Poverty and Inequality in India: a Reexamination - Princeton University

250.0200.0150.0100.050.0Figure 6: Food Intake for Different Per Capita Income Groups, as a Proportion(Per Cent) of Average Intake (1996-97)0.0Cereals and millets Fats and oils Sugar and Jaggery Milk and milk productsPer capita income groups (Rs/cap/month) less than 90 90-150150-300 300-600 more than 600Source: Calculated from National Nutrition Monitoring Bureau (1999), Table 6.9. The data relate to ruralareas of eight sample states.disparities produces very sharp contrastsin APCE growth between the rural sectorsof the slow-growing states and the urbansectors of the fast-growing states (Table 3).This is further compounded by the accentuationof intra-urban inequality, which isitself quite substantial, bearing in mindthat the change is measured over a shortperiod of six years (Table 5).It might be argued that a temporaryincrease in economic inequality is to beexpected in a liberalising economy, andthat this trend is likely to be short-lived.Proponents of the ‘Kuznets curve’ mayeven expect it to be reversed in due course.However, China’s experience of sharp andsustained increase in economic inequalityover a period of more than 20 years, aftermarket-oriented economic reforms wereinitiated in the late 1970s, does not inspiremuch confidence in this prognosis. 32 It is,in fact, an important pointer to the possibilityof further accentuation of economicdisparities in India in the near future.IVQualifications and ConcernsIV.1 Food ConsumptionThere have been major changes in India’sfood economy in the nineties. The eightieswere a period of healthy growth in agriculturaloutput, food production, and realagricultural wages. During the nineties,however, productivity increases sloweddown in many states. The quantity indexof agricultural production grew at a lame2 per cent per year or so. The growth ofreal agricultural wages slowed down considerably.And cereal production barelykept pace with population growth. 33The virtual stagnation of per capita cerealproduction in the nineties has been accompaniedby a gradual switch from net importsto net exports, and also by a massiveaccumulation of public stocks. Correspondingly,there has been no increase in estimatedper capita ‘net availability’ of cereals(Table 6). If anything, net availabilitydeclined a little, from a peak of about 450grams per person per day in 1990 to 420grams or so at the end of the nineties. Thisis consistent with independent evidence,from National Sample Survey data, of adecline in per capita cereal consumptionin the nineties. Between 1993-94 and 1999-2000, for instance, average cereal consumptionper capita declined from 13.5 kgper month to 12.7 kg per month in ruralareas, and from 10.6 to 10.4 kg per monthin urban areas. 34 This comparison isbased on the ‘uncorrected’ 55th Rounddata, and the ‘true’ decline may be largerstill, given the changes in questionnairedesign (Section I.1).The reduction of cereal consumption inthe nineties may seem inconsistent withthe notion that poverty has declined duringthe same period. Indeed, this pattern hasbeen widely invoked as evidence of ‘impoverishment’in the nineties. If cereal consumptionis declining, how can povertybe declining?It is worth noting, however, that thedecline of cereal consumption is not new.A similar decline took place (according toNational Sample Survey data) during theseventies and eighties, when poverty wascertainly declining. Hanchate and Dyson’s(2000) recent comparison of rural foodconsumption patterns in 1973-74 and1993-94 sheds some useful light on thismatter. As the authors show, during thisperiod per capita cereal consumption inrural areas declined quite sharply on average(from 15.8 to 13.6 kgs per personper month), but rose among the pooresthouseholds. The decline in the average isdriven by reduced consumption among thehigher expenditure groups. 35The average decline is unlikely to bedriven by changes in relative prices;indeed, there has been little change in foodprices, relative to other prices, in the interveningperiod. Instead, this pattern appearsto reflect a substitution away fromcereals to other food items as incomes rise(at least beyond a certain threshold). Theconsumption of ‘superior’ food items suchas vegetables, milk, fruit, fish and meat didrise quite sharply over the same period,across all expenditure groups. Seen in thislight, the decline of average cereal consumptionmay not be a matter of concernper se. Indeed, average cereal consumptionis inversely related to per capita incomeacross countries (e g, it is lower inChina than in India, and even lower in theUnited States), and the same applies acrossstates within India (e g, cereal consumptionis higher in Bihar or Orissa than inPunjab or Haryana).Food intake data collected by the NationalNutrition Monitoring Bureau(NNMB) shed further light on this issue.Aside from detailed information on foodintake, the NNMB surveys include roughestimates of household incomes. These areused in Figure 6 to display the relationbetween per-capita income and food intake,for different types of food. The substitutionfrom cereals towards other fooditems with rising per-capita income emergesquite clearly. 36 This pattern, if confirmed,would fit quite well with the data on changeover time. 37 It also implies that the declineof average cereal consumption in the ninetiesis not inconsistent with our earlierfindings on poverty decline. 38IV.2 Localised Impoverishmentand Hidden CostsThe overall decline of poverty in thenineties does not rule out the possibilityof impoverishment among specific regionsor social groups. That possibility, of course,is not new, but it is worth asking whetherEconomic and Political Weekly September 7, 2002 3741