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Macroeconomic crises and poverty monitoring : a case study for India

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  • Datt, Gaurav
  • Ravallion, Martin

Abstract

This case study for India finds an explanation for the drop in average household consumption in rural areas occurring in the year after the 1991 stabilization program instigated to deal with a macroeconomic crisis. A number of factors contributed to falling average living standards, including inflation, a drop in agricultural yields, and contraction in the non-farm sector. The same factors resulted in high poverty measures, although there was also a sizable unexplained shift in distribution. Despite their having an unusually rich data base, the authors nevertheless are unable to account for a large share of the increase in measured poverty, and cannot rule out the possibility that it was the result of sampling and non-sampling errors. Only about one-tenth of the measured increase in poverty is explicable in terms of the variables that would be expected to transmit shocks to the household level. Soon after, the poverty measures returned to their previous level. The study cautions users of survey-based welfare indicators not to read too much into a single survey, particularly when (as here) its results are difficult to explain in terms of other data on hand. However, the usefulness of objective socioeconomic survey data for longer-term poverty monitoring should not be thrown into doubt by these results.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1685.

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Date of creation: 30 Nov 1996
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Handle: RePEc:wbk:wbrwps:1685

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Keywords: Poverty Monitoring&Analysis; Environmental Economics&Policies; Poverty Reduction Strategies; Services&Transfers to Poor; Health Economics&Finance; Poverty Assessment; Services&Transfers to Poor; Safety Nets and Transfers; Rural Poverty Reduction; Environmental Economics&Policies;

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  1. Datt, Gaurav & Ravallion, Martin, 1996. "Why have some Indian states done better than others at reducing rural poverty?," Policy Research Working Paper Series 1594, The World Bank.
  2. Lipton, Michael & Ravallion, Martin, 1995. "Poverty and policy," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 41, pages 2551-2657 Elsevier.
  3. Ravallion, Martin & Datt, Gaurav, 1996. "How Important to India's Poor Is the Sectoral Composition of Economic Growth?," World Bank Economic Review, World Bank Group, vol. 10(1), pages 1-25, January.
  4. Martin Ravallion & Gaurav Datt, 1995. "Is Targeting Through a Work Requirement Efficient? Some Evidence for Rural India," Development Research Unit Working Paper Series archive-41, Monash University, Department of Economics.
  5. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
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Citations

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Cited by:
  1. Gaurav Datt & Martin Ravallion, 1998. "Farm productivity and rural poverty in India," Journal of Development Studies, Taylor & Francis Journals, vol. 34(4), pages 62-85.
  2. Raghbendra Jha, 2002. "Rural Poverty in India: Structure, determinants and suggestions for policy reform," ASARC Working Papers 2002-07, The Australian National University, Australia South Asia Research Centre.
  3. Quibria, M.G., 2002. "Growth and Poverty: Lessons from the East Asian Miracle Revisited," MPRA Paper 2638, University Library of Munich, Germany.
  4. T. Krishna Kumar & Sushanta Mallick & Jayarama Holla, 2007. "Estimating Consumption Deprivation in India using Survey Data: A State-Level Rural-Urban Analysis before and during Reform Period," Working Papers 7, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
  5. Sudip Ranjan Basu, 2005. "Economic Growth, Well-Being and Governance under Economic Reforms: Evidence from Indian States," Development and Comp Systems 0509007, EconWPA.
  6. Gerald Epstein & Ilene Grabel, 2007. "Financial Policy," Publications 3, International Policy Centre for Inclusive Growth.
  7. Raghbendra Jha, 2006. "Vulnerability of Consumption Growth in Rural India," ASARC Working Papers 2006-04, The Australian National University, Australia South Asia Research Centre.
  8. Hazell, Peter B. R. & Haddad, Lawrence James, 2001. "Agricultural research and poverty reduction," 2020 vision briefs 70, International Food Policy Research Institute (IFPRI).
  9. Ravallion, Martin & Datt, Gaurav, 2002. "Why has economic growth been more pro-poor in some states of India than others?," Journal of Development Economics, Elsevier, vol. 68(2), pages 381-400, August.
  10. Datt, Gaurav, 1998. "Poverty in India and Indian states," FCND discussion papers 47, International Food Policy Research Institute (IFPRI).
  11. Jha,R., 2000. "Reducing Poverty and Inequality in India: Has Liberalization Helped?," Research Paper 204, World Institute for Development Economics Research.
  12. World Bank, 2007. "Ethiopia - Accelerating Equitable Growth : Country Economic Memorandum, Part 2. Thematic Chapters," World Bank Other Operational Studies 7866, The World Bank.
  13. Bhaumik, Sumon K. & Chakrabarty, Manisha, 2006. "Earnings Inequality in India: Has the Rise of Caste and Religion Based Politics in India Had an Impact?," IZA Discussion Papers 2008, Institute for the Study of Labor (IZA).
  14. Surajit Deb, 2002. "The Debate on Agriculture-Industry Terms of Trade in India," Working papers 109, Centre for Development Economics, Delhi School of Economics.
  15. Gutner, Tammi, 1999. "The political economy of Food subsidy reform in Egypt," FCND briefs 1, International Food Policy Research Institute (IFPRI).

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