The answer depends on the variable. Poverty (or inequality) is not only about income and/or expenditure. They have other dimensions too, such as unequal access to education, health and physical infrastructure and participation in decision-making processes. One can argue that unequal access to social or physical infrastructure is undesirable. But it is difficult to argue, equally convincingly, that inequality in incomes is bad, especially if absolute living standards of the poor improve. For a long time, the poverty/inequality debate in India was mired in methodological issues concerning comparability of large sample NSS data of 1999-2000 with that of 1993-94. This changed with availability of NSS 2004-05 (61st round). In a study, Laveesh Bhandari (a fellow Express columnist) and I tracked what has happened to poverty and inequality between 1993-94 and 2004-05, a period that almost coincides with liberalisation. These are our own estimates, since we have some problems with Planning Commission figures. First, the poverty story, with poverty ratio defined as percentage of population below the poverty line. India’s poverty line should certainly change, since it doesn’t include health or education as items of consumption expenditure. At that time, it was thought these would be provided by the state — but that’s a separate issue.
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.
... contd.
