Issue1. Vol.1 (April, 2013) - IIT Mandi

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ESSENT Society for Collaborative Research and Innovation, IIT Mandi12G(Y ) = 1 + −× 6294820234.6 2(234.6) 284.13= 19.92%The value of the Gini-coefficient of the incomedistribution of all household (i.e., 0.3691) ifcompared to the value of Gini-coefficient of theincome distribution among the poor (i.e.,0.1992) clearly indicates that the inequality ofincome is higher in the former case as comparedto the later because in the former casecomparatively the value of Gini-coefficient ishigher which shows relatively more skewedincome distribution. The income of the poorestamong the poor is low due to their small size ofholding, higher the dependency ratio and lack ofregular non-form employment opportunities.The value of Gini-coefficient for theconsumer expenditure distribution on fooditems by all households has been worked outas follows:1 2 nG ( c)= 1 + − ∑ ( n + 1 − i)cin2n z i = 1G(c) = Gini-coefficient of the consumerexpenditure on food items by all householdsn= total consumer units (1448.5), z= meanconsumption expenditure (394.94)ci= consumer expenditure on food items by thenith consumer unit , ∑ ( n + 1 − i)ci = 337679020 ,i = 1Thus12G(c)= 1 + −(337679020)1448.5 2(1448.5) × 394.94= 18.57%The value of Gini-coefficient for theconsumer expenditure distribution on fooditems by poor households has been workedout as follows:1 2 qG ( c)= 1 + − ∑ ( q + 1 − i)ciq2q z i = 1G(c) = Gini-coefficient of the consumerexpenditure on food items by poor householdsq= number of poor consumer units (666.2), z =mean consumption of the poor (281.83)ci = consumer expenditure on food items by thei th poor consumer unit,q∑ ( q + 1 − i)ci = 54508260 , thusi = 112G(c)= 1 + −(54508260)666.2 2(666.2) 281.83= 12.99%The value of Gini-coefficient of the consumerexpenditure on food items of all households (i.e.0.1857) if compared to the value of Ginicoefficientof the income distribution among thepoor (i.e. 0.1299) also clearly shows that theinequality of consumer expenditure on fooditems is higher in the former case as capered tothe later. But when the value of Gini-coefficientof income distribution (among all and poor also)is compared to the value of Gini-coefficient ofthe consumer expenditure on food items (by alland poor households), it shows that the value ofGini-coefficient is higher in the former case ascompared to the later mainly due to the reasonthat food being the bare necessity of life,requires a minimum amount of income to bespent on it.Distribution of monthly consumerexpenditure on food and non-food itemsThe percentage expenditure on food and nonfooditems shows that the poor householdsspend most of their income on food items and avery little is left for meeting out the non-foodrequirements where as the ‘not poor’ householdspend comparatively less on food items andproportionately higher amount on non-fooditems.The value of Gini-coefficient for thedistribution of consumer expenditure on food& non-food items by all households has beencalculated as follows:1 2 nG ( c)= 1 + − ∑ ( n + 1 − i)ci , Wheren2n z i = 174 ESSENT|Issue1|Vol1
ESSENT Society for Collaborative Research and Innovation, IIT MandiG(c) = Gini- coefficient of the consumerexpenditure on food and non-food items by allhouseholdsn= total consumer units (1448.5), z= meanconsumer expenditure on food and non-fooditems by all households (526.43), ci= consumerexpenditure on food and non-food items by thei th nconsumer units, ∑ ( n + 1 − i)ci = 442943840 ,i = 1thus12G(c)= 1 + −(442943840)1448.5 2(1448.5) 526.43= 19.87%The value of Gini-coefficient for thedistribution of consumer expenditure on food& non-food items by poor households hasbeen calculated as follows:1 2 qG ( c ) = 1 + − ∑ ( q + 1 − i ) ciq2q z i = 1G(c) = Gini- coefficient of the consumerexpenditure on food and non-food items by poorhouseholdsq = number of poor consumer units (461.9), z =mean consumer expenditure of poor householdsq(326.66), ∑ ( q + 1 − i)ci = 31142028i = 1G ( c ) = 1 += 10 .85 %1461 .91.0022 − 0.8937 =−2( 461 .9)0.108522326 .66(31142028The value of Gini-coefficient for consumerexpenditure on food and non-food items by allhouseholds has been worked out to be 0.1987which is higher to the value of Gini-coefficientof the consumer expenditure by all householdson food items (i.e. 0.1857). Thus, the values ofGini- coefficient in both the cases furthersupport the hypothesis that, as the income of thepeople increases percentage expenditure on nonfooditems increases proportionately at a higher)rate as compared to the percentage expenditureon food items. That is why in the present studytoo, the degree of inequality in the consumerexpenditure is higher when the food and nonfooditems have been taken together than thedegree of inequality when consumerexpenditure on food items alone has been takeninto consideration Gini-coefficient is moreopaque since it measures the distance betweenthe diagonal “line of equal distribution” and theLorenz Curve. Unlike in Lorenz comparisons,the Gini-coefficient comparisons are alwaysconclusive, since one real number must begreater than, equal to or less than another. Theresult of poverty based on these measuresprovides a scope for policy being concernedwith the relatively richer among the poor,ignoring the poorest among the poor.Concluding RemarksThe consumption pattern in rural area variesfrom place to place and from one region to othertherefore present study is based on the day today information on consumption expenditurethroughout the full agricultural year. Further theresults of the present study clearly indicate thatthere exist a lot of variations in the poverty andincome inequality among the samplehouseholds. Income inequality is higher amongall households as compared to poor householdsand the income of the poorest among the poor isvery low mainly due to their small size ofholding, higher level of dependency and lack ofregular farm and non-farm employment. In thestudy area there is a great scope for providingincome and employment generatingopportunities by developing horticulturalactivities, development of cottage and smallscale industries, art and craft industries such aswool based industries, bamboo based industries,leather processing units, rope making, saw millsetc. But it is also observed that economicgrowth by itself does not lead to thecontainment of poverty. Along with economicgrowth some favorable legal and politicalinstitutions are needed for the containment andreduction of poverty.75 ESSENT|Issue1|Vol1
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Issue1. Vol.1 (April, 2013) - IIT Mandi

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