In this paper we examine the incidence of poverty and inequality across different States and socio-economic groups in order to get a spatial picture of welfare distribution in India. Our welfare indicator is the money-metric measure of utility represented by the equivalent expenditure incorporating substitution effects due to price changes. The indicator was derived by estimating separate demand systems for rural and urban using NSS 55 data. This in turn allowed us to compute different poverty and inequality measures based on these equivalent expenditures and carry out our comparative analysis. We calculated these measures for the major States of India, for different religious groups, according to household type (the type of activity) and according to some social criteria like the level of education of the household head and the type of family structure, separately for both the urban and rural sectors. Results are analysed in detail bringing out interesting features, comparisons and interpretations accompanied by plausible explanations. Further it is also shown that ignoring substitution effects and simply using deflated expenditures may not only alter the estimates of poverty and inequality but also the relative performances across regions and groups.
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Angus Deaton & Alessandro Tarozzi, 2000.
"Prices and poverty in India,"
Working Papers
213, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
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Lewbel, Arthur, 1990.
"Full Rank Demand Systems,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(2), pages 289-300, May.
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