It’s official: India’s dazzling growth fails to dent poverty

Mahendra Kumar Singh, 19 Oct, 2006 TIMES NEWS NETWORK

NEW DELHI: Economic growth may have been spectacular since 1993 — that is, post-economic reforms — but it seems to be trickling down rather slowly.

A soon-to-be-released official report has estimated that poverty declined by a mere 0.74% during the 11-year period ended 2004-05. Although there are signs of things moving a little faster, at 0.79%, between 1999-2000 and 2004-05, going by another measure, the number of people below poverty line may have remained unchanged.

National Sample Survey Organisation’s (NSSO) findings show the number of people living below poverty line (BPL) at 22.15% in 2004-05, compared with 26.09% in 1999-2000. In the same period, the country’s GDP grew at around 6%.

This mismatch between growth and its distribution is politically worrying as it indicates a rise in economic disparities. Economists say uneven growth often leads to social unrest which, in turn, can cause problems for politicians.

Anyone consuming less than 2,100 calories in urban areas, and 2,400 calories in rural areas, is classifed in the BPL category.

The NSSO study also shows that poverty declined the sharpest in the poorer states.

Study: BPL population up in Delhi, Maha and Haryana

NEW DELHI: A National Sample Survey Organisation’s study suggests that while economic growth is trickling down very slowly, poverty has declined the sharpest in the poorer states.

Leading them were Assam and the north-eastern states, where people below the poverty line decreased by nearly 4% annually, followed by Jharkhand (2.51% a year during the five-year period), Chhattisgarh (2.15% a year) and Bihar (1.69%). Apart from the slow reduction of poverty, government also seems worried about a lower decrease in poverty ratios in urban areas, compared to rural areas. BPL population in rural areas decreased 4.68% between 1999-2000 and 2004-05, which was over twice the pace of the decrease in urban centres, estimated at 2.12%.

The trend of slower poverty reduction in urban areas, say economists, could be due to migration of the poor from rural areas. But they wonder whether if that is indeed the case, then the rate of actual decline of poverty in rural areas could be over estimated.

The NSSO findings also reveal an increase in BPL population in Haryana, Maharashtra, Delhi, Rajasthan and Goa. This is possibly because migrant labour is moving out of Bihar, Uttar Pradesh and Jharkhand to these states in search of jobs.

There are also fears that dipping state growth rates, as witnessed in the case of Maharashtra, have added to the increase in the BPL population. Among the poorer states, Orissa has the highest proportion of poor — nearly 40% of its population is below the poverty line. The population of poor in Orissa’s villages decreased 8.36% during the five-year period while the urban BPL population fell 1.2%.

Next in line is Jharkhand, which had a marginally higher BPL population of 47.40% compared to Orissa’s 47.15% in 1999-2000. At the end of June 2005, Jharkhand’s poor constituted 34.83% of the state’s population. Bihar remained in the third spot with 32.57% population under BPL.

The estimates were prepared using monthly consumption expenditure of individuals during 365 days on clothing, footwear, education, durables in addition to their medical expenses. This method is called the Mixed Reference Period Method (MRPM). Going by the other measure used by NSSO — Uniform Reference Period which measures poverty based on every consumption for the last 30 days of the survey — BPL population accounted for 27.81% in 2004-05, compared with 35.97% in 1993-94. Economists, however, believe that the methodology is suspect as consumption during 30 days is not the right measure and the government, too, prefers MRPM.

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