Poverty and Inequality in India: a Reexamination - Princeton University

points with the official HCR estimates, wewould get a series in which poverty rosebetween 1993-94 and 1994-95, fell from1994-95 to the end of 1997, rose verysharply in the first half of 1998, and thenfell with extraordinary rapidity in 1999-2000. As we have seen, the official estimatefor 1999-2000 is too low, and the lastthin round, the 54th Round, ran for onlythe first six months of 1998, and maytherefore not be fully comparable withother rounds. Even so, and with due allowancefor corrections, it is very hard tointegrate the poverty estimates based onthe thin rounds with the picture that emergesfrom the thick rounds as well as from othersources surveyed in this paper.The story is further complicated by thefact that these thin rounds were run in twoversions, one of which resembled thestandard questionnaire up to and includingthe 50th Round, and one of which – theexperimental questionnaire – had differentreporting periods for different goods.Headcount ratios based on the experimentalquestionnaire (not shown in Figure 1)are lower than those from the standardquestionnaire, because the experimentalquestionnaire generated higher reports ofper capita expenditure. However, they alsoshow rising HCRs from the 52nd throughthe 54th Rounds, and the increase continuesinto the 55th Round if we use comparablereporting periods from that round.Based on the experimental questionnaire,a case could be made that the all-IndiaHCR has been rising since 1995-96 [Sen2000]. As we have seen, there are goodgrounds for distrusting the experimentalquestionnaire in the 55th Round, becauseof the juxtaposition of the seven-day recalland 30-day recall data for food-pan andtobacco. Quite likely, the ‘reconciliationeffect’ (see Section I.1) pulled down theestimates of per capita expenditure fromthe experimental questionnaire, thus exaggeratingpoverty by this count. Even so,if poverty were genuinely falling, there isno obvious explanation why the experimentalquestionnaire should show a risein poverty from 1995 through 1998.The Planning Commission has neverendorsed poverty counts from the thinrounds. In part, this has been because ofthe smaller sample sizes. The PlanningCommission needs estimates of HCRs, notjust for all-India, but for individual states,and the thin rounds are not large enough tosupport accurate estimates for some of thesmaller (of the major) states. But inadequatesample size generates variance,not bias, and in any case, the thin roundsample sizes are perfectly adequate togenerate accurate estimates for the all-India HCRs. The discrepancies in Figure 1cannot be explained by inadequatesample sizes.There are other differences between thickand thin rounds. For example, the samplingframe for the 51st, 53rd, and 54thRounds was not the census of population,but the ‘economic’ census. In the populationcensus, each household is asked ifit has a family business or enterprise, andonly such households are included in thefirst-stage sampling from the economiccensus when ‘first-stage units’ are drawnwith probability proportional to size. Thismeans that a village with few or no suchhouseholds has only a small or no chanceof being selected as a first-stage unit. Evenso, when the team reaches the village, allhouseholds are listed and have a chanceof being in the sample, so it is unclear thatthis choice of frame makes much difference.Indeed, comparison of various socioeconomicindicators (e g, literacy rates,years of schooling, landholding, or familysize) from the surveys suggests no obviousbreaks between the 51st and 53rd Roundson the one hand, and the 52nd Round(which used the population census) on theother. Conversations with NSS and PlanningCommission staff sometimes suggestthat there may be other (non-documented)differences in the sampling structure of thethin rounds. Certainly, a tabulation of thepopulation sizes of the first-stage unitsshows that the 52nd Round containedrelatively few large units compared withthe 51st, 53rd, 54th, and 55th rounds; thisis a different issue from the use of theeconomic rather than population census(both the 52nd and 55th Rounds use thelatter), and the finding suggests that thefirst-stage units in the 52nd Round wereselected differently from other rounds insome way that is not documented. Moreover,the measurement of consumption isnot the main purpose of any of these thinrounds, all of which have some otherobjective, so it is possible that consumptionis not so fully or carefully collectedas in the quinquennial rounds.In short, there are grounds for scepticismabout the validity of the thin rounds forpoverty estimation purposes, and this is allthe more so if we remember that aside fromindicating no poverty decline in the latenineties, the thin rounds also suggest thataverage per capita expenditure was stagnatingduring that period – something thatis very hard to reconcile with other evidence.Having said this, we have not beenable to identify any ‘smoking gun’ thatwould point to a specific problem with anyof these rounds and explain their apparentlyanomalous poverty estimates. Untilthat puzzle is resolved, we see the evidencefrom the thin rounds as casting a shadowof doubt over the interpretation of thepoverty estimates presented earlier in thispaper. Perhaps the thin rounds in the nextfive years will offer some useful clues.VBeyond Poverty IndexesThe decline of poverty in the nineties,as captured in the indicators examined sofar, can be seen as an example of continuedprogress during that period. Whether therate of progress has been faster or slowerthan in the eighties is difficult to say, andthe answer is likely to depend on how therate of progress is measured. There is, atany rate, no obvious pattern of “acceleration”or ‘slowdown’ in this respect.It is important to supplement the evidencereviewed so far, which essentiallyrelates to purchasing power, with otherindicators of well-being relating, for instanceto educational achievements, lifeexpectancy, nutritional levels, crime rates,and various aspects of social inequality.This broader perspective reveals that socialprogress in the nineties has followedvery diverse patterns, ranging from acceleratedprogress in some fields to slowdownand even regression in other respects.The point is illustrated in Figure 7,where simple measures of the progress ofdifferent social indicators in the ninetiesare compared with the correspondingachievements in the eighties.Elementary education provides an interestingexample of accelerated progress inthe nineties. 46 This trend is evident notonly from census data on literacy rates, butalso from National Family Health Surveydata on school participation. To illustrate,school participation among girls aged 6-14jumped from 59 per cent to 74 per centbetween 1992-93 and 1998-99. 47 The regionalpatterns are also instructive. It isparticularly interesting to note evidence ofrapid progress in Madhya Pradesh andRajasthan, demarcating them clearly fromBihar and Uttar Pradesh, the other twomembers of the so-called BIMARU set. 48There is an important pointer here to therelation between public action and socialachievements. Indeed, Madhya PradeshEconomic and Political Weekly September 7, 2002 3743