Economics India

Monday, January 16, 2006

Scaling Up Poverty Reduction in India

There is much debate among economists, academicians and policy-makers in India and abroad about how poverty is officially defined in India. India’s Planning Commission for many years defined poverty in terms of level of per capita consumer expenditure sufficient to provide an average daily intake of 2400 calories per person in rural areas and 2100 calories per person in urban areas, plus a minimum allocation for basic non-food items. Based on these benchmarks, estimated state-level poverty lines vary according to cost of living differentials. The poverty line at all-India level in terms of monthly per capita during 1999-2000 ranged at about Rs. 328 for rural areas and Rs. 454 for urban areas. In terms of the progress in reducing poverty, the All-India head count of the population below the poverty line (BPL) declined from 46 per cent in rural areas and 41 per cent urban areas in 1983 to about 30 per cent and 25 per cent respectively in 1999-00. While this is a remarkable progress, there are still about 300 million people in India who live below the poverty line with the majority of them in rural areas.

In taking stock of the progress being made in India in the sphere of scaling up poverty reduction, this blog hopes to track, on a continuing basis, a range of issues including emerging disparity in incomes and concentration of wealth, and explore how the country’s policies and programs for reducing poverty could become more efficient and equitable. In particular, this blog would focus on ongoing and prospective poverty reduction strategies; explore how opportunities for the poor can be enhanced to increase their welfare, especially in the context of deepening of economic reforms and the expanding role of globalization; and assess if the national, state and local governments are indeed improving the governance, which is so vital for reducing poverty.

Please comment and share your thoughts on this important topic.


  • The original pathbreaking work on Poverty in India and its measurement was done by VM Dandekar and N. Rath in 1970. Since then numerous attempts have been made to measure poverty in India using various types of data. The measurement problems and the related costs are immense and perhaps we need a better and faster way to calculate poverty. In the present digital world is there any hope for using such measures? "Man Must Measure" but at what cost? And then the statistical analysis is additional cost. We need simpler ways, or else statisticians will feel that there is lot of money in Poverty.

    By Anonymous Anonymous, at 12:52 AM  

  • Dear Ramesh:

    The World Bank Institute had organized a major conference in China on Scaling Up Poverty Reduction in the World. There have been several useful papers mentioned in connection with the conference.

    I am always fascinated by few cases, such as the case of Costa Rica. The governement took major policy initiatives on public expenditure and that has paid a huge dividend. The case of China is also interesting to note. Or India's experience in the sixties in successfully achieving Green Revolution or in cooperative movements in dairy, sugar etc.


    By Anonymous Anonymous, at 7:45 AM  

  • Thanks to the Anonymous for comments. Indeed the original work of Professors Dandekar and Rath in "Poverty in India" is well-recognized in the poverty literature. A poverty line in the context of India was first given by a working group set up by the Planning Commission in July 1962. Later Professors Dandekar and Rath and others (A. Rudra and R.Bardhan) estimated poverty lines under different assumptions. In 1979, the Planning Commission's Task Force on "Projections of Minimum Needs and Effective Consumption Demand" made a number of recommendations to improve the methodological framework for estimating poverty in India based on National Sample Survey data. The National Sample Survey Organization (NSSO) conducts large-scale quinquennial sample surveys on household consumer expenditure, labor force and employment, which provide the basis for the Planning Commission to periodically update the poverty statistics. The last quinquennial survey, involving 150,000 households, was conducted in the 55 th Round during 1999-2000. No official estimates of India's poverty and unemployment exist beyond 1999-2000. The NSS 55th round, however, has been the subject of intense debate in India. We may not want to go into those details but rather focus on what is being done to reduce poverty. What do you think?

    By Blogger Ramesh G. Deshpande, at 8:06 AM  

  • Chandra: Thanks. Yes, we need to take note of some of the successful policies and programs for poverty alleviation implemented in countries other than India in order to place the Indian experience in a right perspective.

    By Blogger Ramesh G. Deshpande, at 8:12 AM  

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