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How important to India's poor is the urban - rural composition of growth?

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  • Ravaillon, Martin
  • Datt, Gaurav

Abstract

Views differ on how much India's poor have shared in the growth and contraction in the country's average standard of living since independence. Some have argued that the rural growth that accompanied the green revolution in the 1970s and 1980s brought few gains to the poor in the rural sector, while others have viewed agricultural growth as the key to rural poverty reduction. Views have also differed on how much urban growth has benefited the poor. The authors used 33 household surveys spanning 1951-1991 to examine the relative importance to India's poor of both urban and rural consumption growth. Among other things, they tested for spillover effects between sectors: does urban growth have the same effects on the rural distribution of consumption as rural growth has on urban distribution? Urban growth reduced poverty, but adverse distribution effects within the urban sector reduced the gains to the urban poor, and urban growth had no significant effect on rural distribution. Rural growth was distribution-neutral within the rural sector and so brought sizable absolute gains to the rural poor. Rural growth also had pro-poor distributional effects on urban poverty. Identifying the nature of these intra- and inter-sectoral effects reinforces the importance of rural growth to national poverty reduction. Future progress in fighting poverty in India will depend on both the rate of rural economic growth and the country's success in switching to a more pro-poor process of growth.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1399.

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Date of creation: 31 Dec 1994
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Handle: RePEc:wbk:wbrwps:1399

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Keywords: Achieving Shared Growth; Poverty Assessment; Rural Poverty Reduction; Services&Transfers to Poor; Safety Nets and Transfers;

References

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  1. Cochrane, John H, 1994. "Permanent and Transitory Components of GNP and Stock Prices," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 109(1), pages 241-65, February.
  2. Ravallion, Martin & Huppi, Monika, 1991. "Measuring Changes in Poverty: A Methodological Case Study of Indonesia during an Adjustment Period," World Bank Economic Review, World Bank Group, World Bank Group, vol. 5(1), pages 57-82, January.
  3. Anand, Sudhir & Kanbur, S M R, 1985. "Poverty under the Kuznets Process," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 95(380a), pages 42-50, Supplemen.
  4. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, Econometric Society, vol. 52(3), pages 761-66, May.
  5. Ravallion, Martin & Datt, Gaurav, 1995. "Growth and poverty in rural India," Policy Research Working Paper Series 1405, The World Bank.
  6. Sudhir Anand & Martin Ravallion, 1993. "Human Development in Poor Countries: On the Role of Private Incomes and Public Services," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 7(1), pages 133-150, Winter.
  7. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, Econometric Society, vol. 44(2), pages 219-31, March.
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Cited by:
  1. Kerr, John M., 1996. "Sustainable development of rainfed agriculture in India:," EPTD discussion papers, International Food Policy Research Institute (IFPRI) 20, International Food Policy Research Institute (IFPRI).
  2. Andrew McKay & Sarmistha Pal, 2004. "Relationships between Household Consumption and Inequality in the Indian States," Journal of Development Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 40(5), pages 65-90.
  3. Umali-Deininger, Dina & Sur, Mona & Deininger, Klaus W., 2005. "Foodgrain Subsidies in India: Are they Reaching the Poor?," 2005 Annual meeting, July 24-27, Providence, RI, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 19486, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Mariapia Mendola, 2003. "Agricultural Technology and Povertry Reduction: A Micro-Level Analysis of Causal Effects," Development Working Papers, Centro Studi Luca d\'Agliano, University of Milano 179, Centro Studi Luca d\'Agliano, University of Milano.
  5. Mendola, Mariapia, 2007. "Agricultural technology adoption and poverty reduction: A propensity-score matching analysis for rural Bangladesh," Food Policy, Elsevier, Elsevier, vol. 32(3), pages 372-393, June.
  6. World Bank, 2001. "India - Improving Household Food and Nutrition Security : Achievements and the Challenges Ahead, Volume 1. Main Report," World Bank Other Operational Studies 15516, The World Bank.
  7. Ravallion, Martin & Datt, Gaurav, 1995. "Growth and poverty in rural India," Policy Research Working Paper Series 1405, The World Bank.
  8. Suryanarayana, M.H., 2002. "Poverty in India: Misspecified Policies and Estimates," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).

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