Poverty and Unemployment

Assessment of the growth experience: Poverty and Unemployment

• Poverty and unemployment are closely related
• High poverty has a multiplier effect on quality of life, deprivation, malnutrition, illiteracy and low human resource development.

Poverty

• Poverty lines
  • Normative nutritional requirement per person per day at some base point.
  • This is debated
  • 2400 cal (rural), 2100 cal (urban)
  • Nutrient requirement then needs to be translated to monetary terms.
• Poverty has declined as per NSSO estimates.
• However, recent committees like the Tendulkar committee have reviewed the methodology of measuring poverty and concluded that poverty levels are much higher than those presented through the NSSO estimates.
• Data on poverty reduction <put>
• Rural-urban and regional disparity
  • Even when poverty has declined there has been a marked disparity in its reduction in rural and urban areas as well as across different regions in the country
  • — states have poverty ratio below the national average
  • Significant reduction in Andhra, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Punjab and WB
  • Most poor states of Bihar, MP, Orissa and UP have shown little progress in poverty reduction
  • Over 54 pc of India’s poor lived in these states in 2004-05
  • These states have more poor than 26 sub-Saharan African countries according to the 2010 HDR
  • North-western states (P, H, HP, J&K) comprise only 2.2 pc of India’s poor. Rural urban disparity is minimal
  • More than half of India’s urban poor live in the states of Maharashtra, MP, UP and TN
  • There is no evidence for convergence in the incidence of poverty across the states of India
  • Coeffcient of variation (CV) of poverty reveals widening inter-state inequalities in poverty reduction. Between 1993-94 and 2004-2005 CV increased from 36 to 54.
• Non-income dimensions of poverty
  • NFHS-3 and District level Household Survey on Reproductive Health
    • 46 pc children under 3 and 49 pc children under 6 malnourished
    • 79 pc children anaemic
    • 59 pc deliveries did not take place in institutional agencies
    • 32 pc have no electricity, 55 no toilet
  • Multidimensional Poverty Index
• Economic Growth and Poverty
  • Necessary for poverty reduction, but not sufficient
  • This is because
    • Poverty is not only income poverty. There are various other unfreedoms. The MDPI captures this well
    • Enabling role of basic education, good health, land reforms, social security
    • The fruits of economic growth may not be automatically utilised to expand basic social services
  • Eliminating deprivation is as much a matter of public action as one merely of economic growth.
  • There has been no significant acceleration in the process of poverty reduction during 1980-2005 despite an acceleration in the growth of per capita GDP
• Since public action is required, schemes such as NREGS and SGSY are important
• Chronic Poverty
  • Higher among rural casual labour households than urban casual labour households
  • Varies significantly across social and occupational groups and is highest for SCs
• Poverty in India vs other developing countries
  • China
    • Poverty in China declined from 53 pc in 1981 to 8 pc in 2001. In the same period India reduced poverty by 17 pc
    • India fares badly even on non-income dimensions of poverty like malnutrition, infant mortality
    • Concerns about equity and disparity remain in China too. India has fared better than China in achieving lower inequality
  • Poverty and Planning/inclusive growth <see poverty notes>
  • Strategy to deal with the problem
    • Recognize that poor are hetrogenous. So strategies need to be specifically designed to deal with chronic poor and other poor
    • Design safety nets
    • Strengthen livelihood and make them more productive

Obsession with economic growth? <Notes from Sen’s article>

• Economic growth helps in advancing living standards and in battling poverty
• Growth, however, should not be taken to be an end in itself
• Sustainable economic growth
• Focus on development
• The good thing about economic growth is that it generates resources for the government to spend according to its priorities

India-China comparision