POVERTY REDUCTION STRATEGY TN

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a. Macro Drivers The key to sustained poverty reduction is growth, particularly if it is accompanied by a high ‘elasticity of connection’ of people to the growth processes. Effective participation of the poor in the growth processes requires that the changing structure of the economy as a result of growth has to be taken into account. In the case of Tamil Nadu, the dynamics of growth is such that the share of services sector will grow as a result of the differentials in agricultural and non-agricultural growth rates. The growing demand for skilled and educated people in the services sector should be accompanied with a substantial increase in expenditure on education and skill training. At the same time, adequate investment in agriculture will ensure higher productivity for farmers who will continue to be linked with agriculture. While a state government has limited control on inflation, which is determined more by national level forces and policies, the state government can at least protect the poor through insurance or similar policy interventions in periods of high inflation or economic slowdown. It is desirable for Tamil Nadu to aim at a growth rate that is at least 0.5 to 1.0 percentage points higher than the National Gross Domestic Product (GDP) growth rate on a sustained basis. If the real GDP growth rate is likely to average at about 9 percent (leaving out the current slowdown phase), the Tamil Nadu GSDP should aim to grow at 9.5 to 10.0 percent per annum in the medium term. Given Tamil Nadu’s relatively lower growth of population, this could translate into higher growth in per capita incomes of about 1.5 to 2.5 percentages to the average for India. This will require attracting considerable investment from the rest of India and abroad. These trends will lead to a reduction in rural poverty both by reduction of the head count ratio in rural areas, and migration of some poor to the urban areas. b. Augmented Fiscal Space The medium term management of government finances should be such as to create additional fiscal space for undertaking higher expenditures on all aspects of MDGs-based poverty reduction, viz., income poverty, health, education, and gender related issues. It is possible that additional fiscal space for undertaking higher primary expenditures relative to GSDP can be created, comparing the 2007-08 RE and 2014-15 projections. Of this, nearly one percentage point of GSDP can come from the revenue side and about 0.3 percent of GSDP from lower interest payments. It is shown that primary (non-interest) expenditure, considering revenue and capital expenditure together, can grow from 16.5 percent of GSDP in 2007-08 RE to about 18.9 percent in 2014-15. Table 7.1 summarises the potential of creating additional fiscal space and resultant restructuring of expenditures. 168
Table 7.1: Adjustment during 2007-08 and 2014-15 Projection (Percent to GSDP) Fiscal Indicators 2007-08 2014-15 2014-15 minus 2007-08 RE Own Tax Revenues 10.11 10.95 0.84 Total Revenue Receipts 16.08 17.06 0.98 Interest Payments 2.13 1.84 -0.29 Pensions 2.32 1.76 -0.56 Education 2.56 4.93 2.37 Medical and Public health 0.66 1.27 0.61 Other Social Services 2.63 2.00 -0.63 Total Social Services 5.85 8.20 2.35 Economic Services 2.72 2.47 -0.25 Total Revenue Expenditure 15.77 16.33 0.56 Revenue Surplus 0.32 0.73 0.41 Fiscal Deficit 2.56 3.00 0.44 Primary Deficit 0.44 1.16 0.73 Capital Expenditure 2.88 4.38 1.50 Total Expenditure 18.65 20.71 2.06 Primary Expenditure 16.52 18.87 2.35 Outstanding Liabilities 22.73 22.36 -0.38 Source: As in Table 3.7. c. Structuring Government Expenditure towards MDGs It has been indicated in this study that it is feasible to substantially increase allocations to health and education as well as capital outlay in Tamil Nadu, in the period from 2008-09 to 2014-15. In particular, based on a set of assumptions, expenditure on education can be increased from about 2.6 percent of GSDP in 2007-08 RE to close to 5 percent of GSDP by 2014-15. In the case of health (Medical and Public Health and Family Welfare), expenditure can be raised from 0.66 percent of GSDP in 2007-08 to 1.27 percent, implying a near doubling of the share relative to GSDP. Capital expenditure (net of repayments) can and should be raised from 2.9 percent of GSDP to 4.6 percent during the same period. In contrast, the expenditure on interest payments and to some extent pensions would be reduced. There would also be reduction relative to GSDP in some general and economic services. d. Targeting With the availability of additional fiscal space, the next step is to allocate it in a manner that MDGs based poverty reduction is effectively achieved. We suggest a four-tier 169
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MONOGRAPH 6/2010 MDGs-BASED POVERTY
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MONOGRAPH 6/2010 March 2010 Price:
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CONTENTS Acknowledgements Contents
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List of Tables Table 1.1 Millennium
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Table 5.10 Status of Urban Water Su
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Appendix 1.12 Maternal Mortality an
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MDGs-Based Poverty Reduction: Main
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. In terms of share of below povert
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of expenditure on public goods like
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households or individuals. For each
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Chapter 1 ISSUES AND INITIAL CONDIT
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The first three goals relate to era
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. Poverty in Tamil Nadu: Inter-stat
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and the urban poverty ratio was sli
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the total poor accounted for a prog
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physical development of people. Mor
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Table 1.11: Millennium Development
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indicates that Tamil Nadu will achi
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However, there is a scope for meeti
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status of malnutrition. The accepte
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The under-five mortality rate-U5MR
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(iv) HIV/AIDS, Malaria and Other Di
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3. While Tami Nadu has done compara
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Chapter 2 REDUCING POVERTY: THE MAC
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est of the economy indicates the ex
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share of the tertiary sector in Tam
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Chart 2.1: Sectoral Growth in Tamil
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policies are in place to absorb lar
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In the context of interface between
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Table 2.7: Decomposition of the Hea
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Dutt are not so relevant for predic
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The SDE estimates vary across the s
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Chart 2.3 highlights that agricultu
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2.6 Summary In summary the followin
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Chapter 3 FISCAL REFORMS FOR POVERT
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Bardhan (1996) emphasizes that ofte
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atio of government employees to pop
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Table 3.2: Tamil Nadu in Inter-stat
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Chart 3.4: Own Tax Revenues Relativ
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collected by state-owned enterprise
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Chart 3.5: Capital Outlay as percen
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The Fiscal Policy Strategy Statemen
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f. Pension and Salary Expenditures
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10 it is kept at 40 percent to acco
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Government of Tamil Nadu has to sub
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Chapter 4 COPING WITH SPATIAL IMBAL
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In order to focus on the deficient
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Chart 4.2 indicates the arrangement
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Chart 4.5: Human Development Index:
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Table 4.4: Index of Gender Deficien
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Districts Table 4.7: Health Facilit
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Regarding access costs in availing
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4.6 Incidence of Poverty: District
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district followed by Villupuram and
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household willing to do public work
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Districts Table 4.13: Implementatio
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Table 4.14: Share of BPL Population
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Table 4.16: Block -wise Gross Acces
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Table 4.18: Block-wise IMR in Thiru
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8. For provision of safe drinking w
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Chapter 5 WATER, LAND AND AGRICULTU
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5.2 Water: Key Issues in Tamil Nadu
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Table 5.3: Sources of Water Supply
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funding under the Water Resources C
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In 2006-7, 65.83 percent of habitat
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the major cause for poor maintenanc
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about 30 litre per capita per day (
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2006-07). However, total area under
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Page 141 and 142: 5.4 Agriculture: Key Issues Agricul
Page 143 and 144: Table 5.19: Productivity (Yield) of
Page 145 and 146: Only rice and sugarcane received ir
Page 147 and 148: iv. There are severe water quality
Page 149 and 150: Chapter 6 LAST MILE REACH STRATEGIE
Page 151 and 152: targeting as a device to improve ef
Page 153 and 154: eneficiaries and of delivering prog
Page 155 and 156: In the nighbourhood of the poverty
Page 157 and 158: inefficiencies. Some of the major c
Page 159 and 160: Tamil Nadu is close to achieving un
Page 161 and 162: programmes. It is the only Self Emp
Page 163 and 164: districts in Tamil Nadu. Namadhu Gr
Page 165 and 166: 6.5 Reaching Households and Individ
Page 167 and 168: proposition more insurable, a group
Page 169 and 170: line to post-office saving banks or
Page 171 and 172: each the urban poor who live in slu
Page 173 and 174: Eleventh Plan (2007) observes: “O
Page 175 and 176: i. provide financial assistance for
Page 177 and 178: unemployed or underemployed poor by
Page 179 and 180: Services Prepare detailed water sup
Page 181 and 182: Chapter 7 SUMMARY AND FORMULATION O
Page 183 and 184: positive and relatively high. The b
Page 185 and 186: 3. In terms of composition of BPL p
Page 187 and 188: holdings are smaller than 4 hectare
Page 189: There are considerable inter-distri
Page 193 and 194: R i =(I a +I max -I i )/(I a +I max
Page 195 and 196: line to post-office saving banks or
Page 197 and 198: d. Targeting As far as rural areas
Page 199 and 200: 7.6 Urban Poverty Reduction Strateg
Page 201 and 202: Fund, GoTN has created Tamil Nadu I
Page 203 and 204: Some initiative by Government of Ta
Page 205 and 206: • Addressing urban poverty allevi
Page 207 and 208: land. There is need to develop a sc
Page 209 and 210: REFERENCES Agarwal, S.P. (2005),
Page 211 and 212: Deaton, Angus and Alessandro Tarozz
Page 213 and 214: Himmelfarb, G. (1984), The Idea of
Page 215 and 216: Report of the Working Group on Urba
Page 217 and 218: APPENDIX TABLES Appendix Table 1.1:
Page 219 and 220: Appendix Table 1.1 (contd.): Millen
Page 221 and 222: Appendix Table 1.2 (a): Poverty Lin
Page 223 and 224: Appendix Table 1.3: Poverty Gap Est
Page 225 and 226: Appendix Table 1.5: Head Count Rati
Page 227 and 228: Appendix Table 1.6 (contd.): Progre
Page 229 and 230: Appendix Table 1.8: Women’s Malnu
Page 231 and 232: Appendix Table 1.10: Child Mortalit
Page 233 and 234: Appendix Table 1.11 (contd.): State
Page 235 and 236: Appendix Table1.12 (contd.): Matern
Page 237 and 238: Appendix Table 2.3: Decomposition o
Page 239 and 240: and Publicity Relief from Natural C
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Appendix Table 4.3: Demography Rela
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Appendix Table 4.5: Health Faciliti
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Sl. No Appendix Table 4.7: Efficien
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Appendix Table 4.9: Employment unde
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Appendix Table 5.1: Major and Mediu
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Appendix Table 7.1: Indices for Dis
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ANNEXURES 231
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Monotonicity Sensitivity Axiom Mono
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component of the poverty line is th
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Fuchs (1969), while advocating the
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H = m/n (2) The head count ratio ig
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Annexure 1.3 UNIFORM RECALL PERIOD
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‣ Periyar became Erode; ‣ Tirun
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Women Receiving 3 Or More ANC Visit
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In Sivagangai, as per 2001 census,
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Table 4.3: Block wise Gender Wise G
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Block Table 4.6: Trained Teachers a
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Annexure 5.1 ENVIRONMENTAL CONSEQUE
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Annexure 6.1 NOTES ON SELECTED CENT
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10. Kasturba Gandhi Balika Vidyalay
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MSE Working Papers Recent Issues *
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POVERTY REDUCTION STRATEGY TN

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