article poverty in rural india, 1970-71 to 1987-88

78

■Article■

Poverty in Rural India, 1970-71 to

1987-88

●

Yoshifumi Usami

Introduction

Since the late 1970s Indian economic growth has been accelerated

from the so called " Hindu Rate of Growth " to 5. 5 percent per year. Though this rate of growth was much less than that experienced in

East and South-east Asian countries, it is a remarkable performance

when the size of country and its initial conditions are considered.

Manufacturing industry has been a main driving force, yet the per-

formance of agriculture was not poor. The rate of growth of agri-

cultural production was 3. 3 percent during the 1980s while it was only

2. 3 percent during the 1970s. Though the growth rate of wheat

production declined from 4. 4 percent to 3. 6 percent over the pre-vious decade, rice production grew faster. Annual fluctuation of pro-duction also decreased1) . Thus foodgrain production dropped by

only 6. 6 percent, from 150 million tons in 1985-86 to 140 million tons in 1987-88 when a severe drought attacked western India.

In addition to the favorable performance of macro economy, the central government and state governments took direct intervention

measures to alleviate poverty in rural areas. The Integrated Rural

Development Program (hereafter IRDP) and the National Rural Em-

ployment Program (NREP, merged into the Jawahar Rozgar Yojana

宇佐美好文 Yoshifumi Usami, College of Agriculture University of Osaka Prefec-

ture. Agricultural Economics.

Poverty in Rural India, 1970-71 to 1987-88 79

lately) are some of them. In order to facilitate the diffusion of green

revolution to the so far untouched regions and to push up rice pro-duction, the Special Rice Production Program (SRPP) was imple-

mented during the Sixth Five Year Plan period (1980-85).

It is of great interest to know under these circumstances how the

rural poor is affected. Indian government claimed a massive reduc-

tion of rural poverty from 40.4 percent in 1983 to 32.7 percent in

1987-88. According to the Eighth Five Year Plan further reduction

to 27 percent by 1991 was expected2). Minhas et al., on the other hand, are the opinion that there were serious problems in the estima-

tion procedure taken by the Indian government and poverty reduc-

tion was much less than that estimated by the Planning Commission3). The purpose of this paper is (1) to review the recent studies on the

estimation methodology and on changes in rural poverty, and (2) to estimate the incidence of extreme poverty since 1970-71 and to ex-

amine its movement over time. It also aims at the direct measure-

ment of rural poverty, such as examination of changes in real per

capita total expenditure of the bottom 40 percent of rural population

and estimation of extreme poverty of cultivators and agricultural

laborers.

1. Review

The incidence of poverty is estimated as a proportion of population

below the minimum required per capita consumer expenditure that

is called as the poverty line. There are several methodological prob-

lems in the estimation which result in different estimates of the in-

cidence of poverty and its movement over time. First is related to the poverty line itself. The poverty line of each

year depends on the level of minimum requirement fixed for the base

year and on the index or deflator that is used to update the base year

poverty line to different years. Broadly speaking, we have two sets of poverty lines ; one is that of Bardhan P. K. (1974) and the other is

that of the Planning Commission. Bardhan fixed the cut off point

at Rs. 15 at 1960-61 prices4). When the consumer price index for

80 Journal of the Japanese Association for South Asian Studies, No. 5

agricultural laborers (CPIAL) is used to adjust to the current prices, it is Rs. 42.45 at 1973-74 prices. The Planning Commission, on the other hand, fixed the poverty line for rural areas at Rs. 49.09. There-fore there is a difference of Rs. 6.64 between the two.

It is not intended here to examine the properties of these two pov-erty lines. Instead, we assume that these are given and we will con-sider these two poverty lines as the indicators of moderate and ex-treme poverty.

The second problem is which price index or deflator should be used to convert the poverty line in the base year to the current

prices5). Bardhan used CPIAL and the Planning Commission used the Central Statistical Organization's (CSO) implicit deflator of national private consumption expenditure, while Minhas et al. (1987 and 1991) used the consumer price index for middle rural popula-tion (CPIMR)6). Assuming that the pattern of consumer expendi-ture of the poor is similar to that of agricultural laborers, Bardhan used the CPIAL to convert the base year poverty line to other years. So did Kakwani and Subbarao (1990). As well known, the CPIAL is constructed on the bases of the pattern of consumer expenditure of agricultural laborers in late 1950s as the weight diagram, and 1960-61 as the base year. Compared with other price indices, such as the consumer price index for industrial workers (CPIIW) and the GNP implicit deflator, the CPIAL rose rather fast during the 1960s and the early 1970s but rose rather slowly after the mid-1970s. The div-ergence between the CPIAL and the other price indices has grown wide of later7).

The Planning Commission used the CSO's implicit deflator of na-tional private consumption expenditure in updating the poverty line in the base year (1973-74) for different years. Though different base

year poverty line was fixed for rural and urban areas, Rs. 49.09 for rural area and Rs. 56.64 for urban area at 1973-74 prices, the same implicit price deflator was used for both areas.

Minhas et al. are critical on the usage of CPIAL on the ground that the agricultural labor households constitute only 30 percent of


the total households in rural area, while the rural poor consists not

only of agricultural laborers but also of other rural laborers and mar-

ginal and small cultivators8). They also pointed out the drawback

(A) Poverty Lines

(B) Incidence of Poverty

Table 1. Comparison of the Poverty Lines and Incidence of Poverty

Estimated by Minhast et al. and Kakwani and Subbarao

Note : The incidence of poverty in rural area estimated by the Planning Commission was 40.4 percent in 1983-84 and 32.7 percent in 1987-88.

Source : Minhas et al. (1991) Kakwani and Subbarao (1990).


of CPIAL in assuming the price of firewood as constant to construct

the CPIAL. According to them the consumer price index (like

CPIAL) constructed for the fuel and light group, and consequently

for total non-food and general, would involve gross under estimation.

The rate of under-estimation increased over time. They also crit-

icized the Planning Commission in ignoring the differentials in price

movements between the rural and urban areas over time.

They constructed the consumer price index for total rural popula-tion (CPITR) and for middle population (CPIMR) based on the pat

tern of consumer expenditure in 1970-71 as the weight diagram..

They then used the latter in updating the poverty line9).

The third problem is concerned with the NSS data of consumer

expenditure. When the total private consumpation is estimated from

NSS consumer expenditure data, it is well below the aggregated

private consumption expenditure estimated by the CSO. The dif-ference reached about 20 percent in 1983 and about 27 percent in

1986-87. In order to adjust the under estimation of NSS data to

CSO's estimates, the planning commission used the " pro rata ad-

justment ", i.e., 20 to 27 percent increase to total expenditure for each per capita total expenditure (PCTE) group10). Whatever the

justification for this adjustment procedure may be, it is clear that this"

pro rata adjustment " brought about a massive reduction in the in-cidence of poverty. This is a major factor lying behind the large difference between the poverty estimate of the Planning Commission

and that of Minhas et al.

Table-1 indicates the incidence of rural poverty estimated by var-ious researchers as well as the official estimates.

2. Change in the Incidence of Extreme Poverty, 1970-71 to

1987-88

As mentioned above, we have two cut-off points as the poverty line

in rural India ; one is Rs. 15 at 1960-61 prices and the other is Rs.

49.09 at 1973-74 prices. Using CPIAL for updating, the former is Rs. 42.45 at 1973-74 prices and there is a large difference between the


two poverty lines. The two sets of the incidence of poverty , i.e., the proportions of population below the poverty line, accordingly calcu-lated differ largely from each other. It is, however , beyond the scope of this article to examine which one is a more appropriate indicator

for the minimum requirement. Instead, we assume that these two

poverty lines indicate the extreme poor and the poor, respectively11). That is, population below the poverty line of Rs. 49.09 at 1973-74

prices is regarded as living below the socially fixed minimum stand-ard of living, whereas those below the poverty line of Rs. 15 at 1960-

61 prices are compelled to be under extremely hardship conditions . By setting two poverty lines and comparing the movements of two

estimates of poverty it is expected to understand about the intensity of poverty.

Since Minhas et al. (1991) estimated the incidence of poverty based

on the Planning Commission's poverty line (Rs. 49.09 at 1973-74

prices), the cut-off point of Rs. 15 at 1960-61 prices is taken as the

poverty line in this article. This has two merits. One is that we can assess changes in the extreme poverty during the last one and a

half decades, for example, if the extreme poor were more benefited . from economic growth or the government direct intervention mea-

sures than the moderate poor. It also allows to compare the recent movement of the incidence of poverty with that of 1960s.

For updating the base year poverty line to other years two sets of

price index are used in this article. It is expected to know to what extent the different price indices give different estimates of poverty.

One is the CPIAL and the other is the CPITR constructed by Min-has et al. As mentioned above, the CPIAL rose rather slowly since

mid-1970s. As a result the poverty line at current prices thus up-

dated by CPIAL is likely underestimated. Though Minhas et al . constructed both CPITR and CPIMR and used the latter for estimat-

ing the incidence of poverty in their articles, the CPITR unfortu-nately is not available for all study years. The CPITR was almost

the same level with the CPIMR during the 1970s but it rose rather

fast during the 1980s, so that the poverty line based on the CPITR


is overestimated to some extent. The consumer expenditure survey result published in NSSO jour

nals was used without any adjustment12). Usually the two parame-

ters log normal distribution is applied to estimate the incidence of

poverty, but a simple linear interpolation method was used in this article for the sake of simplicity in calculation. This may cause an

estimation error but the tendency could be valid.

Table-2 indicates the poverty lines and incidence of extreme pov-

erty estimated for the year 1970-71, 1972-73, 1977-78, 1983 and.

1987-88. For rural India as a whole the incidence of extreme pov-

erty declined during the last one and a half decades. Thus it was

around 45 percent in early 1970s and it declined to around 35 percent

in late 1980s. The movement, however, is not uniform throughout

Table 2. Poverty Line and Incidence of Poverty,

Note:

(1) The base year poverty line was fixed at Rs. 15 at 1960-61 prices for rural. India. After adjusting for regional price differential the poverty line for each. state was converted to 1970-71 prices by using CPIAL. The poverty line then. was updated by CPIAL and CPITR after 1970-71.

(2) PL1 stands for the poverty line updated with CPIAL and PL2, that up dated with CPITR.

(3) IP1 and IP2 stands for the proportion of population below the PL1 and PL2, respectively.


the period. It declined by 2.7 percent and 1.7 percent between 1972-73 and 1977-78 (the former figure indicates the incidence of

extreme poverty based on the poverty line updated by CPIAL and

the latter, the poverty line updated by CPITR). The reduction of

poverty was accelerated between 1977-78 and 1983 and it was 8.8

percent and 6.2 percent. The speed of poverty reduction, however, did not continue to the mid 1980s. Thus the reduction of poverty

between 1983 and 1987-88 slowed down to 6.7 percent and 2.2 per-

cent. Though the incidence of poverty declined but it was not as

large as that claimed by the Planning Commission. Thus poverty

reduction was slow in the mid 70s, it was fast between 1977-78 and 1983, and it was moderate from 1983 to 1987-88.

Note that different price indices used for updating the base year

1970-71 to 1987-88

Source:

NSSO, Tables with Notes on Consumer Expenditure, The National Sample

Survey No. 231, 1978; •\, Consumer Expenditure, NSS 27th Round, Sarvek-

shana, Vol. 2 No. 3, 1979; •\, Some Results on the Second Quinquennial Survey

on Consumer Expenditure, Vol. 9 No. 3, 1986; •\, A Report on the Third Quin-

quennial Survey on Consumer Expenditure, Sarvekshana, Vol. 9 No. 4, 1986;

― , Results of the fourth Quinquenial Survey on Consumer Expenditure (sub-sample 1), Sarvekshana, Vol. 15 No. 1, 1991; Min. of Finance, Economic Survey, various issues ; Minhas et al. (1990 and 1991)


poverty line give considerably different estimates. Since both price indices moved together the incidence of extreme poverty was not dif-

ferent much from each other by 1977-78. They, however, caused a

large difference between the two estimates during the 1980s. Thus

the incidence of poverty based on CPITR was higher than that based

on CPIAL by 6 percent in 1983 and, about 11 percent in 1987-88.

Thus when the CPIAL was applied, the incidence of poverty de-clined by 6.7 percent between 1983 and 1987-88 whereas it was only

2.2 percent when the CPITR was used. This is natural because the

distribution of population around the cut-off point is comparatively

high so that even a small change in the poverty line caused a large

swing in the incidence of extreme poverty. It follows that selection

of a proper price index is very important for updating the poverty

line to other years. Since CPIAL has a drawback that explains partly

the comparatively slow rise during the 1980s, it is likely that using

the CPIAL for updating causes underestimation of the extreme poor.

We have to keep this point in mind while interpreting the estimation

results.

When it comes to state-wise incidence of extreme poverty, a con-

trast emerges among the movement of the poverty incidence of each

state. It declined between 1972-73 and 1977-78 in seven states, Andhra Pradesh, Kerala, Gujarat, Rajasthan, Punjab, West Bengal

and Orissa, and rose in five states, Assam, Haryana, Karnataka, Jam-mu and Kashmir and Himachal Pradesh, and it remained almost

at the same level in Uttar Pradesh, Madhya Pradesh, Tamil Nadu,

Maharashtra and Bihar.

The period between 1977-78 and 1983 saw a considerable decline

in the extreme poverty in all states except Bihar where poverty in-

tensified slightly.

From 1983 to 1987-88 the incidence of extreme poverty dropped

in eight states, West Bengal, Bihar, Tamil Nadu, Andhra Pradesh,

Kerala, Madhya Pradesh, Uttar Pradesh and Rajasthan, while it rose in Punjab, Jammu and Kashmir, Gujarat, Assam and Himachal

Pradesh.


Reduction of extreme poverty throughout the period under study

was recorded in two states, West Bengal and Kerala. Two other

states, Tamil Nadu and Andhra Pradesh, witnessed similar reduc-tions in extreme poverty. On the other hand, the performance in

terms of poverty reduction was meager in Uttar Pradesh, Madhya

Pradesh and Bihar, though the latter two showed an improvement be-

tween 1983 and 1987-88.

Comparison with the estimates by Minhas et al. gives rather in-

teresting points. According to them the incidence of poverty de-

clined from 57.3 percent in 1970-71 to 49.0 percent in 1983 and to

44.9 percent in 1987-88. Thus the reduction was 8.3 percent be-

tween 1970-71 and 1983, and 4.1 percent between 1983 and 1987-88.

The incidence of extreme poverty, on the other hand, declined by

7.5 percent and 2.1 percent in the same period, respectively. It means that between 1977-78 and 1983 the incidence of poverty and

extreme poverty declined almost together but the percentage of the

poor fell more than that of the extreme poor in the mid-80s. If the

proportion of population between the two poverty lines is denoted as the moderate poor, they are more benefited in this period.

3. Change in Per Capita Total Expenditure and Poverty

Figure-1 shows the movements of average per capita total consump-

tion expenditure (PCTE) and the incidence of extreme poverty be-tween 1970-71 and 1987-88 for 15 major states. Since PCTEs in

1977-78 in Maharashtra and Rajasthan were overestimated, both

states are excluded. This figure indicates a clear correlation be-

tween PCTE and the incidence of poverty. Thus the incidence of

extreme poverty is high in the poor states in terms of average PCTE,

like Orissa and Bihar, while it is low in the prosperous states like

Punjab and Haryana. Besides, the growth of PCTE is related with

the reduction of poverty. The movement of West Bengal, Kerala,

Tamil Nadu and Andhra Pradesh clearly shows that growth in PCTE

brought about a decline in the incidence of extreme poverty, whereas

a decline in PCTE caused a rise in the poverty index in Haryana


(1972-73 to 1977-78), Jammu and Kashmir (1970-71 to 1977-78), Assam (1972-73 to 1977-78) and Gujarat (1983 to 1987-88).

When compared the level of PCTE with the incidence of extreme

poverty, 15 states are broadly categorized into two groups: one is West Bengal and Kerala (also Haryana and Punjab to some extent)

and the other is the remaining states. West Bengal and Kerala had the higher incidence of poverty than the other states with the same

PCTE level. This is due partly to the fact that the poverty lines

were higher in these states than other states and partly to the fact

that the inequality is higher in Kerala. Thus both states moved the

different poverty reduction path during the last one and half dec-ades.

Among the remaining 11 states Uttar Pradesh, Madhya Pradesh

(until 1983) and Bihar (until 1983) were those of poor performance in

poverty reduction and in PCTE growth. This is clearly seen when compared with Tamil Nadu and Andhra Pradesh that recorded a high

growth in PCTE and a large reduction in poverty. The fact that the performance of poverty reduction and PCTE

Fig. 1. Change in Per Capita Total Expenditure and the Incidence of

Poverty, 1970-71 to 1987-88.


growth was comparatively better in West Bengal, Andhra Pradesh, Tamil Nadu and Orissa seems to indicate that growing rice produc-

tion had favorable effects on rural poverty. Table-3 indicates the

rate of growth of foodgrain production for 17 major states. Since the

annual fluctuation of foodgrain production was so large, most of the

rate of growth estimated for the three subperiods are statistically not

significant. Thus the table shows the annual rate of growth for the

whole period and percentage increase for each sub-period. Consid-

ering that current consumption expenditure would be affected by the

previous year's production as well, the percentage increase in food-

grain production was calculated while comparing the two-year aver-

Table 3. Growth of Foodgrain Production

Note:** Significant at 1 percent level.

Source:

Govt. of India, Min. of Finance, Economic Survey, various issues


ages. All India foodgrain production increased rather rapidly from

1970 to 1983 but it was slowed down between 1983 and 1987. This

is mainly due to the severe drought attacked in 1987-88. The rate

of growth, however, is no more than uniform across the states. This is particularly so between 1983 and 1987, in which W . Bengal and Tamil Nadu recorded the high rate of growth of foodgrain production

while crop failed in Gujarat and Rajasthan.

Reduction in extreme poverty seems not to be correlated with

growth in foodgrain production until 1983. Thus foodgrain produc-tion in Maharashtra increased very fast from 1970 to 1977 but the incidence of poverty increased there. Bihar and Uttar Pradesh rec-

orded rather high rate of growth of foodgrain production, but reduc-tion in extreme poverty was marginal. On the otfier hand increase

in foodgrain production was very low or negative but the incidence of

extreme poverty declined considerably in Gujarat , Kerala and Ra-jasthan. Similarly Rajasthan, Punjab and Uttar Pradesh recorded the high rate of growth in foodgrain production but it did not ac-

company a sizable decline in the incidence of poverty during 1977-83. Contrary to the previous periods the correlation between the growth

rate and reduction of extreme poverty could be observed in 1983-87

(r=-0.50). Thus the states that recorded higher growth of food-

grain production, such as W. Bengal, Tamil Nadu and Bihar recorded a large reduction of extreme poverty. On the other hand the inci-

dence of poverty rose in the drought attacked Gujarat. Still the case

that a decline in foodgrain production did not cause an increase in the incidence of extreme poverty also could be seen in Rajasthan , Andhra Pradesh and Karnataka.

Agricultural production includes non-food commercial crops as

well and the weight of foodgrains is only 68 percent in total. Never-

theless the above mentioned fact that growth in foodgrain production,

did not correlated with the reduction of poverty suggests that the so-

called trickle down effect was weak. It means that the lions share of

benefit from growth in foodgrain production tended to accrue to cul-

tivators unless there were counter balancing measures.


4. Change in Inequality

Suppose that the PCTE is correlated closely with income , the above evidence shows that income growth is likely to affect favorably on the incidence of poverty. For this income growth-poverty reduction re-

lationship, we have to be careful about the fact that the PCTE was

an average figure for all the PCTE classes, varying from the class of

less than Rs. 65 to that of more than Rs. 385 for the year 1987-88 , for example. It follows that there is an assumption that the distri-

bution of population among PCTE classes was constant and benefit

of economic growth is shared equally among them, which could

hardly hold. In fact, there are several irregular movements in

Figure-1 in which growth in expenditure resulted in a rise in the in-

cidence of poverty. These movements suggest the fact that PCTE

growth was not equal for every PCTE class. Table-4 indicates change in inequality over time for all the major

states. The inequality index in terms of Gini coefficient was hardly

constant. It rose during the 70s but declined after 1977 in West

Bengal, Orissa, Kerala, Gujarat and Madhya Pradesh. It continu-

ously rose in Andhra Pradesh, Tamil Nadu and Assam. Thus pov-erty reduction accompanied with a decline in inequality in West Ben-

gal and Kerala, but it did not in Andhra Pradesh. In Assam a rise in inequality was accompanied with an increase of poverty.

Kakwani and Subbarao estimated the growth and inequality effects

on the reduction of poverty. Tendulkar and Jain decomposed the

change in the number of poor into PCTE growth, population growth

and distribution change13). The former further estimated the growth

elasticity of poverty, i.e., the ratio of percentage change in the inci-

dence of poverty to percentage change in PCTE. Though it is

impressive, there are several methodological problems in these an-

alyses. Instead a direct measurement, changes in real consumption

expenditure of the bottom deciles or in the incidence of poverty

among agricultural laborers for example, is preferable14). The fol-

lowing is a tentative analysis in this direction.


Table-5 indicates the average PCTE of the bottom 40 percent of

population from 1970-71 to 1987-88. These are deflated by CPIAL

and CPITR. It also shows the average PCTE deflated by CPITR.

It is seen that real PCTE of the bottom increased rather slowly be-

tween 1972-73 and 1977-78 than that of rural populations as a whole.

Thus for all India, for example, growth at the rate of 1.48 percent

per annum was recorded for all PCTE classes, but it was less than 1

percent for the bottom four deciles. Higher growth in PCTE of the

bottom than the all PCTE classes was observed only in four states,

Table 4. Change in Inequality (Gini Coefficient) 1970-71 to 1987-88

Note:

(1) Since per capita total expenditure of the top PCTE class was overestimated and adjustment could not be possible, the Gini coefficient was not calculated for Maharashtra and Rajasthan for 1977-78.

(2) Similarly it is likely that per capita total expenditure of the top PCTE class in Jammu and Kashmir was over-reported for 1987-88. The Gini coefficient was, therefore, overestimated.

Source: Same as Table 2.


(A) Per Capita Total Expenditure

(B) Annual Growth Rate

i.e., W. Bengal, Punjab, Orissa and Bihar.

Change in PCTE between 1977-78 and 1983 was on the whole

favorable to the bottom four deciles in most states. Higher growth

in PCTE of the bottom than that of all classes was recorded in Gu-

jarat, Haryana, Karanataka, Kerala, Madhya Pradesh and Orissa. The price index problem, however, again emerges for the other states.

When a different price index is used as the deflator, a different pic-

ture emerges. Thus if CPITR is used as the deflator like all PCTE

classes, it is not certain if the growth of PCTE of the bottom was

higher or not in 6 states, Andhra Pradesh, Assam, Jammu and Kash-

Table 5. Change in Per Capita Total Expenditure, All PCTE Classes

and the Bottom Four Deciles

Source:

Same as Table 2.


mir, Tamil Nadu, Uttar Pradesh and W. Bengal. Comparison with

Table-3 shows that higher growth in foodgrain production likely had

a favorable effect on PCTE of the bottom in Gujarat, Haryana , Ma- dhya Pradesh and Punjab. On the other hand though foodgrain

production declined in Kerala and W. Bengal the PCTE of the bottom increased faster than that of all PCTE classes.

From 1983 to 1987-88 PCTE of the bottom four deciles grew fast-

er than the all classes in Karanataka, Kerala, Madhya Pradesh , Orissa, Rajasthan, Uttar Pradesh and W. Bengal. On the other hand

in Assam, Haryana, Jammu and Kashmir and Maharashtra growth of

PCTE of the bottom was slower. Similarly to the previous period

higher growth of the bottom was not certain in Andhra Pradesh,

Himachal Pradesh and Punjab. It is interesting to note that the

PCTE of the bottom was less affected by the fall of foodgrain produc-tion. Both Gujarat and Rajasthan recorded a substantial decline in

foodgrain production in this period. The PCTE of the bottom,

however, did not fall in Rajasthan and it declined slightly in Gujarat.

Similar phenomenon is seen in Orissa. But this is not always the

case as the faster growth of PCTE of all classes was seen in Mahara-

shtra where foodgrain production decline in this period.

5. The Incidence of Poverty among Cultivators and Agricul-

tural Laborers

Table-6 indicates the incidence of poverty of cultivators, agricul-

tural laborers and other rural laborers in 1983 for the major 17 states.

For comparison the similar index was calculated based on NSS Em-

ployment and Unemployment data of 1977-78. It is noteworthy that composition of the poor differs largely among various states mainly

due to the fact that proportion of cultivators and labor household

differs regionally. The states in which cultivators constitute the ma-

jority of the poor are Assam, Himachal Pradesh, Jammu and Kash-mir, Madhya Pradesh, Rajasthan and Uttar Pradesh, while agricul-

tural and other rural laborers constitute the majority in the remaining

states.


When it comes to the rural population as a whole, the period of

1977-78 to 1983 witnessed a considerable reduction in poverty in ru-

ral India except Bihar. As mentioned above, a large reduction in the

incidence of extreme poverty was recorded in 11 states. The inequal-

ity index also declined in 10 states and PCTE increased in most

states.

Table-6 shows that extreme poverty of cultivators was reduced in

this period in most of the states in which data is at hand . Four

states, Assam, Himachal Pradesh, Maharashtra and W . Bengal rec-

Table 6. Incidence of Extreme Poverty of Cultivators and , Agricultural and Rural Laborers

Note:

(1) The report of the Second Quinquennial Survey on Employment and Un-

employment, 1977-78 contains only the estimated distribution of households

by household type and PCTE class. The estimated number of persons per

household given by the consumer expenditure survey was applied to estimate

the distribution of population by PCTE class.

Source:

NSSO, Some Selected Results of the Second Quinquennial Survey on Em-

ployment and Unemployment, NSS 32nd Round, Sarvekshana, Vol. 6 No. 1-2,

1982 and Vol. 7, No. 3 and 4, 1984;•\,Results on Pattern of Consumer Ex-

penditure of Households Self-employed in Agriculture, and of Agricultural

and Rural Labor Households, NSS 38th Round, Sarvekshana, Vol. 13 No . 1,

1989.


orded a decline by more than 10 percent in the incidence of extreme

poverty of cultivators. Only in Bihar it rose by 4.9 percent. Thus the index of extreme poverty of cultivators moved together with that

of rural populations as a whole.

The changes in the incidence of extreme poverty of agricultural

laborers were a mixture of the movements to both directions. It de-

clined in 9 states, among which Assam, Gujarat, Himachal Pradesh

and Karnataka recorded more reduction in the extreme poverty of agricultural laborers than that of cultivators. In other words the in-

cidence of poverty of agricultural laborers declined faster in these

states than cultivators. This suggests that agricultural laborers in

these states were more benefited from agricultural growth and the

poverty alleviation programs. In Andhra Pradesh, Jammu and Kash-mir and Maharashtra the incidence of extreme poverty of agricultural

laborers declined but it is not certain if this decline was larger than

that of cultivators.

In Bihar, Punjab and West Bengal, on the other hand, the incidence of extreme poverty of agricultural laborers increased. It is most pro-

bable that poverty was not reduced in Tamil Nadu. Thus the in-cidence of extreme poverty of cultivators in West Bengal declined

massively from 46 percent to 36 percent during the period but that of

agricultural laborers increased from 73 percent to 75 percent. Food-

grain production in W. Bengal declined by about 7 percent from 1977-78 to 1983. Reduction of extreme poverty among cultivators,

therefore, indicates to certain extent that the poverty alleviation pro-

gram was effective. Nevertheless this benefit did not reach to agri-cultural laborers.

As the most prosperous state in India, Punjab had already enjoyed

the lowest incidence of poverty of cultivators, 5 percent in 1977-78.

It declined further to 3 percent in 1983. The incidence of extreme

poverty of agricultural laborers, on the other hand, did not decline but rose up slightly. Though marginal, this fact is rather significant

when agricultural growth is taken into consideration. As shown in

Table-3 foodgrain production in Punjab jumped up by more than 50


percent during this period. It follows that this massive increase in agricultural production did not benefit agricultural laborers. This is

likely related with migrant laborers from Uttar Pradesh and Bihar.

Thus the fact that the indices of poverty for cultivators and agri-

cultural laborers did not move together and there are several cases

that reduction in extreme poverty of agricultural laborers lagged be-hind that of cultivators has a far reaching implication. It is unlikely

that the benefit of agricultural growth and the goverment poverty

alleviation programs was equally shared among rural population.

The benefit could not reach agricultural laborers who constitute the majority of the poor.

Conclusion

From the movements of the average PCTE, its inequality and the

incidence of extreme poverty several patterns of change in rural pov-

erty emerge. One is W. Bengal (1972-73 to 1987-88) and Kerala

(1977-78 to 1987-88), another was Tamil Nadu (1970-71 to 1987-88) and Andhra Pradesh (1972-73 to 1987-88). The third pattern

was Uttar Pradesh (1970-71 to 1987-88), Bihar (1970-71 to 1983-84)

and Madhya Pradesh (1970-71 to 1983-84).

In W. Bengal and Kerala growth in PCTE was accompanied with

a decline in inequality both of which resulted in a considerable reduc-

tion in incidence of poverty. Thus both growth and equity are achieved in these states to some extent. The fact that negative

growth of foodgrain production did not cause a rise in the incidence of poverty and rather continuous reduction of poverty was recorded,

suggests the poverty alleviation programs have been effective in these

states. Many village level studies showed that the poverty allevia-

tion programs, such as IRDP and NREP, are implemented in West

Bengal more favorably to the weaker sections than in other states15).

Thus, a majority of IRDP beneficiaries were landless casual laborers.

Coupled with the Operation Barga, these direct interventions seem-

ingly have been effective to attack rural poverty. Increase in the in-

cidence of extreme poverty among agricultural laborers, as is seen in


Table-6, would be a result of a strong party bias.

In Tamil Nadu and Andhra Pradesh, on the other hand, increase in PCTE resulted in reduction in poverty but it did not accompany

a decline in inequality, rather disparity widened in the period. Change in real PCTE of the bottom four deciles grew slowly

compared with al PCTE classes in these states. Reduction in the

incidence of extreme poverty of agricultural laborers lagged behind

that of cultivators. These facts suggest that growth in foodgrain

production and the poverty alleviation programs in these states had more favorable effects on cultivators than agricultural laborers.

In Uttar Pradesh, Bihar and Madhya Pradesh neither growth in

PCTE nor reduction of poverty was observed in the period. When

the regional disparity is taken into consideration, it is not hard to anticipate that PCTE growth would have been negative in eastern

and central Uttar Pradesh. Foodgrain production increased substan-

tially in Madhya Pradesh and Uttar Pradesh but it did not result in

tangible increase in PCTE. It is reported that the failure of anti-

poverty programs is particularly severe in the " backward " states of the Hindi belt. A majority of the beneficiaries were privileged class-

es and the poorest of the poor largely have been excluded. Under

these circumstances the incidence of extreme poverty remained at

the same level in these states. In Bihar and Madhya Pradesh, however, growth in PCTE and poverty reduction to some extent

were reocrded between 1983 and 1987-88.

Notes 1) It does not follow that the fluctuation in foodgrain production of each state

decreased. Compared with the previous decade the coefficient of variation. of foodgrain production during the 1980s increased in Andhra Pradesh, Gu-jarat, Himachal Pradesh, Jammu and Kashmir, Kerala and Rajasthan. Nev ertheless a decline in the coefficient of variation of rice production, however, is noteworthy.

2) Govt, of India, Planning Commission (1992) Vol. 1, p. 31 and Vol. 2, p. 27. Minhas et al. (1991) scrutinized the methodology taken by the Planning Commission to estimate the incidence of poverty.


3) Minhas B. S., L. R. Jain and S. D. Tendulkar (1991).

4) Bardhan P. K. (1974). Ahluwalia (1984) also fixed the poverty line at Rs.

15 at 1960-61 prices.

.5) There was a hot discussion in early 1970s between Bardhan who used CPIAL

for updating the base year poverty line and Minhas who applied CSO's im-

plicit deflator. See Srinivasan T. N. and P. K. Bardhan (1974). 6) See Minhas B. S., L. R. Jain, S. M. Kansal and M. R. Saluja (1987) and

Minhas et al. (1991).

7) Higher weight is given to coarse grains in the CPIAL weight diagram and

these prices rose faster during the 1960. It was discussed that this caused a

higher rise in CPIAL during the 1960s. The slow rise of CPIAL after the

late 1970s is due partly to the firewood prices being kept constant, as Minhas et al. examined. It is likely that unfavorable terms of trade between agricul-

tural products and manufactured goods also resulted in a slower rise of

CPIAL.

8) See Minhas et al. (1987 and 1991).

9) See Minhas et al. (1987 and 1991). 10) See Minhas et al. (1991).

11) Kakwani and Subbarao (1991) used the ' poor ' and the ' acute poor '. The

poverty line for the poor and acute poor applied in their article was Rs. 50 and Rs. 40 at 1973-74 prices, respectively.

12) NSSO conducted household expenditure survey every year until 1973-74.

Since 1972-73 they started the quinquennial survey and it was conducted in 1977-78, 1983 and 1987-88. These survey results were published in Sar-

vekshana, issued by NSSO. According to Kakwani and Subbarao (1991)

there was an overestimation in the expenditure of the top PCTE class in

Maharashtra and Rajasthen in 1977-78. Similarly the top PCTE class in

Jammu and Kashmir in 1987-88 is likely overestimated. Unfortunately ad-

justment could not be done in this article. 13) See Kakwani and Subbarao (1990) and Tendulkar and Jain (1991). 14) There is a discussion on the decomposition of reduction of poverty into growth

and inequality effects between Kakwani and Subbarao (1991) on one hand

and Tendulkar and Jain (1991) on the other. See also Ranade (1991).

15) Kohli (1987), Kurian (1989), Gopal (1989), Seabright (1989), Dreze (1990),

Swaminathan (1990), Ezekiel (1990) and Lieton (1990), to mention a few

from recent studies. It is, however, not certain if IRDP loans and subsidies

contributed to eugment productive assets of the weaker sections.

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article poverty in rural india, 1970-71 to 1987-88

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