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There
is now substantial agreement that India's success at
reducing the incidence of poverty during the 1970s and
1980s was halted, if not reversed, during the 1990s.
Estimates made at the World Bank (the most recent update
being by Gaurav Datt in the Economic and Political Weekly
Dec 11-17, 1999) show that the incidence of poverty,
which between 1972-73 and 1989-90 fell from 55.4 per
cent to 34.3 per cent in rural India and from 54.3 to
34.1 per cent nationally, has in subsequent NSS rounds
up to 1997 (when the incidence was 34.2 per cent national
and 35.8 per cent rural) never gone below the 1989-90
level and has in fact risen to much higher levels in
individual years (Chart 1).
Chart
1 >> Click
to Enlarge
Other estimates (for example, by S. P. Gupta, Member,
Planning Commission, with data up to 1998 and following
the Expert Group method) suggest an even greater increase
in rural poverty during the 1990s. All these estimates
indicate, moreover, that the gap between rural and urban
areas, which had decreased during the 1980s and 1970s,
increased considerably during the 1990's.
This lack of any further progress on the poverty reduction
front is of course a matter of concern, but in the context
of official national income figures pointing to rather
robust growth during the 1990s, it is also a puzzle.
Datt, for example, states that "the 1990s appear
to have been a decade of missed opportunities as far
as poverty reduction is concerned" but notes also
the need for a reconciliation between the pictures thrown
up by the National Sample Survey (NSS) and the National
Account Statistics (NAS).
Other commentators have gone further and questioned
the veracity of the data. Those favouring the liberalisation
process tending to dismiss the NSS consumption data.
In contrast, those opposed to the economic policies
of the 1990s have been sceptical of the large GDP growth
figures being brought out in the NAS by the Central
Statistical Organisation (CSO).
Matters are complicated because the CSO has shifted
midway through the 1990s to a new series of national
income with base year 1993-94 (from the old series with
base year 1980-81). This makes calculations of growth
rates for the 1990s as a whole somewhat difficult. Nonetheless,
national income figures from the old series are available
for the period 1990-91 to 1996-97 and can be extended
to 1997-98 by applying the growth rates reflected in
the data relating to the new series.
On that basis we find that the average annual rate of
growth of GDP between the triennium ending 1990-91 and
the triennium ending 1997-98 stood at 2.41 per cent
in the primary sector, 6.81 per cent in the secondary
sector, 7.07 per cent in the tertiary sector and 5.65
per cent in the case of overall GDP. The corresponding
growth rates for the period extending between trienniums
ending 1980-81 and 1990-91 were 3.51, 6.92, 6.05 and
5.36 respectively. Thus, according to this series, the
rate of overall GDP growth was in fact slightly higher
during the 1990s as compared to the 1980s and, although
there is evidence of some slowdown in agriculture consistent
with an increased gap between urban and rural incomes,
agricultural income growth during the nineties continued
to comfortably outpace rural population growth.
The puzzle is compounded because the new series of national
income, with 1993-94 as base, has not only upped the
GDP estimates but also points to a higher rate of growth
than in the old series for both overall and agricultural
incomes. Thus, the GDP estimate for 1993-94 is about
9 per cent higher according to the new series than the
old, both overall and in agriculture. Also, between
1993-94 and 1997-98, agricultural GDP as per the new
series rose by a total of 14.2 per cent as compared
with 8.37 per cent according to the old series. Total
GDP between these years increased by 31.3 per cent as
per the new series as compared with 30.4 per cent in
the old series, with GDP in the secondary sector rising
by 41.6 per cent in both series and that in the tertiary
sector by 37.4 in the new series against 38.6 per cent
in the old.
In sum, going by the new series, the agricultural sector
has performed much better than suggested by the old
series, widening the lack of correspondence between
the growth of rural incomes and trends in rural poverty.
A priori, any lack of correspondence between trends
in income growth and poverty incidence must be put down
to either increased inequality and/or to a failure of
per capita consumption to rise along with income, whether
because of higher savings or measurement problems. The
World Bank estimates of real per capita consumption
in rural areas from the various NSS rounds are seen
rising sharply between 1972-73 and 1986-87, with a further
spurt in 1989-90, but declining subsequently, with the
trend level having stagnated at best (Chart 2). This
closely tracks the movements (in the opposite direction)
of rural poverty.
Chart
2 >> Click
to Enlarge
Also, urban real per capita consumption continued to
have a rising trend during the 1990s, consistent with
continued fall in urban poverty. From this, and the
fact that rural inequality, as measured by the Gini
coefficients obtained from the NSS distribution of consumer
expenditure, has fluctuated within the range of 27 to
31 per cent throughout, Datt has concluded that poverty
increased during the 1990s not so much because of increased
inequality but because measured rural consumption from
the NSS failed to reflect the income growth in the National
Accounts Statistics (NAS).
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