SCALlNG UP POVERTY REDUCTION INDIA COUNTRY STUDY Dr. Rohini Nayyar Adviser, Planning Commission, Government of India February 13, 2004

2 TRENDS IN AGGREGATE AND RURAL POVERTY IN INDIA Year Rural Combined (Rural +Urban) No. of Persons%ageNo. of Persons%age (in million) (in million ) Source : Planning Commission

3 REDUCTION IN POVERTY Is it Real? The official estimates of poverty questioned by many. Problems of comparability between and survey data. 7/30 day recall period, 365 day recall period for consumer durables may have led to higher expenditure estimates. Evidence from thin samples between and indicates very little change in poverty estimates. Deaton & Dreze and Tendulkar & Sundaram indicate poverty reduction between 7-8.2% points as against over 10% reduction shown by the official estimates. Sen and Himangshu show poverty decline only by 4-4.5% points.

4 OTHER CO-RELATES OF POVERTY The other co-relates of poverty indicate that poverty would have decline at a lower rate than projected by the official estimates. The employment elasticity of growth declined to 0.16 in 1990’s as compared to 0.52 in the 1980’s. The decline in employment elasticity of agriculture was more pronounced from 0.70 in the period 1983 to to 0.10 during to Growth in non-farm employment in the backward regions of the country more in the nature of refuge employment. Deceleration in the rural income growth rates during the 1990s. Higher rise in food prices in the post reform period. Deterioration in fiscal position of States, reduction in resource transfer from Centre to the States.

5 ECONOMIC GROWTH AND POVERTY REDUCTION Economic growth is necessary for poverty reduction. But the link between the two is not automatic. The growth rates in the 1980’s and in the post reform period broadly similar at % per annum. Deceleration in growth rate after Many States which have grown faster in the post reform period do not show rapid reduction in poverty. Some of the States which did not grow very fast show higher reduction in poverty indicating impact of other factors on incidence of poverty. Even in high growth States which have done well in reducing poverty, regions and communities get left out in the growth process. Scheduled Castes/Scheduled Tribes in high growth states witnessed little reduction in poverty. The links between agricultural growth and poverty reduction much more pronounced. High positive co-relation between physical infrastructure and reduction in poverty.

6 DECENTRALISATION AND POVERTY REDUCTION People’s participation in planning and delivery of development programmes institutionalised in the wake of challenges of liberalisation and globalisation. The urge of emerging middle classes for political representation was accommodated through Panchayati Raj Institutions (PRIs). Constitutional status provided to PRIs, regular elections, reservations for women and marginalised sections, independent finance and election commissions, separate functional domain. Notable successes in empowering panchayats in Kerala, Madhya Pradesh and West Bengal. Involvement of village community in programme implementation. Social audit institutionalised leading to transparency and accountability.

7 Problems in many States especially in the Central and Eastern parts of the country. Continuing struggle between the political leadership at the State level and between the panchayati raj functionaries for control on economic resources. Panchayats viewed as agencies of Govt. and not as people’s organisation. Panchayats more concerned with construction projects, no vision of long term livelihoods for the people. In many States political empowerment has yet to lead to economic betterment. Panchayats more effective where people are politically aware and educated. DECENTRALISATION AND POVERTY REDUCTION

8 Role for other civil society organisations in the development process. Influenced policies at Central and State levels, generated awareness, helped in capacity building, active in development work and service delivery. Major role for NGOs in programmes for population stabilization, health programmes, provision of education under Sarva Siksha Abhiyan, control of land degradation. Self-Help Groups and users’ associations promoted by the Government. Programmes implemented through SHGs. Greater accountability and transparency in the functioning of PRIs and the other Government Departments. DECENTRALISATION AND POVERTY REDUCTION

9 LESSONS FROM INDIA..1 Agricultural growth is the key to reduction in poverty. Investment in irrigation facilities to increase crop productivity. Regionally differentiated strategy.Ground water exploitation in high rainfall areas of Eastern India. Focus on water harvesting, water conservation and improvement in land capability through watershed development in dry regions of the country. Investment in agricultural research and extension for crop diversification. Provision of marketing linkages and promotion of primary processing in rural areas for employment generation. Tenancy reform to create a land market in the rural areas to facilitate access to land by the rural poor. Promotion of rural non-farm employment through upgrading the technological base of rural enterprises and by providing a package of facilities including training, credit and market linkages.

10 LESSONS FROM INDIA..2 Physical Infrastructure  Increased focus on creation of a rural road network to link villages.  Rural electrification.  Rural drinking water supply and sanitation.  Provision of housing and shelter to the rural poor. Social Infrastructure  Investment in health and education and improvement in quality of these services.  A shift in approach to service delivery through community participation and community contribution.

11 LESSONS FROM INDIA..3 A food for work programme to meet the nutritional needs of the transient poor. Self-employment through development of micro enterprises financed by a mix of credit and subsidy. Availability of food at affordable prices. Strengthening the targeted Public Distribution System. Special programmes for the aged, vulnerable and the socially excluded. Mid-day meals in schools and coverage of pre- school children and lactating mothers. Social Security Scheme. Programmes for removal of regional imbalances.

12 LESSONS FROM INDIA..4 Good governance has been highlighted as a most crucial factor for achievement of poverty reduction and improvement in the social indicators in the Tenth Five Year Plan. To improve accountability and transparency in the delivery system, strengthen Panchayats  by providing them clearly defined functions;  financial resources; and  administrative support. Strengthen the Gram Sabha to oversee and enforce effective implementation of development programmes by institutionalising social audit.

13 LESSONS FROM INDIA..5 Create an enabling environment for Non-Governmental Organisations to play a greater role in strengthening communities’ capabilities. Strengthen the spirit of cooperation and self-help by integrating SHGs in the development programmes as attempted under programmes like SGSY, RMK, NABARD. Greater role for community organisations in ensuring preservation of land and environment through mechanisms such as joint forest management, watershed associations, etc. Innovative approaches to service delivery through people’s participation and contribution.

14 UPSCALING : LIMITATIONS There is no unique solution for poverty reduction. Even within a macro-economic environment conducive to growth, specific micro-interventions are required based on natural resource endowments and the prevailing socio-political cultural milieu. The case study of India shows that strategies, policies and programmes that have been successfully implemented in one State/Region have not been replicated in others. Even in reforming states with high economic growth, pockets of backwardness and poverty persist. Therefore, there are limitations to replication of successful interventions that originate in a specific country, which should be kept in mind.