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Poverty in India: Concepts, Measurement and Trends: Manoj Panda Centre For Economic and Social Studies (CESS), Hyderabad
Poverty in India: Concepts, Measurement and Trends: Manoj Panda Centre For Economic and Social Studies (CESS), Hyderabad
Manoj Panda
Centre for Economic and Social Studies (CESS),
Hyderabad
Coverage
• Introduction
• Concepts of Poverty and Poverty Line
• Measurement of Poverty
• Trends in Poverty over Time
• Variations across States and Social
Groups
• Inequality: Concept and Measurement
• Some Policy Issues
Introduction
India’s economic structure has changed
dramatically over last 5-6 decades; among the
most dynamic economies recently.
Benefits of growth not widely spread to various
sections in society, reached only marginally to
low income groups.
Similar experience of other countries too.
Question then arose: Can we guarantee to all at
least a minimum level of living necessary for
physical and social development of a person?
Absolute poverty literature grew out of this
question.
Why estimate poverty?
Poverty estimates are vital input to design, monitor and
implement appropriate anti-poverty policies.
3500
Per Capita Calorie Intake per day
3000
2500
2000
1500
1000
500
0
0 100 200 300 400 500 600 700 800 900 1000
Per Capita Consumption Expenditure per Month
(Rupees)
An Example of Size Distribution of Consumption Expenditure
MPCE %Population
0-150 3.2
150-200 4.0
200-250 6.5
250-300 8.6
300-340 10.0 (half of 10% are below poverty line 320)
340-400 11.3
400-450 8.6
450-500 9.2
500-550 9.3
550-650 11.4
650-800 8.9
800-1000 5.0
Above 1000 4.0
All classes 100.0
MPCE: Monthly Per Capita Consumption Expenditure
Urban HCR
55
50
45
40
35
30
25
20
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
Up to mid-1970s – fluctuations with cycles
Since mid-1970s – continuous fall
Except a few years immediately after start
of reforms (early 1990s)
Controversies around estimates for 1999-
2000 (under estimates poverty)
Data Contamination in 1999-2000
7-Day Recall versus 30-Day Recall
1999-2000 2004-05
Rural 27.1 21.8
Urban 23.6 21.7
Total 26.1 21.8
Poverty Head Count Ratio: Major Indian States
Poverty By Social Groups: Rural 2004-05
States ST SC OBC OTHERS
Andhra Pradesh 30.5 15.4 9.5 4.1
Assam 14.1 27.7 18.8 25.4
Bihar 53.3 64 37.8 26.6
Chhattisgarh 54.7 32.7 33.9 29.2
Delhi 0.0 0.0 0.0 10.6
Gujarat 34.7 21.8 19.1 4.8
Haryana 0.0 26.8 13.9 4.2
Himachal Pradesh 14.9 19.6 9.1 6.4
Jammu & Kashmir 8.8 5.2 10.0 3.3
Jharkhand 54.2 57.9 40.2 37.1
Karnataka 23.5 31.8 20.9 13.8
Kerala 44.3 21.6 13.7 6.6
Madhya Pradesh 58.6 42.8 29.6 13.4
Maharashtra 56.6 44.8 23.9 18.9
Orissa 75.6 50.2 36.9 23.4
Punjab 30.7 14.6 10.6 2.2
Rajasthan 32.6 28.7 13.1 8.2
Tamil Nadu 32.1 31.2 19.8 19.1
Uttar Pradesh 32.4 44.8 32.9 19.7
Uttarakhand 43.2 54.2 44.8 33.5
West Bengal 42.4 29.5 18.3 27.5
All India 47.2 36.8 26.7 16.1
Poverty By Social Groups: Urban 2004-05
States ST SC OBC OTHERS
Andhra Pradesh 50 39.9 28.9 20.6
Assam 4.8 8.6 8.6 4.2
Bihar 57.2 67.2 41.4 18.3
Chhattisgarh 41.0 52.0 52.7 21.4
Delhi 9.4 35.8 18.3 6.4
Gujarat 21.4 16 22.9 7.0
Haryana 4.6 33.4 22.5 5.9
Himachal Pradesh 2.4 5.6 10.1 2.0
Jammu & Kashmir 0.0 13.7 4.8 7.8
Jharkhand 45.1 47.2 19.1 9.2
Karnataka 58.3 50.6 39.1 20.3
Kerala 19.2 32.5 24.3 7.8
Madhya Pradesh 44.7 67.3 55.5 20.8
Maharashtra 40.4 43.2 35.6 26.8
Orissa 61.8 72.6 50.2 28.9
Punjab 2.1 16.1 8.4 2.9
Rajasthan 24.1 52.1 35.6 20.7
Tamil Nadu 32.5 40.2 20.9 6.5
Uttar Pradesh 37.4 44.9 36.6 19.2
Uttarakhand 64.4 65.7 46.5 25.5
West Bengal 25.7 28.5 10.4 13.0
All India 33.3 39.9 31.4 16.0
Poverty Measures
Head Count Ratio (HCR), Poverty Gap
(PG) and Squared Poverty Gap (SPG)
m
HCR
n
z yi
m
PG 1
n i 1
(
z
)
z yi
m 2
SPG 1
n i 1 z
i 1
Cumulative
% of Income
Cumulative % of Population
16000 6.0
14000
5.0
12000
4.0
10000
8000 3.0
6000
2.0
4000
1.0
2000
0 0.0
Tamil Nadu
Bihar
Punjab
Kerala
Orissa
Haryana
Karnataka
Rajasthan
Maharashtra
Uttar Pradesh
Andhra Pradesh
Madhya Pradesh
Himachal Pradesh
Assam
Gujarat
West Bengal
1993-94 2004-05
Andhra Pradesh 141.5 173.9
Assam 177.9 194.8
Bihar 142.9 166.9
Chhatishgarh 180.6 232.9
Gujarat 149.8 187.1
Haryana 123.1 132.3
Himachal Pradesh 212.8 174.2
Jharkhand 190.7 232.0
Karnataka 157.2 203.3
Kerala 126.7 127.4
Madhya Pradesh 155.7 205.9
Maharashtra 194.1 202.1
Orissa 183.2 189.7
Punjab 118.0 156.6
Rajasthan 132.0 163.1
Tamil Nadu 149.0 179.4
Uttar Pradesh 141.2 151.2
Uttaranchal 166.7 158.5
West Bengal 169.9 200.0
All India 163.0 188.2
Factors affecting Poverty
Poverty depends on per capita household income
which in turn affected by employment, wage rate,
land productivity, industrialisation, expansion of
service sector and other general growth and
distribution factors
Special role of
•per capita agricultural income
•Employment and real wage rate
•Inflation rate and relative food prices
•Government expenditure
Per capita development expenditure
Social sector expenditure
Indian growth process since 1950s more or less
distribution neutral till 1980s.
Importance of a critical minimum steady growth in per
capita income for poverty reduction.
Inequality increased in recent years after reforms.