Poverty unambiguously declined, from around 36 per cent in 1993-94 to around 27 per cent in 2004-05. This is poverty based on expenditure, not other variables, and 27 per cent of India’s population is still huge. Poverty declines could (and should) have been faster. With these caveats, sharpest declines in poverty have occurred in Assam, Himachal, Bihar/Jharkhand, Tamil Nadu, West Bengal and Haryana. Least declines took place in MP/Chhattisgarh, Punjab and Orissa. Poverty concentrations are in Bihar/Jharkhand, Uttar Pradesh/Uttarakhand, Maharashtra, MP/Chhattisgarh, Orissa and Tripura. What do poverty declines depend on? Apart from points about composition of growth and shape of the expenditure distribution, poverty declines require growth. Though indirect, growth is the only long-lasting solution to problems of poverty and unemployment. The proposition that direct anti-poverty programmes are necessary to supplement growth effects of poverty reduction does not negate the proposition about growth being necessary. Growth has contributed to poverty reduction. The only states/UTs that don’t entirely fit this growth story are Assam, Pondicherry, Delhi and Chandigarh.

Incidentally, it is by no means the case that poverty ratios haven’t declined for SCs/STs. While the absolute poverty ratio for SCs is significantly higher than the all-India figure, the decline between 1993-94 and 2004-05 is more for SCs than for the all-India population. However, this is not the case for STs. Similarly, the decline for Muslims has also been significant. Except for STs, this indicates the danger of generalising across collective categories like caste or religion.

Let’s now move on to the relative inequality story, again based on expenditure alone. There are problems in comparing inequality across countries. Subject to that, India had relatively low levels of inequality till 1993-94. While this continues to be the case, our study shows a sharp increase in inequality between 1993-94 and 2004-05, especially for urban India. Except for Delhi, Pondicherry, Goa and Chandigarh, which don’t quite fit the picture, growth seems to have led to increase in inequality. In that sense, growth hasn’t been inclusive, it has been exclusive. It is inequality that has been inclusive. Increased inequality depends not on growth per se, but on the growth process, and this link requires more investigation. But some trends seem clear. First, inequality has resulted from greater urbanisation, meaning both migration and integration of rural areas into urban centres of economic activity. In geographical areas where this integration process has been slow, inequality hasn’t increased much. Second, inequality is lower in states where self-employment is higher. At this level of aggregation, one doesn’t know whether this self-employment is voluntary or involuntary, whether it means being stuck in low-skill jobs or not.

... contd.