Kerala 2005 - of Planning Commission

CHAPTER 3
ASSESSING DEVELOPMENT: THE INCOME DIMENSION
49
Table 3.7: Head Count Index
of Poverty in Kerala and India
Year Rural
Kerala
Urban
Kerala
Total
India
1973-74 59.19 62.74 59.79 54.88
1977-78 51.48 55.52 52.22 51.32
1983-84 39.03 45.68 40.42 44.48
1987-88 29.10 40.33 31.79 38.86
1993-94 25.73 24.55 25.43 35.97
1999-00 9.40 19.80 12.72 26.30
Source: Planning Commission, GOI.
Table 3.7 shows that till 1973-74, the incidence of poverty
in Kerala, both rural and urban, was higher compared to
that in the rest of the country. In 1983-84, however, the
relative position of Kerala vis-à-vis India was reversed – the
incidence of poverty in Kerala dropped below the Indian
average. This was possible because both rural and urban
poverty in Kerala declined steadily throughout the last four
decades, and more sharply compared to the decline in the
country as a whole. Following the Planning Commission
methodology, the headcount index for rural Kerala in 1999-
2000 is estimated to be 9.4 per cent and that for urban
Kerala is 19.8. It is well known that the 1999-00 figures are
not strictly comparable with the estimates for earlier periods
because of changes in the survey methodology adopted by
the National Sample Survey Organisation (NSSO). A recent
attempt by Angus Deaton and Jean Dreze 9 to adjust for the
differences and generate consistent estimates of poverty for
1999-00 show that the headcount ratios in rural and urban
Kerala turn out to be 10.0 and 9.6, respectively, (much lower
in urban areas) compared to 26.3 and 12.0 in all-India.
Kerala’s growth pattern in the past decades shows, as
we saw earlier, that the tertiary sector has grown much
faster than the primary and secondary sectors. It can be
argued that the rapid growth of the tertiary sector has been
beneficial to the poor in Kerala. Ravallion and Datt (2002)
find that higher farm yields, higher State development
spending, higher non-farm output and lower inflation all
work towards reducing poverty. Among them, non-farm
output alone is found to have differential elasticity across
Indian States and substantially higher elasticity for Kerala.
Even though there is hardly any rural-urban difference in
the human development indicators, there might be some
connection between urbanisation and reduction in income
poverty through the non-farm income route. In Kerala,
over a period of 40 years, the degree of urbanisation has
increased from 15 per cent to 26 per cent, with the bulk
of the increase having taken place during 1981-1991.
This is also the period when income poverty declined
rapidly. There is a positive correlation between the degree
of urbanisation and the proportion of main workers in the
non-primary sector (Narayana, 2003). The most urbanised
districts have over two-thirds of the main workers in the
non-primary sector and the least urbanised districts have
less than one-fourth in the non-primary sector.
4. Poverty Reduction through
Socio-economic Security
Human insecurity is both cause for, as well as an outcome of,
poverty. This two-way causality – poverty as a cause and effect
of human insecurity and vice versa – renders human life less
fulfilling and debilitating. An attack on poverty, therefore,
is also an effort to end human insecurity and indignity, and
goes a long way in enhancing the basic human development
status of the poor. In this regard, the social security measures
in Kerala assume a great deal of significance. The State
seems to have a better record, relatively speaking, in
providing a range of welfare programmes aiming to enhance
socio-economic security of her people.
It is noteworthy that the Kerala initiatives covered not
only the traditional aspects of labour market interventions,
pensions, etc., but also aimed at providing a certain level
of support to the poorer sections. The latter was done by
institutionalising a public distribution system, with a near
universal coverage, providing free basic education and
health care (which includes anganwadis, where pregnant
and lactating mothers and small children are assisted), and
free mid-day meal scheme up to class VII.
Successive Governments in Kerala have introduced as many
as 35 social security schemes and over 3 per cent of the
State budget is spent on social security measures. 10 Since all
schemes are State initiated, the fiscal burden it imposes has
to be necessarily examined, more so in view of the hard
budget constraints faced by the State Governments vis-à-vis
the Union Government in the Indian context. The ultimate
aim of the social security schemes like pensions and onetime
benefits, in case of contingencies, is to provide security
to the poorer and vulnerable sections of the population in
order to enable them to meet adverse situations, which
cause income loss and depletion of capabilities.
9 Deaton and Dreze (2002).
10 See Economic Review 2003.