for
substantial sections of the population. In Net Production Net Imports Net Change in ‘Net Availability’
the case of Orissa, there is some indepen- Public Stocks (1+2-3)
dent evidence of localised impoverishment 1985-89 422.7 2.0 -5.3 430.1
in the poorer districts, due inter alia to the 1990 456.9 0.3 5.0 452.1
1991 447.9 -1.4 0.4 446.1
destruction of the local environmental base 1992 446.8 1.3 4.2 443.8
and to the dismal failure of state-spon- 1993 446.4 2.5 16.6 432.3
sored development programmes [Drèze 1994 456.3 0.2 16.6 439.9
2001].39 1995 448.6 -5.9 -2.3 445.1
1996 451.7 -6.9 -11.7 456.4
Similarly, the overall improvement of 1997 445.5 -6.7 -4.2 443.0
living standards may hide instances of 1998 455.3 -4.7 11.0 439.6
impoverishment among specific occupa- 1999 456.3 -5.4 25.3 425.6
tion groups. The nineties have been a period 2000 452.7 -5.2 30.7 416.8
of rapid structural change in the Indian Note: All figures (except first row) are three-year averages centred at the year specified in the first column.
economy, leading in some cases to Source: Calculated from Government of India (2002), p S-21.

points with the official HCR estimates, we not bias, and in any case, the thin round is very hard to reconcile with other evi-
would get a series in which poverty rose sample sizes are perfectly adequate to dence. Having said this, we have not been
between 1993-94 and 1994-95, fell from generate accurate estimates for the all- able to identify any ‘smoking gun’ that
1994-95 to the end of 1997, rose very India HCRs. The discrepancies in Figure 1 would point to a specific problem with any
sharply in the first half of 1998, and then cannot be explained by inadequate of these rounds and explain their appar-
fell with extraordinary rapidity in 1999- sample sizes. ently anomalous poverty estimates. Until
2000. As we have seen, the official esti- There are other differences between thick that puzzle is resolved, we see the evidence
mate for 1999-2000 is too low, and the last and thin rounds. For example, the sam- from the thin rounds as casting a shadow
thin round, the 54th Round, ran for only pling frame for the 51st, 53rd, and 54th of doubt over the interpretation of the
the first six months of 1998, and may Rounds was not the census of population, poverty estimates presented earlier in this
therefore not be fully comparable with but the ‘economic’ census. In the popu- paper. Perhaps the thin rounds in the next
other rounds. Even so, and with due al- lation census, each household is asked if five years will offer some useful clues.
lowance for corrections, it is very hard to it has a family business or enterprise, and
integrate the poverty estimates based on only such households are included in the V
the thin rounds with the picture that emerges first-stage sampling from the economic Beyond Poverty Indexes
from the thick rounds as well as from other census when ‘first-stage units’ are drawn
sources surveyed in this paper. with probability proportional to size. This The decline of poverty in the nineties,
The story is further complicated by the means that a village with few or no such as captured in the indicators examined so
fact that these thin rounds were run in two households has only a small or no chance far, can be seen as an example of continued
versions, one of which resembled the of being selected as a first-stage unit. Even progress during that period. Whether the
standard questionnaire up to and including so, when the team reaches the village, all rate of progress has been faster or slower
the 50th Round, and one of which – the households are listed and have a chance than in the eighties is difficult to say, and
experimental questionnaire – had different of being in the sample, so it is unclear that the answer is likely to depend on how the
reporting periods for different goods. this choice of frame makes much differ- rate of progress is measured. There is, at
Headcount ratios based on the experimen- ence. Indeed, comparison of various socio- any rate, no obvious pattern of “accelera-
tal questionnaire (not shown in Figure 1) economic indicators (e g, literacy rates, tion” or ‘slowdown’ in this respect.
are lower than those from the standard years of schooling, landholding, or family It is important to supplement the evi-
questionnaire, because the experimental size) from the surveys suggests no obvious dence reviewed so far, which essentially
questionnaire generated higher reports of breaks between the 51st and 53rd Rounds relates to purchasing power, with other
per capita expenditure. However, they also on the one hand, and the 52nd Round indicators of well-being relating, for in-
show rising HCRs from the 52nd through (which used the population census) on the stance to educational achievements, life
the 54th Rounds, and the increase contin- other. Conversations with NSS and Plan- expectancy, nutritional levels, crime rates,
ues into the 55th Round if we use com- ning Commission staff sometimes suggest and various aspects of social inequality.
parable reporting periods from that round. that there may be other (non-documented) This broader perspective reveals that so-
Based on the experimental questionnaire, differences in the sampling structure of the cial progress in the nineties has followed
a case could be made that the all-India thin rounds. Certainly, a tabulation of the very diverse patterns, ranging from accel-
HCR has been rising since 1995-96 [Sen population sizes of the first-stage units erated progress in some fields to slow-
2000]. As we have seen, there are good shows that the 52nd Round contained down and even regression in other re-
grounds for distrusting the experimental relatively few large units compared with spects. The point is illustrated in Figure 7,
questionnaire in the 55th Round, because the 51st, 53rd, 54th, and 55th rounds; this where simple measures of the progress of
of the juxtaposition of the seven-day recall is a different issue from the use of the different social indicators in the nineties
and 30-day recall data for food-pan and economic rather than population census are compared with the corresponding
tobacco. Quite likely, the ‘reconciliation (both the 52nd and 55th Rounds use the achievements in the eighties.
effect’ (see Section I.1) pulled down the latter), and the finding suggests that the Elementary education provides an inter-
estimates of per capita expenditure from first-stage units in the 52nd Round were esting example of accelerated progress in
the experimental questionnaire, thus exag- selected differently from other rounds in the nineties.46 This trend is evident not
gerating poverty by this count. Even so, some way that is not documented. More- only from census data on literacy rates, but
if poverty were genuinely falling, there is over, the measurement of consumption is also from National Family Health Survey
no obvious explanation why the experi- not the main purpose of any of these thin data on school participation. To illustrate,
mental questionnaire should show a rise rounds, all of which have some other school participation among girls aged 6-14
in poverty from 1995 through 1998. objective, so it is possible that consump- jumped from 59 per cent to 74 per cent
The Planning Commission has never tion is not so fully or carefully collected between 1992-93 and 1998-99.47 The re-
endorsed poverty counts from the thin as in the quinquennial rounds. gional patterns are also instructive. It is
rounds. In part, this has been because of In short, there are grounds for scepticism particularly interesting to note evidence of
the smaller sample sizes. The Planning about the validity of the thin rounds for rapid progress in Madhya Pradesh and
Commission needs estimates of HCRs, not poverty estimation purposes, and this is all Rajasthan, demarcating them clearly from
just for all-India, but for individual states, the more so if we remember that aside from Bihar and Uttar Pradesh, the other two
and the thin rounds are not large enough to indicating no poverty decline in the late members of the so-called BIMARU set.48
support accurate estimates for some of the nineties, the thin rounds also suggest that There is an important pointer here to the
smaller (of the major) states. But in- average per capita expenditure was stag- relation between public action and social
adequate sample size generates variance, nating during that period – something that achievements. Indeed, Madhya Pradesh

and Rajasthan are two states where there Delhi) that are relatively well-off economi- based poverty indexes tends to foster a
have been many interesting initiatives in cally, and have also experienced compara- simplistic view of the relation between
the field of elementary education in the tively high rates of growth of per capita economic growth and poverty decline.
nineties (on the part of government as well expenditure in the nineties (Table 3).51 Third, it is also interesting to re-examine
as non-government institutions), in con- A detailed assessment of the progress of the issue of trends in inequality, in the light
trast with Bihar and Uttar Pradesh where development indicators in the nineties is of this broader perspective. As discussed
schooling matters continue to be highly beyond the scope of this paper. However, in Section III, there is much evidence of
neglected. The fact the literacy rates and a few general observations can be made rising economic inequality in the nineties,
school participation have surged in the on the basis of these illustrations. First, as in the form of a widening rural-urban gap,
more ‘active’ states is an encouraging noted already, poverty is not unidimen- enhanced inter-state disparities, and also
indication of the possibility of effective sional. The poverty indexes used in the growing inequality within urban areas in
public intervention in this field. first part of this paper are useful indicators most states. What about other types of
Turning to instances of ‘slowdown’, we of inadequate purchasing power, but on social inequality, involving other dimen-
have already referred to the slackening of their own do not do justice to the range sions of well-being (e g, educational levels
the growth rate of real agricultural wages of deprivations we ought to be concerned or life expectancy) and other bases of
in the nineties. Another important example with. Following on this, it is important to disadvantage (e g, gender or caste)? The
is the slowdown of infant mortality de- acknowledge that recent progress in elimi- decline of the female-male ratio among
cline. During the eighties, India achieved nating poverty and deprivation has been children illustrates the fact that the pheno-
a reduction of 30 per cent in the infant quite uneven in different fields. The debate menon of rising inequality in the nineties
mortality rate – from 114 deaths per 1,000 on ‘poverty in the nineties’ has often is not confined to standard economic
live births in 1980 to 80 per 1,000 in 1990. overlooked this basic point. inequalities: ‘natality inequality’ between
During the nineties, however, the infant Second, this recognition is also impor- males and females is also rising.53 But this
mortality rate declined by only 12.5 per tant in assessing the relation between is not to say that inequality has risen across
cent – from 80 to 70.49 In fact, in the poverty decline and economic growth. As the board. Even within the field of gender
second half of the nineties, India’s infant noted earlier, the decline of poverty in the inequality, there are changes in the other
mortality rate has remained virtually un- nineties, as captured by conventional in- direction, such as the emergence of a
changed. In some states, notably Rajasthan, dexes such as the headcount ratio or the substantial gender gap in life expectancy
the infant mortality rate has stagnated for poverty-gap index, has been overwhelm- in favour of women, overturning India’s
as long as 10 years. These worrying trends ingly driven by the growth of average per long history of female disadvantage in this
have received astonishingly little attention capita expenditure. From this it may seem respect. Similarly, it is interesting to note
in policy debates, and even in the debate that the reduction of poverty is mainly a that while economic disparities between
on ‘poverty in the nineties’. question of economic growth. However, rural and urban areas have sharply risen
Finally, there have also been some areas there is an element of circularity in this in the nineties, there are trends in the
of ‘regression’ in the nineties. The in- argument: if poverty is defined as lack of opposite direction as well. The rural-urban
crease of economic inequality, discussed income, it is not surprising that the growth gap in life expectancy, for instance, has
earlier, can be seen in those terms. Given of income plays a key role in reducing it. declined from 10 years or so in the late
the adverse social consequences of eco- When the multidimensional nature of 1970s to seven years or so today, and rural-
nomic inequality (ranging from elitist biases poverty is acknowledged, this relation urban differentials in school participation
in public policy to the reinforcement of appears in a different light. To illustrate, have also narrowed.54 Here again, the
other types of inequality), this accentua- consider child mortality as an aspect of the picture is more diverse (and more inter-
tion of economic disparities is not a trivial deprivations associated with poverty. There esting) than it appears on the basis of
matter. Another example of adverse is, of course, a significant (negative) re- purchasing-power indicators alone.
development in the nineties is the decline lation between child mortality and pur- Fourth, the broad approach explored here
in the female-male ratio among children, chasing power. But child mortality is also calls for a correspondingly broad reading
from 945 girls per 1,000 boys (in the 0-6 strongly influenced by other factors such of the causal influences underlying the
age group) in 1991 to 927 girls per 1,000 as educational levels, fertility rates, public identified changes. In the debate on ‘pov-
boys in 2001.50 This decline appears to be health provisions (including clean water erty in the nineties’, there has been a
driven by the spread of prenatal sex- and vaccinations), and various aspects of tendency not only to view development
determination technology and sex- gender relations. Looking at inter-state trends in unidimensional terms, but also
selective abortion, but this does not mean contrasts in India, the correlation between to attribute these trends in a somewhat
that it is a ‘technological’ phenomenon, child mortality and average per capita mechanical manner to the economic re-
unrelated to other recent economic and expenditure (or even poverty indexes) is forms initiated around 1991. At one end
social trends. Economic growth, in parti- actually quite weak. Other factors, particu- of the spectrum, it has been claimed that
cular, may facilitate the spread of sex- larly female literacy, are often more im- the last decade has been a period of un-
selective abortion, by making the use of portant.52 Similar comments apply in the precedented improvement in living stan-
sex-determination technology more afford- context of elementary education: the nine- dards, thanks to liberalisation.55 At the
able. In this connection, it is worth noting ties have demonstrated the possibility of other end, the nineties have been described
that the largest declines of the female-male rapid progress in this field through public as a period of widespread ‘impoverish-
ratio among children between 1991 and intervention, with or without rapid eco- ment’, attributed to liberalisation.56 Clearly,
2001 occurred in five states (Gujarat, nomic growth. In short, the standard focus these readings fail to do justice to the
Haryana, Himachal Pradesh, Punjab and on headcount ratios and other expenditure- diversity of recent trends. But in addition,

they ignore the diversity of causal influ- on the basis of headcount ratios. For the Sixth, the case for going beyond expen-
ences that have a bearing on these trends. purpose of the poverty comparisons exam- diture-based indicators applies also to the
The accelerated progress of elementary ined in this paper, the headcount ratio turns assessment of inequality. While expendi-
education in the nineties, for instance, has out to be no less informative than the ture-based data suggest rising disparities
little to do with liberalisation, and the same poverty-gap index. Yet it was important in the nineties, the same need not apply
applies to the slowdown of infant mortal- to calculate the PGIs, if only to discover to other social indicators. For instance,
ity decline, not to speak of the decline of that this refinement does not, after all, while economic disparities between rural
the female-male ratio among children. make much difference in this particular and urban areas have increased in the
Much else than liberalisation has happened context. nineties, there has been some narrowing
in the nineties, and while issues of eco- Third, growth patterns in the nineties are of the rural-urban gap in terms of life
nomic reform are of course extremely characterised by major regional imbalances. expectancy and school participation.
important, so are other aspects of eco- Broadly speaking, the western and south- Finally, we have argued against reading
nomic and social policy. ern states (Andhra Pradesh excluded) have these trends simply as evidence of the
tended to do comparatively well. The low impact (positive or negative) of ‘liberalis-
VI growth states, for their part, form a large ation’. For one thing, the impact of liberalis-
Concluding Remarks contiguous region in the north and east. ation is a ‘counterfactual’ question, and
This is a matter of concern, since the much depends on how the alternatives are
A number of useful lessons emerge from northern and eastern regions were poorer specified. For another, much else has hap-
this reexamination of the evidence on to start with. Indeed, National Sample pened in the nineties, other than liberalis-
poverty and inequality in the nineties. First, Survey data suggest a strong pattern of ation. The evidence we have reviewed is
there is consistent evidence of continuing inter-regional ‘divergence’ in average per of much interest in its own right, indepen-
poverty decline in the nineties, in terms of capita expenditure (APCE): states that dently of the liberalisation debate. Much
the ‘headcount ratio’. The extent of the started off with higher APCE levels also work remains to be done in terms of identi-
decline, however, remains somewhat had higher growth rates of APCE between fying the causal relations underlying the
uncertain at this time. Given the method- 1993-94 and 1999-2000. In some of the trends we have identified. EPW
ological changes that took place between poorer states, notably Assam and Orissa,
the 50th and 55th Rounds of the National there has been virtually zero growth of Notes
Sample Survey, the official figures (imply- average per capita expenditure (and very
ing a decline from 36 per cent to 26 per little reduction, if any, in rural poverty) [We are grateful to Suresh Tendulkar for helpful
cent in the all-India headcount ratio be- between 1993-94 and 1999-2000. These comments]
tween 1993-94 and 1999-2000) are, strictly regional patterns are at least broadly con- 1 See Datt (1999a), Gupta (1999), Bhalla (2000a,
speaking, invalid. We have discussed sistent with independent estimates of the 2000b), Deaton and Tarozzi (2000), Drèze
alternative estimates, based on comparable growth rates of state domestic product (2000), Lal, Mohan and Natarajan (2001),
Nagaraj (2000), Ravallion (2000), Sen (2000),
data from the two surveys. As it turns out, (SDP). Sundaram and Tendulkar (2000, 2001, 2002),
these adjusted estimates suggest that a Fourth, the intensification of regional Visaria (2000), Sundaram (2001a, 2001b,
large part of the poverty decline associated disparities is only one aspect of a broader 2001c), Chandrasekhar and Ghosh (2002),
with official figures is ‘real’, rather than pattern of increasing economic inequality Datt and Ravallion (2002), among others.
driven by methodological changes. While in the nineties. Two other aspects are rising 2 On the first position, see, e g, Bhalla (2000a),
Bhagwati (2001), Das (2000). On the other
further corroboration and investigation of rural-urban disparities in per capita expen- side, see Mehta (2001), Sainath (2001a,
the adjustment procedure is required, the diture, and rising inequality of per capita 2001b), Shiva (2001a), among others.
results have been supported by one inde- expenditure within urban areas in most 3 These estimates build on earlier work by Deaton
pendent study using an entirely different states. Further, the real wages of agricul- and Tarozzi (2000), Deaton (2001a, 2001b)
methodology [Sundaram and Tendulkar tural labourers have increased more slowly and Tarozzi (2001).
4 In the 50th Round, the correlation between the
2002]. Further, the adjusted figures fit than per capita GDP, and conversely with logarithm of total household per capita
reasonably well with related evidence from public sector employees, suggesting some expenditure and the logarithm of per capita
the national accounts statistics, the em- intensification of economic inequality expenditure on this subset of commodities is
ployment-unemployment surveys, and data between occupation groups. 0.79 and 0.86 in the rural and urban sectors,
on agricultural wages. Fifth, we have argued for assessing respectively.
5 More precisely, and somewhat less restrictively,
Second, we have discussed some impor- changes in living standards in a broader we require that the probability of being
tant limitations of the headcount ratio as perspective, going beyond the standard poor, given the amount of a household’s
an index of poverty (even within the stan- focus on expenditure-based indicators. In expenditure on these intermediate goods,
dard expenditure-based approach), and that broader perspective, a more diverse remains the same in the 55th Round as it was
argued for wider adoption of alternative picture emerges, with areas of accelerated in the 50th. We require this on a state by state
basis, one sector at a time, which allows the
poverty indexes such as the poverty-gap progress in the nineties as well as slow- conditional probability to vary by state and by
index. The main argument for using down in other fields. For instance, there sector.
headcount ratios is that they have good is much evidence of rapid progress in the 6 In Deaton and Tarozzi (2000), it is shown that,
‘communication value’, in so far as they field of elementary education, but the rate between the 43rd and 50th Rounds, the
are relatively easy to understand and in- of decline of infant mortality has slowed component of the CPIAL for the uncovered
items grew somewhat less rapidly than the
terpret. However, this transparency is to down. These and related trends deserve component for the covered items. In conse-
some extent deceptive, and much caution greater attention than they have received so quence, if we were to supplement our price
is required in interpreting poverty trends far in the debate on ‘poverty in the nineties’. indexes for uncovered items from the CPIAL,

the estimated rate of increase of consumer 15 See Government of India (1993b), p 16. ratio with respect to the logarithm of mean per
prices would come down, and correspondingly, 16 In Table 2 and elsewhere in this paper, the capita expenditure.
there would be a faster decline in the poverty terms ‘Bihar’, ‘Madhya Pradesh’ and ‘Uttar 30 Calculated from Government of India (2002),
indexes, at least for the period falling between Pradesh’ refer to these states as they existed p S-51. There have been further major increases
these two rounds (i e, 1987-88 to 1993-94). prior to the formation of Jharkhand, Chattisgarh in public sector salaries after 1999-2000, with
7 The Törnqvist price index is a weighted and Uttaranchal in late 2000. the gradual implementation of the recom-
geometric index with weights that are the 17 In the first sub-period, the estimates suggest mendations of the Fifth Pay Commission by
average of the expenditure shares in the base some increase in poverty in rural Haryana many state governments.
and comparison periods. It is a superlative and Himachal Pradesh, and also in urban 31 See Drèze and Sen (2002), Statistical Appendix,
index in the sense of Diewert (1976). Himachal Pradesh, Punjab and Delhi. These Table A.6; also Datt (1999a, 1999b).
8 For further details, see EPW Research patterns, however, should be interpreted with 32 On rising income inequality in China in the
Foundation (1993). On the conceptual and caution, given the relatively small sample post-reform period, see Bramall and Jones
practical problems involved in defining ‘calorie sizes for these states and the possibility of (1993), Griffin and Zhao Renwei (1993), Yao
norms’, see Dasgupta and Ray (1990) and transient fluctuations in poverty levels in Shujie (1999), Khan and Riskin (2001), among
Osmani (1990), and the literature cited there. specific years. others.
Note also that, if the calorie norms were to 18 Here and elsewhere, it is useful to remember 33 On these and related trends, see Drèze and Sen
be reapplied today, they would not generate that the period between 1993-94 and 1999- (2002), chapter 9. On the growth of foodgrain
the same poverty lines. Updating calorie-norm 2000 was one of ‘peak’ economic growth production, see Government of India (2002),
based poverty lines for inflation does not for the Indian economy, with per capita pp S-21 and S-22.
preserve their calorie-norm status. GDP growing at a healthy 4.4 per cent per 34 See Shariff and Mallick (1999), Table 5, and
9 Similar issues arise, of course, in the context year. National Sample Survey Organisation (2001),
of inter-state comparisons, especially between 19 While the relative growth rates of APCE in pp A-101 and A-134.
states (e g, Kerala and Uttar Pradesh) with different states are consistent with the 35 For similar observations based on a comparison
radically different consumption patterns and corresponding relative growth rates of per of 1972-73 and 1993-94 NSS data, see Rao
social environments. In both cases, com- capita SDP, the levels of per capita SDP growth (2000).
parisons of living standards call for supple- tend to be higher than those of APCE growth. 36 For further evidence, see also National Institute
menting expenditure data with other types of We shall return to this issue in the next section, of Nutrition (1997). This pattern, sometimes
information, relating for instance to public with reference to the all-India figures. known as the ‘nutrition transition’, is familiar
amenities, health achievements, educational 20 On the growing divergence of per capita SDP to nutritionists [Drewnoski 1999]. It is worth
levels, etc. in the nineties, see also Ahluwalia (2000) and noting that its implications for health are not
10 The official line is actually 115.20. We use Drèze and Sen (2002). uncontroversial; some nutrition experts have
115.70 because this is the figure yielded by 21 For inequality indexes, see Table 5 in apparently “pointed to the beneficial health
the official methodology when the calculations Section III. effects of dire poverty, poor diets, and strenuous
are based on the unit record data, as opposed 22 See particularly Bhalla (2000a), Kulsheshtra manual labour”, presumably referring to the
to the interpolations used by the Planning and Kar (2002), Ravallion (2000), Sen (2000), benefits of a low fat, low sugar, and high fibre
Commission. See notes to Table 2. Sundaram and Tendulkar (2001). diet, rather than low quantities. (Drewnoski,
11 The case of Delhi is handled differently. 23 Calculated from Central Statistical Organis- 1999, p 195).
Because there are few sample households in ation (2001), p xxxii. 37 Unlike NNMB data, National Sample Survey
rural Delhi, it is not advisable to use the price 24 In nominal terms, between 1993-94 and 1999- data suggest that per capita cereal consumption
index for rural Delhi as part of the calculations. 2000, consumer expenditure has been growing rises monotonically with per capita expen-
The poverty line for urban Delhi is calculated at about 11.5 per cent per year according to diture. The contradiction between nutritional
from the all-India urban poverty line by CSO data, and 10 per cent per year according food intake and expenditure surveys is neither
multiplying it by the price index for urban to our NSS-based estimates. Both the CSO’s uncommon nor fully understood; for two
Delhi relative to urban India. implicit price deflator and our Törnqvist index different interpretations of the Indian case, see
12 Note that this is not the only way of using the have been growing at 8 per cent per year or Subramanian and Deaton (1996) and
indexes; another (but only one other) possibility so during this period. Thus, differences in Subramanian (2001).
would be to update the poverty line for each price deflators do not seem to help to resolve 38 Also worth noting in this context is tentative
sector of each state by its own inflation rate. the CSO-NSS discrepancy in this case, even evidence of recent improvement in nutritional
Because we are dealing with price indexes, not though price-index differences may have indicators based on anthropometric
prices, the different alternatives will give played a role in enhancing that discrepancy measurements. According to NNMB data, the
different answers. in earlier periods (see Sen, 2000). proportion of adults with a low “body mass
13 More precisely, the poverty-gap index (PGI) 25 The NSS surveys, for their part, almost certainly index” has declined in the nineties [see
calculates the total shortfall of consumption disproportionately miss wealthy households at Vaidyanathan 2002]. The National Family
below the poverty line, per capita of the total the very top of the distribution, and as Banerjee Health Surveys also suggest that the proportion
population, and expressed as a percentage of and Piketty (2001) have shown, there has been of undernourished children has declined
the poverty line: PGI ≡ (1/z)[(Σ (z-yi)/n] where a marked rise in incomes among the very between 1992-93 and 1998-99 [see Inter-
z is the poverty line, n is the population size, highest earners. Even so, they show that the national Institute for Population Sciences 1995:
and yi is the consumption level of the ith poor total amount of these earnings is not enough xxxiii, and International Institute for Population
person. to explain the increasing disparity between the Sciences, 2000: 267 and 443].
14 The poverty-gap index, however, retains one NSS and the CSO estimates of consumption 39 It should also be noted, however, that Orissa
limitation of the headcount ratio: it is not expenditure. was hit by a devastating cyclone in October
sensitive to the distribution of per capita ex- 26 For details, see, e g, Acharya (1989). 1999, around the middle of the 55th Round
penditure below the poverty line. This limita- 27 See, e g, Jose (1988) and Sarmah (2000). Note survey period. The 1999-2000 poverty
tion is overcome by higher-order members of that the ‘real wage’ estimates used here ignore estimates for Orissa are therefore likely to be
the FGT class, such as the ‘squared poverty- inter-state differences in price levels. somewhat ‘above trend’.
gap index’ (SPGI), and also by the Sen index. 28 See Drèze and Sen (2002), p 328; on the 40 For insightful case studies of localised
While we have calculated the SPGI estimates, slowdown of the growth rate of real agricultural economic crises in the nineties, see e g, Roy
we confine ourselves here to the poverty-gap wages in the nineties (compared with the (1999), Breman (2001a), Krishna (2001),
index, for two reasons. First, it is easier to eighties), see also Sarmah (2000, 2001). Jhabvala and Sinha (2002), Samal (2002), and
interpret. Second, SPGIs are highly sensitive 29 Note that these derivatives are not elasticities Dabir-Alai (2002).
to measurement errors at the bottom of the per in the usual sense, and are not the same as 41 See Rodgers and Rodgers (2000), Rogaly et
capita expenditure scale, and their reliability the elasticities sometimes quoted, which are al. (2001), Sharma (2001), Institute for Human
calls for further scrutiny. the derivatives of the logarithm of the headcount Development (2002), among others.

42 On the other hand, labour migration can 56 To illustrate: “Both under the World Bank sitions’, mimeo, World Bank, Washington,
also have positive roles, such as facilitating structural adjustment, and from the finance DC.
the diffusion of knowledge [Maharatna 2001] ministry – it’s feet might be in India, but it’s Datt, Gaurav, and Ravallion, Martin (2002): ‘Is
and enabling the disadvantaged castes to head is in Washington – and then under the India’s Economic Growth Leaving the Poor
“escape from the clutches of the prevailing World Trade Organisation obligations, we’re Behind?’, mimeo, World Bank, Washington,
caste discrimination in the village” [Sharma basically getting a fundamental destruction of DC.
2001: 18]. notions of the rights of citizens… Very vital Deaton, Angus (2001a): ‘Adjusted Indian Poverty
43 For a telling case study of the human costs resources we need both for survival – drinking Estimates for 1999-2000’, Princeton, Research
of involuntary displacement, see Bhatia (1997). water, all the resources people need for Programme in Development Studies, processed.
44 On this, see particularly Breman (2001a, livelihoods – are just disappearing so rapidly Available at http://www.wws.princeton.edu/
2001b). that life is becoming impossible…we really ~rpds.
45 See e g, Sainath (2001a, 2001b, 2001c, 2001d), have a very, very major crisis of survival at – (2001b): ‘Computing Prices and Poverty Rates
Breman (2001b), Drèze (2001), Mehta (2001). hand....” [Shiva 2001b]. For further contri- in India, 1999-2000’, Princeton, Research
We are not referring here to media reports of butions on both sides of the debate, see the Programme in Development Studies, proces-
short-term hardship associated with the recent literature cited in footnote 2. sed. Available at http://www.wws.princeton.
drought (in 2000 and 2001), but to stories of edu/~rpds.
sustained impoverishment. References Deaton, Angus and Tarozzi, Alessandro (2000):
46 For further discussion, see Drèze and Sen ‘Prices and Poverty in India’, Princeton, Re-
(2002), chapter 5. Acharya, Sarthi (1989): ‘Agricultural Wages in search Programme in Development Studies,
47 See Drèze and Sen (2002), p 148; also India: A Disaggregated Analysis’, Indian processed. Available at http://www.wws.
International Institute for Population Sciences Journal of Agricultural Economics, 44. princeton.edu/~rpds.
(1995, 2000), for further details. Ahluwalia, Montek S (2000): ‘Economic Diewert, W Erwin (1976): ‘Exact and Superlative
48 To illustrate, looking at the percentage Performance of States in Post-reforms Period’, Index Numbers’, Journal of Econometrics, 4.
reduction in illiteracy between 1991 and 2001, Economic and Political Weekly, May 6. Drewnowski, Adam (1999): ‘Fat and Sugar in the
Madhya Pradesh and Rajasthan did better than Banerjee, A and Piketty, T (2001): ‘Are the Rich Global Diet: Dietary Diversity in the Nutrition
any other major state except Himachal Pradesh; Growing Richer: Evidence from Indian Tax Transition’ in Grew, R (ed), Food in Global
Uttar Pradesh is very close to the all-India Data’, MIT, Cambridge MA, and CEPREMAP, History, Westview, Boulder.
average; and Bihar ranks second from the Paris, processed. Available at http:// Drèze, Jean (2000): ‘Poverty: Beyond Headcount
bottom (calculated from census data given in www.worldbank.org/indiapovertyworkshop. Ratios’, The Hindu, September 9.
Government of India, 2001b). The comparison Bhagwati, Jagdish (2001): ‘Growth, Poverty and – (2001): ‘No More Lifelines: Political Economy
is particularly instructive because all four Reforms’, Economic and Political Weekly, of Hunger in Orissa’, The Times of India,
BIMARU states started off with similar (very March 10. September, 17.
low) levels of literacy in 1991. On the ‘schooling Bhalla, Surjit (2000a): ‘Growth and Poverty in Drèze, Jean, and Murthi, Mamta (2001): ‘Fertility,
revolution’ in Himachal Pradesh (an even more India: Myth and Reality’, mimeo, Oxus Education, and Development: Evidence from
remarkable example of successful promotion Research and Investments, New Delhi. India’, Population and Development Review,
of elementary education), see PROBE Team – (2000b): ‘FAQ’s on Poverty in India’, mimeo, 27.
(1999), chapter 9. Oxus Research and Investments, New Delhi. Drèze, Jean and Sen, Amartya (eds) (1990): The
49 See Government of India (1999a), Table 1, Bhatia, Bela (1997): ‘Forced Evictions in the Political Economy of Hunger, Clarendon,
and Sample Registration Bulletin, April 2001; Narmada Valley’ in Drèze, J P , Samson, M, Oxford.
also UNICEF (2001) and Mari Bhat (2002). and Singh, S (eds) (1997), The Dam and the – (2002): India: Development and Participation
The comparison with Bangladesh is also Nation: Displacement and Resettlement in the Oxford University Press, New Delhi.
instructive: Bangladesh’s infant mortality rate Narmada Valley, Oxford University Press, EPW Research Foundation (1993): ‘Poverty Levels
was much higher than India’s in 1990 (91 and New Delhi. in India: Norms, Estimates and Trends’,
80 per 1,000, respectively), but by 1999 it had Bramall, Chris, and Jones, Marion (1993): ‘Rural Economic and Political Weekly, August 21.
come down to 61 as against India’s 71. See Income Inequality in China since 1978’, Government of India (1993a): Report of the Expert
World Development Indicators 2001, pp 16-17. Journal of Peasant Studies, 21(1). Group on Estimation of Proportion and
50 On this and related issues, see Drèze and Sen Breman, Jan (2001a): ‘An Informalised Labour Number of Poor, Planning Commission, New
(2002), chapter 7. System: End of Labour Market Dualism’, Delhi.
51 The relevant female-male ratios are given in Economic and Political Weekly, 35(52). – (1993b): Sample Registration System: Fertility
Government of India (2001b), pp 92-94. – (2001b): ‘The State of Poverty in Urban India and Mortality Indicators 1990, Office of the
52 Across states, the correlation coefficient bet- at the Beginning of the 21st Century’, Registrar General, New Delhi.
ween child mortality and per capita expenditure Sukhamoy Chakravarty Memorial Lecture, – (1999): Compendium of India’s Fertility and
is 0.4 (in absolute value), compared with 0.8 Delhi School of Economics, November 16. Mortality Indicators 1971-1997, Office of the
for the correlation coefficient between child Central Statistical Organisation (2001): National Registrar General, New Delhi.
mortality and female literacy. After controlling Accounts Statistics 2001, CSO, New Delhi. – (2001a): Economic Survey 2000-2001, Ministry
for female literacy, per capita expenditure Chandrasekhar, C P, and Ghosh, J (2002): The of Finance, New Delhi.
bears no significant association with child Market that Failed: A Decade of Neoliberal – (2001b): ‘Provisional Population Totals’, Census
mortality at the state level. For further dis- Economic Reforms in India, Leftword Books, of India 2001, Series 1(India), Paper 1 of 2001,
cussion, see Drèze and Sen (2002), pp 87-89. New Delhi. Office of the Registrar General, New Delhi.
On the determinants of mortality and fertility Dabir-Alai, Parviz (2002): ‘The Socio-Economics –(2002): Economic Survey 2001-2002, Ministry
in India, see also Murthi, Guio and Drèze of Street Vending: A Case Study of of Finance, New Delhi.
(1995) and Drèze and Murthi (2001), and Vulnerability for Delhi in the 1990s’, mimeo, Griffin, K, and Zhao Renwei (eds) (1993): The
further studies cited there. Richmond School of Business, London. Distribution of Income in China, Macmillan,
53 On ‘natality inequality’ and its significance, Das, Gurcharan (2000): India Unbound, Penguin, London.
see Sen (2001). New Delhi. Gupta, S P (1999): ‘Tricle Down Theory Revisited:
54 See e g, Government of India (1999), p 16, Dasgupta, Partha, and Ray, Debraj (1990): The Role of Employment and Poverty’, V B
and Drèze and Sen (2002), p 148. ‘Adapting to Undernourishment: The Singh Memorial Lecture, 41st Annual Con-
55 To illustrate: “Economic reforms initiated in Biological Evidence and Its Implications’ in ference of the Indian Society of Labour
1991 have led to a radical transformation in Drèze and Sen (1990), vol i. Economics, November 18-20, Mumbai.
the well-being of the bottom half of the popula- Datt, Gaurav (1999a): ‘Has Poverty Declined since Hanchate, A and Dyson, T (2000): ‘Trends in the
tion. From an approximate level of 38 per cent Economic Reforms?’, Economic and Political Composition of Food Consumption and their
in 1987, poverty level in India in 1998 was Weekly, December 11-17. Impact on Nutrition and Poverty in India’,
close to 12 per cent” [Bhalla 2000b, p 7]. – (1999b): ‘Poverty in India: Trends and Decompo- mimeo, London School of Economics.

Institute for Human Development (2002): Rao, C H Hanumantha (2000): ‘Declining Demand Sundaram, K (2001a): ‘Employment-
‘Dynamics of Poverty, Employment and for Foodgrains in Rural India: Causes and Unemployment Situation in Nineties: Some
Human Development in Bihar’, project report; Implications’, Economic and Political Weekly, Results from NSS 55th Round Survey’,
to be published as a monograph. January 22. Economic and Political Weekly, March, 17.
International Institute for Population Sciences Ravallion, Martin (2000): ‘Should Poverty – (2001b): ‘Employment and Poverty in 1990s:
(1995): National Family Health Survey Measures be Anchored to the National Further Results from NSS 55th Round
1992-93: India, IIPS, Mumbai. Accounts?’, mimeo, ARQADE, University of Employment-Unemployment Survey, 1999-
– (2000): National Family Health Survey 1998-99 Toulouse. 2000’, Economic and Political Weekly,
(NFHS-2): India, IIPS, Mumbai. Rodgers, Gerry and Rodgers, Janine (2000): ‘Semi- August 11.
Jhabvala, R and Sinha, S (2002): ‘Liberalisation Feudalism Meets the Market: A Report from – (2001c): ‘Poverty in India: Some Issues in
and the Woman Worker’, Economic and Purnia’, Working Paper 6, Institute for Human Measurement and Database’, mimeo, Delhi
Political Weekly, May 25. Development, New Delhi. School of Economics, Delhi.
Jose, A V (1988): ‘Agricultural Wages in India’, Rogaly, B, Biswas, J, Coppard, D, Rafique, Sundaram, K and Tendulkar, S (2000): ‘Poverty
Economic and Political Weekly, June, 25. A, Rana, K and Sengupta, A (2001): ‘Seasonal in India: An Assessment and Analysis’, draft
Khan, A R and Riskin, C (2001): Inequality and Migration, Social Change and Migrants’ Rights: report for the Asia Development Bank; mimeo,
Poverty in China in the Age of Globalisation, Lessons from West Bengal’, Economic and Delhi School of Economics, Delhi.
Oxford University Press, New York. Political Weekly, December 8. – (2001): ‘NAS-NSS Estimates of Private
Krishna, Sridhar (2001): ‘Phasing Out of Import Roy, Tirthankar (1999): ‘Growth and Recession Consumption for Poverty Estimation: A Dis-
Licensing: Impact on Small-scale Industries’, in Small-Scale Industry: A Study of Tamil aggregated Comparison for 1993-94’,
Economic and Political Weekly, July 7. Nadu Powerlooms’, Economic and Political Economic and Political Weekly, January 13.
Kulshreshtha, A C and Kar, A (2002): ‘Estimates
Weekly, October 30. – (2002): ‘Recent Debates on Data Base for
of Food Consumption Expenditure from
Sainath, P (2001a): ‘Will the Real National Measurement of Poverty in India’, Delhi
Household Surveys and National Accounts’,
Calamity Please Stand Up?’, The Hindu, School of Economics, processed. Presented at
paper presented at the joint Planning Com-
February 25. joint GOI/World Bank poverty workshop,
mission/World Bank workshop on poverty
– (2001b): ‘It’s the Policy, Stupid, Not Imple- Delhi, January 2002. Available at http://
measurement, Delhi, January. Available at
http://www.worldbank.org/ mentation’ (2 parts), The Hindu, September. www.worldbank.org/indiapovertyworkshop.
indiapovertyworkshop. – (2001c): ‘Mass Media: Disconnected from Mass Tarozzi, Alessandro (2001): ‘Estimating Com-
Lal, D, Mohan, R and Natarajan, I (2001): Reality’, The Hindu, September 2. parable Poverty Counts from Incomparable
‘Economic Reforms and Poverty Alleviation: – (2001d): ‘Where Stomachaches Are Terminal’, Surveys: Measuring Poverty in India’, Research
A Tale of Two Surveys’, Economic and The Hindu, April 29. Programme in Development Studies, Princeton
Political Weekly, March, 24. Samal, K C (2002): ‘Shrimp Culture in Chilika University, processed. Available at http://
Maharatna, Arup (2001): ‘On the ‘Brighter Side’ Lake: Case of Occupational Displacement of www.wws.princeton.edu/~rpds.
of Seasonal Migration: A Case Study of Ferti- Fishermen’, Economic and Political Weekly, UNICEF (2001): ‘GOI-UNICEF Country
lity Transition in Tribal Population in Rural May 4. Programme of Cooperation 2003-2007’,
West Bengal, India’, mimeo, Gokhale Institute Sarmah, Sasanka (2000): ‘Agricultural Wages: mimeo, UNICEF, New Delhi.
of Politics and Economics, Pune. Trends and Determinants’, M Phil thesis, Delhi Vaidyanathan, A (2002): ‘Food Consumption and
Mari Bhat, P N (2002): ‘Has the Decline in Infant School of Economics. Nutrition Status: A Re-examination Based on
Mortality Rate Slowed Down? A Review of – (2001): ‘Agricultural Wages in India: An Analysis Indian Evidence’, mimeo, Madras Institute of
SRS Evidence’, paper presented at a national of Regions and States’, mimeo, Centre for Development Studies, Chennai.
workshop on ‘Infant Mortality: Levels, Trends Development Economics at the Delhi School Visaria, Pravin (2000): ‘Alternative Estimates
and Interventions’ held at New Delhi on of Economics; forthcoming in Indian Journal of Poverty in India’, The Economic Times,
April 11-12. of Labour Economics. June 27.
Mehta, Jaya (2001): ‘Give Poverty a Face Please!’, Sen, Abhijit (2000): ‘Estimates of Consumer Yao Shujie (1999): ‘Economic Growth, Income
in Alternative Economic Survey 2000-2001, Expenditure and its Distribution’, Economic Inequality and Poverty in China under
Rainbow Publishers, Delhi. and Political Weekly, December 16. Economic Reforms’, Journal of Development
Murthi, M, Guio, A C and Drèze, J P (1995): Sen, Amartya (2001): ‘Many Faces of Gender Studies, 35.
‘Mortality, Fertility and Gender Bias in India’, Inequality’, Frontline, October 27, 2001.
Population and Development Review, 21. Shariff, A and Mallick, A C (1999): ‘Dynamics
Nagaraj, R (2000): ‘Indian Economy since 1980: of Food Intake and Nutrition by Expenditure
Virtuous Growth or Polarisation?’, Economic Class in India’, Economic and Political Weekly,
and Political Weekly, August 5. July 3.
National Institute of Nutrition (1997): 25 Years Sharma, Alakh (2001): ‘Agrarian Relations and
of National Nutrition Monitoring Bureau, NIN, Socio-Economic Change in Bihar’, paper
Hyderabad. presented at a conference on ‘Labour and
National Nutrition Monitoring Bureau (1999): Capitalist Transformation in Asia’ held at the
Report of Second Repeat Survey – Rural Centre for Development Studies, Thiru-
(1996- 97), National Institute of Nutrition, vananthapuram, December 13-15.
Hyderabad. Shiva, Vandana (2001a): ‘India: Corporatisation
National Sample Survey Organisation (2001a): of Agriculture Disastrous’, The Guardian,
‘Level and Pattern of Consumer Expenditure March 7.
in India 1999-2000’, Report 457, National –(2001b): ‘Is Globalisation Killing the Environ-
Sample Survey Organisation, New Delhi. ment?’, interview with Frederick Noronha;
– (2001b): ‘Consumption of Some Important available at http://www.onweb.org/archive/
Commodities”, Report 461, National Sample features/shiva/shiva.html.
Survey Organisation, New Delhi. Subramanian, A (2001): ‘Are Income-Calorie
Osmani, Siddiq R (1990): ‘Nutrition and the Elasticities Really High in Developing
Economics of Food: Implications of Some Countries? Some Implications for Nutrition
Recent Controversies’ in Drèze and Sen (1990), and Income’, mimeo, National Council of
vol i. Applied Economic Research, New Delhi.
PROBE Team (1999): Public Report on Subramanian, Shankar and Angus Deaton (1996):
Basic Education in India, Oxford University ‘The Demand for Food and Calories’, Journal
Press, New Delhi. of Political Economy, 104, 133-62.

Deaton Dreze Poverty India

Uploaded by

Copyright:

Available Formats

Deaton Dreze Poverty India

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Deaton Dreze Poverty India

Uploaded by

Copyright:

Available Formats

Special articles

Poverty and Inequality in India

ANGUS DEATON, JEAN DREZE

Economic and Political Weekly September 7, 2002 3729

3730 Economic and Political Weekly September 7, 2002

Economic and Political Weekly September 7, 2002 3731

3732 Economic and Political Weekly September 7, 2002

Economic and Political Weekly September 7, 2002 3733

Headcount ratio (per cent)

3734 Economic and Political Weekly September 7, 2002

Economic and Political Weekly September 7, 2002 3735

Proportionate decline in rural headcount ratio

Six-year growth of rural APCE

There has been much discussion of the

3736 Economic and Political Weekly September 7, 2002

Economic and Political Weekly September 7, 2002 3737

Rural headcount ratio (adjusted)

3738 Economic and Political Weekly September 7, 2002

alone can predict much of the cross-state

Economic and Political Weekly September 7, 2002 3739

3740 Economic and Political Weekly September 7, 2002

Economic and Political Weekly September 7, 2002 3741

3742 Economic and Political Weekly September 7, 2002

Economic and Political Weekly September 7, 2002 3743

3744 Economic and Political Weekly September 7, 2002

Economic and Political Weekly September 7, 2002 3745

3746 Economic and Political Weekly September 7, 2002

Economic and Political Weekly September 7, 2002 3747

3748 Economic and Political Weekly September 7, 2002

You might also like