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Growth and poverty in rural India

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  • Ravallion, Martin
  • Datt, Gaurav

Abstract

Unlike most developing countries, consistent poverty measures for India can be tracked over a long time. The authors used 20 household surveys for rural India for the years 1958-90 to measure the effects of agricultural growth on rural poverty and on the rural labor market and to find out how long it takes for the effects to be felt. They found that measures of absolute rural poverty responded elastically to changes in mean consumption. But agricultural growth had no discernible impact - either positive or negative - on the share of total consumption going to the poor. For the rural poor, the authors attribute the long-run gains from growth to higher average farm yields, which benefited poor people both directly and through higher real agricultural wages. And the benefits from higher yields were not confined to those near the poverty line - the poorest also benefited. The process through which India's rural poor participate in the gains from agricultural growth takes time, although about half of the long-run impact comes within three years. The long-run elasticity of the head-count index to farm yield was over 2 - of which 40 percent came through wages. Short-run elasticities were far smaller. Inflation adversely affected the rural poor by eroding their real wages in the short-run.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1405.

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Date of creation: 31 Jan 1995
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Handle: RePEc:wbk:wbrwps:1405

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Keywords: Public Health Promotion; Environmental Economics&Policies; Poverty ReductionStrategies; Services&Transfers to Poor; Health Monitoring&Evaluation; Environmental Economics&Policies; Achieving Shared Growth; Safety Nets and Transfers; Services&Transfers to Poor; Rural Poverty Reduction;

References

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  1. Villasenor, JoseA. & Arnold, Barry C., 1989. "Elliptical Lorenz curves," Journal of Econometrics, Elsevier, vol. 40(2), pages 327-338, February.
  2. Fields, Gary S, 1989. "Changes in Poverty and Inequality in Developing Countries," World Bank Research Observer, World Bank Group, vol. 4(2), pages 167-85, July.
  3. Sargan, J D, 1980. "Some Tests of Dynamic Specification for a Single Equation," Econometrica, Econometric Society, vol. 48(4), pages 879-97, May.
  4. Amemiya, Takeshi, 1974. "The nonlinear two-stage least-squares estimator," Journal of Econometrics, Elsevier, vol. 2(2), pages 105-110, July.
  5. Griffin, Keith & Ghose, Ajit Kumar, 1979. "Growth and impoverishment in the rural areas of Asia," World Development, Elsevier, vol. 7(4-5), pages 361-383.
  6. Lipton, Michael & Ravallion, Martin, 1993. "Poverty and policy," Policy Research Working Paper Series 1130, The World Bank.
  7. Mukherjee, Anindata & Ray, Debraj, 1991. "Wages and involuntary unemployment in the slack season of a village economy," Journal of Development Economics, Elsevier, vol. 37(1-2), pages 227-264, November.
  8. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  9. Bell, Clive & Rich, Robert, 1994. "Rural Poverty and Aggregate Agricultural Performance in Post-independence India," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 56(2), pages 111-33, May.
  10. Ravaillon, Martin & Datt, Gaurav, 1994. "How important to India's poor is the urban - rural composition of growth?," Policy Research Working Paper Series 1399, The World Bank.
  11. Atkinson, Anthony B, 1991. "Comparing Poverty Rates Internationally: Lessons from Recent Studies in Developed Countries," World Bank Economic Review, World Bank Group, vol. 5(1), pages 3-21, January.
  12. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-31, March.
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Citations

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Cited by:
  1. Neri, Marcelo Cortes, 2006. "Desigualdade, estabilidade e bem-estar social," Economics Working Papers (Ensaios Economicos da EPGE) 637, Graduate School of Economics, Getulio Vargas Foundation (Brazil).
  2. 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 19486, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  3. Ravaillon, Martin & Datt, Gaurav, 1994. "How important to India's poor is the urban - rural composition of growth?," Policy Research Working Paper Series 1399, The World Bank.
  4. Datt, Gaurav & Ravallion, Martin, 1997. "Why have some Indian states performed better than others at reducing rural poverty?," FCND discussion papers 26, International Food Policy Research Institute (IFPRI).
  5. Fan, Shenggen & Hazell, P. B. R., 1997. "Should India invest more in less-favored areas?:," EPTD discussion papers 25, International Food Policy Research Institute (IFPRI).
  6. Basanta K. Pradhan & M.R. Saluja, 1998. "An Assessment of Poverty Studies in India with Special Reference to Economic Reforms," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(4), pages 1081-1102.
  7. Samuel Fambon, 2005. "Croissance économique, pauvreté et inégalité des revenus au Cameroun," Revue d’économie du développement, De Boeck Université, vol. 19(1), pages 91-122.
  8. Neri, Marcelo Cortes, 2008. "Income Polices, Income Distribution, and the Distribution of Opportunities in Brazil," Economics Working Papers (Ensaios Economicos da EPGE) 678, Graduate School of Economics, Getulio Vargas Foundation (Brazil).
  9. Fan, Shenggen & Hazell, P. B. R., 1999. "Are returns to public investment lower in less-favored rural areas?: an empirical analysis of India," EPTD discussion papers 43, International Food Policy Research Institute (IFPRI).
  10. Suryanarayana, M.H., 2002. "Poverty in India: Misspecified Policies and Estimates," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  11. Binswanger, Hans P., 2006. "Empowering Rural People for Their Own Development," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25713, International Association of Agricultural Economists.
  12. Kerr, John M., 1996. "Sustainable development of rainfed agriculture in India:," EPTD discussion papers 20, International Food Policy Research Institute (IFPRI).
  13. Fan, Shenggen & Hazell, P. B. R. & Thorat, Sukhadeo, 1999. "Linkages between government spending, growth, and poverty in rural India:," Research reports 110, International Food Policy Research Institute (IFPRI).
  14. Dubin, H.J. & Brennan, John P., 2009. "Combating stem and leaf rust of wheat: Historical perspective, impacts, and lessons learned," IFPRI discussion papers 910, International Food Policy Research Institute (IFPRI).
  15. Marcelo Côrtes Nerí, 1999. "Assets, Markets and Poverty in Brazil," Research Department Publications 3055, Inter-American Development Bank, Research Department.
  16. Datt, Gaurav, 1998. "Poverty in India and Indian states," FCND discussion papers 47, International Food Policy Research Institute (IFPRI).
  17. Devi, T. Sivasakthi & Balasubramanian, R. & Kumar, B. Ganesh, 2011. "Employment, Income and Labour Supply Decision of Rural Households : An Economic Analysis of MGNREGS in Tamil Nadu," Agricultural Economics Research Review, Agricultural Economics Research Association (India), issue 2011.

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