Spatial and Social Inequalities in Human Development: India in the ...

Graph 9: Persons below the poverty line(in percentage)A part of the explanation could be that with growth, the increase in inequality has been sharperin urban areas compared to the rural areas, giving modest results in the former, in terms ofpoverty reduction. More importantly, it is now well recognised that the methodology adoptedby the Planning Commission was grossly underestimating rural poverty. The methodology hasbeen criticized for not taking into account social consumption i.e. education and healthexplicitly in calculating the poverty line. It can be argued that the state sector played a majorrole in the provision of these social services particularly in rural areas in the base year of 1972-73, for which the poverty line was worked out initially, there has been withdrawal of publicagencies over the past three decades. As a consequence, the proportion of education andmedical care expenditure in household’s consumption basket has increased significantly.Assuming implicitly that the basket in urban areas included all items of consumption includingsuch items like education and health-care, the Expert Group headed by Tendulkar (PlanningCommission 2009) recommend this basket for adoption in rural areas as well. Further, incomputing relative price indices, health and educational expenditures are to be taken intoaccount, which was never done before. These changes resulted in significant upward revision ofpoverty figure in rural areas from 29 per cent to 41.8 while urban poverty was taken to remainfixed at 27.8 per cent, suggesting a gap of 14 percentage points between the two povertyfigures, as shown by the dotted lines in Graph 9.Poverty studies focussing on spatially disaggregated scenario indicate that inequality in povertyacross states and districts has gone up both in rural and urban areas (Kundu and Mohanan2009). One would, therefore, argue that poverty reduction has been relatively less in lessdeveloped states such as Bihar, Uttar Pradesh and Jharkhand than in developed states likeKarnataka, Maharashtra and Tamil Nadu, reporting more modest growth in consumptionexpenditure compared to developed states, both in rural and urban areas. As a result, povertyhas got concentrated in the most backward states and within that in remote regions that are17