An Interstate Study Of Poverty And Inequality In India

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1. 86 Poverty Alleviation in India: Issues & Challenges
Chapter—8
An Interstate Study of Poverty
and Inequality in India
—Surender Kumar Kulshrestha*
ABSTRACT
Economic growth is an effective indicator for removal poverty and
enhances employment so in recent time there are many developing countries
which focus for improving economic growth. Economic plans in India are
much focused to push economic growth but there create an exclusion among
the states that's why 11th and 12th plan are focused on Inclusive growth.
This paper attempts to investigate interstate poverty and inequality of
consumption distribution over the years. Planning commission data based
this study reveals that the inequality among the states is increased over the
years while poverty has reduced.
INTRODUCTION
India among the fast growing countries across world on the other
hand there is highest population of poor live. Poverty an important issue
which shows the backwardness of the country but there is also income
inequality among the states of the country and this inequality creates
exclusion within the country. The exclusion has become wider after the
*Assistant Professor, Department of Economics, Vardhman Mahaveer Open
University, Kota Rajasthan, 324021
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2. 87An Interstate Study of Poverty and Inequality in India
LPG policy, 1991. Some areas, people, and sectors grow faster than do the
others but this creates exclusion within the country. Some states are growing
with faster speed other do not but there is a disparity among growth
within the states and growth must be pro poor otherwise this may be
create a wider exclusion. Economic growth is the most powerful instrument
for reducing poverty and improving the quality of life in developing
countries like India. There is research evidence that rapid and sustained
growth is critical role for alleviation of poverty. Millennium Development
Goals also focused on this issue as the first goal of halving the global
proportion of people living on less than $1 a day. Economic growth can
generate virtuous circles of prosperity and it creates a virtuous circle of
opportunity. Strong growth and employment opportunities improve quality
life and backwardness of the countries. This may lead and give intensive
of growing group of entrepreneurs for investment.
MATERIALS AND METHODS
This study is based on the state-wise secondary data of poverty from
planning commission and data of 2004-05 are based on uniform recall
period (URP) while poverty data of 2011-12 based on Tendulkar
Methodology by the Planning Commission. The Gini coefficient is a
measure of the inequality of a distribution a value zero expresses perfect
equality and a value of 1 maximal inequality. Gini focuses coefficient Data
book only for is on calculated Planning Commission and it is on inequality
4th August, assuming 2014that all individuals within each state have gross
income equal to per capita GSDP. This method ignores the
LITERATURE REVIEW
Poverty is more debatable issue across the world and most of the
countries which are developed in present time had a phase of poverty
populated era. Even country like India where reduction of poverty is taken
place speedy in last two decade but there need to do much work in this
regard. Rapid and sustained poverty reduction requires inclusive growth,
which allows people to donate to and to benefit from economic growth
(OECD 2012). Inclusive growth refers both to the pace and to the pattern
of growth, which is considered, interlinked, and therefore needs to be
addressed together (Commission on Growth and Development 2008).
The benefits of growth to the poor were not mitigated by adverse
redistribution. On the contrary, favourable redistribution has made an
important contribution to the decline in the depth and severity of poverty.
The more serious constraint on poverty reduction seems to have been
that there just was not enough growth (Datt 1998). One of the reasons
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3. 88 Poverty Alleviation in India: Issues & Challenges
behind the increased income inequality observed in India in the post-
reform period has been the stagnation of employment generation in both
rural and urban areas across the states. Open unemployment increased in
most parts of the country and the rate of growth of rural employment hit
an all-time low. Declining employment elasticity in several sectors, including
agriculture, was one of the main reasons behind this decline. Low
employment generation in the agriculture sector has also been associated
with a steady, but significant increase in casualisation of the labour force in
India. Owing to large-scale downsizing and privatisation of public sector
units, employment generation in the organized sector has also suffered
(Pal and Ghosh 2007). Sachs et al. (2002) have also examined state-level
patterns of growth, searching for patterns to explain the geographical
distribution of economic growth, although they do not link it directly to
poverty reduction. They identify heavily urban areas, particularly near
the coast, as the likely centres for the fastest future growth, and expect
income growth to be slower in the interior and in states with poor policy
or political environments. They identify Kerala, for example, as unlikely
to benefit from its good educational levels and coastal location because of
poor labour relations for large businesses. Kulshrestha(2014) found that
Goa, Tamil Nadu, Kerala, Andhra Pradesh, Mizoram, Meghalaya,
Himachal Pradesh are states that are more inclusive on the other hand
Bihar, Arunachal Pradesh, U.P., Madhya Pradesh, Jharkhand, Assam and
J&K are more exclusive from the reform as distribution of welfare has not
reached these states like than others.
INTERSTATE ANALYSIS OF POVERTY
It is clear from figure 8.1 that the most of eastern and north eastern
states have the poverty dominance while the southern states are less
Fig. 8.1 Poverty Ratios of Different States and UTs
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4. 89An Interstate Study of Poverty and Inequality in India
poverty ratio. There are ten states above the all India poverty ratio but
others have better performance than all India ratio. It is also clear from
the same figure that poverty has declined all states except Dadra & Nagar
Haveli, Manipur, Arunachal Pradesh, Assam and Chandigarh.
HARSH STATES IN POVERTY
It can be inferred from the figure 8.2 that Chhattisgarh, Jharkhand,
Manipur, Arunachal Pradesh, Bihar, Odisha, Assam, Madhya Pradesh
and Uttar Pradesh are poverty dominants states. The harsh states deduced
their poverty ration except Arunachal Pradesh.
Fig. 8.2 Poverty Dominant States in India
OTHER THAN HARSH STATES IN POVERTY
It can be conclude from figure 8.3 that the other than harsh states
have less than 20 percent poverty in 2011-12. All these states reduced
their level of poverty over the two decades but still some states such as
Nagaland and Mizoram where poverty ratio has been increased since
2004-05.
Fig. 8.3 Other than Harsh States in Poverty
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5. 90 Poverty Alleviation in India: Issues & Challenges
CONVERGENCE OF POVERTY RATIO AMONG
STATES
It can be derived from the table 8.1 that coefficient of variation among
states and union territory has been increased in different point of time
which shows that some states have done better for poverty alleviation and
other are still on the same place. So there is not convergence among states
and exclusion has been enhanced over the years among states but mean
of poverty has been declined over the year.
Table 8.1 Descriptive Statistics of Indian States in BPL
Year 1973-74 1977-78 1983 1987-88 1993-94 1999-2000 2004-05 2011-12
Mean 50.01 48.29 37.70 34.25 32.32 22.07 20.74 17.71
S.D. 9.92 12.07 13.14 12.51 10.97 12.19 9.75 10.98
C.V. 19.84 25.00 34.87 36.52 33.96 55.22 47.04 62.03
Note: Excluding Chhattisgarh, Jharkhand, Uttrakhand and Daman & Diu
INEQUALITY OF CONSUMPTION IN RURAL
AREAS
It is inferred from the table 8.2 and figure 8.4 that consumption
inequality remain the same by and large over the years across states in
India but coefficient of variation over the has increased in earlier period
than it is decreased but last decade it is increased which shows that reforms
in initial level decreased the variability among states but then it increased
the variation among states.
Table 8.2 Gini Coefficient Descriptive Statistics
in Rural Areas across States
Year 1973-74 1977-78 1983-84 1993-94 1999-2000 2004-05 2009-10
Mean 0.26 0.31 0.28 0.26 0.24 0.27 0.27
S.D 0.04 0.07 0.03 0.03 0.03 0.04 0.05
C.V 14.78 22.01 12.52 12.32 11.75 13.36 17.26
Fig. 8.4 Ccoefficient of Variation of Rural Gini Coefficient across States
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6. 91An Interstate Study of Poverty and Inequality in India
INEQUALITY OF CONSUMPTION IN URBAN
AREAS
There is remain the same condition about urban income inequality
over years across states but the mean of Gini coefficient increased over
the year which shows that the consumption inequality over the has been
increased in urban areas of states. The coefficient of variation is on average
increased over the year but the variability among states has not been
changed as shown in table 8.3 and figure 8.5.
Table 8.3 Gini Coefficient Descriptive Statistics in Urban Areas
Year 1973-74 1977-78 1983-84 1993-94 1999-2000 2004-05 2009-10
Mean 0.30 0.33 0.31 0.31 0.31 0.35 0.36
Standard Deviation 0.04 0.03 0.04 0.04 0.04 0.04 0.04
Coefficient of
Variation 11.85 9.54 12.89 12.72 13.15 11.84 12.23

Fig. 8.5 Coefficient of Variation of Urban Gini Coefficient across States
CONCLUSION
This paper concludes that there is not convergence among states and
exclusion has been enhanced over the years among states in term of
poverty ratio. Some states have done well for poverty alleviation and
other have needed to do. Central as well as states government need to
focus on those states where the percentage of poverty is much higher.
Mean of poverty has been declined over the year rural as well as urban
areas. This study reveals that the Indian states not much improve their
inequality of consumption over the years. The level of inequality remains
the same not only in urban areas but also in rural areas. The most of
eastern and north eastern states have the poverty dominance while the
southern states are less poverty ratio.
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7. 92 Poverty Alleviation in India: Issues & Challenges
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Commission on Growth and Development, 2008, 'Growth Report:
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Kulshrestha S.K., 2014, 'Socioeconomic Inclusion of Indian States
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OECD, 2012, 'India Sustaining High and Inclusive growth', OECD
"Better Policies" Series.
Pal, P. and Ghosh, J., 2007, 'Inequality in India: A survey of recent
trends', DESA Working Paper No. 45ST/ ESA/ 2007/ DWP/
45July 2007.
Sachs, J., Bajpai, N. and Ramiah, A., 2002, 'Understanding Regional
Economic Growth in India', Harvard Center for International
Development Working Paper No. 88.
Edited by D.K. Kulshrestha and Veerandra Singh Matsaniya ISBN 978-93-82816-23-2
MANGLAM PUBLISHERS & DISTRIBUTORS DELHI-110053 (INDIA) Year 2015