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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 >>
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 >>
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). |
