1. Chronic Poverty in India: Concepts, Incidence and Relevance Amita Shah Gujarat Institute of Development Research May 22, 2009 IGIDR

2. Structure of the Discussion * Poverty during Pre and Post Reforms Period: Trends, Evidence, Debates Chronic Poverty: Concepts & Measurement Policy Options

3. Poverty in India: Recapitulations of Trends HCR (URP – 30 Days) 19831993-942004-05 Rural Poor45.7637.2629.18 Very Poor25.5215.389.64 Urban Poor42.2732.5626.02 Very Poor22.4516.0012.00 All Poor44.9336.0228.27 Very Poor24.7915.5410.32

4. Changes in Poverty (URP) % Points Per Annum Adjusted for Base Year 83-9493-0583-9493-05 Rural-0.61-0.73-1.77-1.97 Urban-0.92-0.59-2.18-1.81 All-0.85-0.70-1.89-1.94 Reduction of Urban Poor is Slower During the Post Reform Period

5. Estimates Based on Mixed Reference Period 1993-94 to 1999-20000.69 1999-2000 to 2004-051.02 Nineties was a Lost Decade for Poverty Reduction Due to: * High Rate of Inflation * Jobless Growth

6. Comparison of 1987-88 to 1993-94 and 1993- 94 to1999-2000 Rate of Decline was higher in the Post-reform period (low base) Elasticity of Poverty Reduction with respect to Income had declined Increased Inequality, associated with Growth had dampening impact on poverty reduction Role of FDI is perceptible despite limited flow; the trickle down effect however, is slow.

7. Decomposition of Poverty Reduction Total Change Due to Growth Due to Inequality Rural-8.08-10.882.80 Urban-8.08-12.404.32

8. Calorie Intake at Official Poverty Line Poverty Line2004-05356.3 Poverty Ratio2004-0528.3 Calorie at OPL1820 Direct (Calorie Based Estimates) Calorie1993-942004-05 <240074.587.0 < 220058.569.5 <180020.025.0

9. Debates Non-Comparability of Data Post Nineties Performed Better Why have a Poverty Line Whether to Raise Poverty Line Line Vs. Identification

10. Emerging Issues Low Poverty with High Levels of Mal- Nutrition Chronic Poverty is Hard to Hit Entry of New Poor due to Structural Adjustment Spatial and Social Dimensions of Concentration of the Poor Poverty Vs. Multi-Dimensional Deprivation

11. Chronic Poverty Concepts-1 Extreme Poverty that Persists Over Long Period – years, life, generations Multidimensional -economic, human capital related, socio-political Poverty That Causes Preventable Deaths Important as Analytical Categories

13. What Causes CP? Insecurity Traps Limited Citizenship and Voice Spatial disadvantages Social Discrimination Poor Work Environment

14. Analysis of Poverty Dynamics Entry- drivers and maintainers Exit Ideally Need longitudinal-Panel Data Sets Alternative Approaches-Cohorts based, Recall and Stages Growth

15. Why CP is Important? If not addressed immediately, it becomes more intractable and costlier Increased Period under CP reduces chances of exit Worsens vicious cycle bet. Material Deprivation and Investment in Human Capital Political Resistance may take a shape that may result into negative impact Environmental degradation and CC Demographic Window having Short Span

16. Global Magnitude: Countries and Consistent Improvers IndicatorsFull CDCs Full Cls Number of countries3211 Population (% of total)1033 Child mortality (% of total)366 Infant mortality (% of total)3011 US$ 1/day poverty (% of total)1722 US$ 2/day poverty (% of total)1328 Undernourishment (% of total)23 Aid in 2002 (% of total)2914

17. CP in India-(Panel Data) CP reduced from 28.4% to 24.3% during 1970/1- 1980/1 to 1980/1-1998/9 Over the entire period CP was 38%; TP 40%; NP 21% CP as % to Poor Declined from 43% to 38.6% during the two sub-periods CP was 38.6 % among SC; 27.9% in ST; and 22.2 among Others during 1980/1-1998/9

18. CP in India (Panel Data 1981-98) Always Poor (CP) Transient Poor (Poor at one Point) Non-PoorAll S.C38.640.020.9100 S.T27.944.427.6100 O.C22.237.839.9100 Total24.338.637.1100

19. Explanatory Factors Caste alone has Marginal Impact Composition vs. Size of the HHs is Important Local level Infrastructure and Urban-linked Employment was the Most Significant Factor CP Declined Initially and then Increased-Due to Declining Land Holding Size (?) The Factors thus, vary Over Time

20. Stages of Growth (Rural) Food Clothing House Repairing Education Debt Payment Buying a Small Piece of Land Health Missing in all ALTERNATIVE trajectories

21. Distribution of Households Across Four Categories by States (% of hhs) HHS CategoriesRajasthan (35 Vill- ages) Gujarat (20 Villages) Andhra Pradesh A. Remained Poor17.849.8NA B. Escaping Poverty11.19.214 C.Descended into Poverty 8.07.312 D. Remained Non-poor63.2`33.6NA

22. Reasons for Escaping Poverty Reasons% of HHs RajasthanGujaratAndhra Pradesh Health related608874 Social expenses316869 Funeral expenses344928 Interest payment725260 Drought/ Crop failure18-44 Land exhaustion---

23. Vulnerability: 2004-05 Sengupta et. al) Categories of Poor% of Pop.AV. DPCE (US$) Current Price Extremely Poor & Poor21.81.1 Marginal &Vulnerable55.01.8 Middle Income19.33.7 High Income4.09.3 All1002.3

24. 19832004-05 StatesHCRRank% shareHCRRank% Share Orissa65.3115.7047.0716.03 Bihar62.71214.6441.53216.53 Madhya Pradesh49.2358.6137.21310.79 Maharashtra43.1379.0429.95510.36 Uttar Pradesh46.94517.4233.25420.93 Tamil Nadu53.4848.4728.3166.10 West Bengal53.6049.7725.6777.23 All India44.93 10028.27 100 Table 1: Concentration of Poverty among Major States in India

25. Sr. No. Regions in Descending OrderCategory of Region 1Orissa-SouthernForest-based 2Madhya Pradesh-South CentralForest-based 3Madhya Pradesh-ChhatisgadhForest-based 4Orissa-NorthernForest-based 5Madhya Pradesh-South westernForest-based 6Maharashtra-EasternForest-based 7Bihar-SouthernForest-based 8Madhya Pradesh-CentralOther 9Bihar-CentralDry land 10Uttar Pradesh-CentralOther 11Tamilnadu-Coastal NorthernForest-based 12Bihar-NorthernOther 13Madhya Pradesh-VindhyaForest-based 14Madhya Pradesh-Malwa PlatauOther 15Uttar Pradesh-EasternDry land Table 3: List of 15 Regions Appearing in the Three NSSO-Rounds

26. III. Way Forward Inclusive Growth: XI Plan: More of the Same? ( Fiscal, Financial, Trade Policies; Institutions; Broad- based Growth) Focus on Agriculture Growth: Neglect of Dry Land Areas NREGS and Universal PDS Social Protection & Transfer of Minimum Income Right to Decent Life

27. THANKS