Poverty falls, but inequality worsens

By Anil Padmanabhan
New Delhi

There are two messages, one good, the other, bad, in the latest poverty numbers released by the government.

The good news first. It is obvious that poverty has declined in aggregate terms, both in rural and urban India. At a national level, it has declined by 7.4 percentage points from 37.2% in 2004-05 to 29.8% in 2009-10; rural poverty, over the same period, has declined from 41.8% to 33.8%, and urban poverty from 25.7% to 20.9%. In other words, now only one in three people is officially poor in rural areas; in urban India, the proportion is even better—one in five.

The numbers are consistent with the house listing data released under Census 2011. As reported by Mint on 14 March, the data clearly showed that India was trading up, albeit unevenly.

So, at a national level, we are better off than before. But is that enough? Not when there has been a visible loss in growth momentum. And not when things could become worse if the risks underlying the budget that has just been presented, pan out.

Now for the really bad news: the reduction in poverty is not uniform. Not only are there visible regional disparities, the demographic profile of poverty continues to reflect the stereotypes that have defined Indian polity.

While the bigger states of Bihar, Uttar Pradesh and Madhya Pradesh—also the traditional laggards in terms of growth—have shown some improvement in terms of the number of poor, the latest data also shows that minorities and marginalized community groups such as scheduled castes and scheduled tribes continue to pack the number of poor. And the poorer the state, the more this concentration. In rural Bihar and Chhattisgarh, nearly two out of three people from the scheduled castes and scheduled tribes are poor. In Manipur, Orissa and Uttar Pradesh, the proportion is one in two.

More worrying is the dangerously high incidence of poverty among casual labourers in urban areas. According to Planning Commission data, poverty among casual labourers in urban areas of Bihar is 86%; Assam, 89%; Orissa, 58.8%; Punjab, 56.3%; Uttar Pradesh, 67.6%, and West Bengal, 53.7%.

We already know two things from the employment data released by the National Sample Survey Office (NSSO) last year. One, that the five-year period ended 2009-10, despite being in terms of economic growth the most vibrant phase of independent India, generated virtually little or no employment. (An aside for all those who questioned the NSSO data that highlighted this jobless growth is that consumption data generated by the same office is the basis of the new poverty calculations that show that overall poverty has declined.)

Second, that there has been a marked deterioration in the quality of the workforce; it became predominantly casual in this period. Between 2004-05 and 2009-10, the number of casual workers grew by 21.9 million, while growth in the number of regular workers nearly halved (compared with the period between 1999-2000 and 2004-05) to 5.8 million; the number of the self-employed, dominated by agricultural workers, fell by 25.1 million.

Viewed together, the data would suggest that the have-nots have witnessed a sharp deterioration in the quality of life. The obvious conclusion is that inequality has worsened in India.

In the final analysis, while we should be happy that poverty has declined at the aggregate level, the small picture reveals a deepening divide between the haves and the have-nots. That is certainly cause for worry.

Anil Padmanabhan is a deputy managing editor of Mint and writes on the intersection of politics and economics. Comments are welcome at capitalcalculus@ livemint.com



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