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Vulnerability of Consumption Growth in Rural India

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  • Raghbendra Jha

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Abstract

The fragility of livelihoods and hence the vulnerability of consumption growth due to aggregate shocks in the Indian rural sector have been highlighted recently. However, as yet there exist no estimates of the vulnerability of consumption growth in rural India. This paper attempts to fill this lacuna by providing certainty equivalent growth of consumption in 14 major states of India over the period 1958-1997, corresponding to NSS Rounds 13th to 53rd. The extant debates around poverty-growth elasticities are premised on the assumption of a state of world without any risks and uncertainties. In the real world in which the poor actually live they are subject to risks - both general and idiosyncratic - which affect their welfare. Thus poverty should not be viewed in static terms but within a framework that allows for changing states of the world. This paper shows that certainty equivalent consumption growth in rural India has been much lower than average real per capita consumption growth - indeed, in some cases, it has been negative. This points to the poor performance of consumer-perceived average welfare in India's rural sector and should be a matter of urgent policy concern.

Suggested Citation

  • Raghbendra Jha, 2006. "Vulnerability of Consumption Growth in Rural India," ASARC Working Papers 2006-04, The Australian National University, Australia South Asia Research Centre.
  • Handle: RePEc:pas:asarcc:2006-04
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    File URL: https://crawford.anu.edu.au/acde/asarc/pdf/papers/2006/WP2006_04.pdf
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    References listed on IDEAS

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    1. Auffret, Philippe, 2003. "High consumption volatility : the impact of natural disasters?," Policy Research Working Paper Series 2962, The World Bank.
    2. Raghav Gaiha & Katsushi Imai, 2004. "Vulnerability, shocks and persistence of poverty: estimates for semi-arid rural South India," Oxford Development Studies, Taylor & Francis Journals, vol. 32(2), pages 261-281.
    3. Ethan Ligon & Laura Schechter, 2003. "Measuring Vulnerability," Economic Journal, Royal Economic Society, vol. 113(486), pages 95-102, March.
    4. Gaurav Datt & Martin Ravallion, 2002. "Is India's Economic Growth Leaving the Poor Behind?," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 89-108, Summer.
    5. Datt, Gaurav & Ravallion, Martin, 1997. "Macroeconomic Crises and Poverty Monitoring: A Case Study for India," Review of Development Economics, Wiley Blackwell, vol. 1(2), pages 135-152, June.
    6. Hoddinott, John & Quisumbing, Agnes, 2003. "Methods for microeconometric risk and vulnerability assessments," Social Protection and Labor Policy and Technical Notes 29138, The World Bank.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    India; Consumption Volatility; National Sample Survey; Certainty Equivalent Consumption;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • D69 - Microeconomics - - Welfare Economics - - - Other
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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