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The Impact of Trade Liberalization on Household Welfare and Poverty in India

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  • Basanta K. Pradhan
  • Sahoo Amarendra
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    Abstract

    A 28-sector, 3-factor and 9-household group Computable General Equilibrium (CGE) model for India is constructed to analyze the impacts of Tariffs and Non-tariff Barriers (NTBs) on the welfare and poverty of socio-economic household groups. A general cut in tariffs leads to a decrease in overall welfare and reduction in poverty, which urban households are in a relatively better position to address. The choice of a fiscal compensatory mechanism with indirect tax on domestic consumption does not substantially change the pattern of impact except that it increases overall poverty in the economy. On the other hand, quota reductions on agriculture and food products result in a gain in welfare and a bigger reduction of poverty, with rural households doing better than urban households.

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    Bibliographic Info

    Paper provided by PEP-MPIA in its series Working Papers MPIA with number 2006-01.

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    Date of creation: 2006
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    Handle: RePEc:lvl:mpiacr:2006-01

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    Related research

    Keywords: Computable general equilibrium (CGE) model; microsimulations; International trade; poverty; India;

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    Cited by:
    1. John Gilbert, 2008. "Trade Policy, Poverty, and Income Distribution in CGE Models: An Application to SAFTA," Working Papers 200802, Utah State University, Department of Economics and Finance.
    2. John Gilbert, 2009. "Agricultural Trade Reform Under Doha and Poverty in India," Working Papers 200903, Utah State University, Department of Economics and Finance, revised 28 Jun 2009.
    3. John Gilbert & Nilanjan Banik, 2010. "Socioeconomic Impacts of Cross- Border Transport Infrastructure Development in South Asia," Development Economics Working Papers 21803, East Asian Bureau of Economic Research.
    4. John Gilbert, 2008. "BIMSTEC-Japan Trade Cooperation and Poverty in Asia," Working Papers 200803, Utah State University, Department of Economics and Finance.

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