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POVERTY REDUCTION STRATEGY TN

of the currently

of the currently unemployed, may lead to a rise in the aggregate output in the economy (Dasgupta and Ray, 1986). Redistribution policies can support economic growth by correcting market failures, especially imperfections of the credit and insurance markets that particularly affect the poor. Expanding access to credit, can make small farmers and artisans economically more viable by allowing them to enlarge their scale of production, or take up more high-return, high-risk occupations. Better education and health for the poor have important positive externalities for the rich. Better education for women is often associated with better health, nutrition, and health of children (particularly daughters). Similarly, better opportunities for outside work for young women can lead to socially more beneficial fertility behaviour through raising the marriage age. Markets and institutions of governance have a critical role in broad-based poverty reduction strategies. Changes in institutions for risk taking and sharing, such as the replacement of informal risk sharing arrangements among members of a small community (e.g., households in a village) by facilitating participation in well functioning markets, can affect the pattern of resource allocation, particularly, relating to the selection of crops, and use of fertilisers. Growth and its impact on poverty are also affected by the efficiency of the legal system particularly for enforcing rights and contracts. The asset base is critical in enhancing the poverty-reducing impact of growth. Rapid growth could be detrimental to poverty reduction if it erodes the asset base of the poor including common property resources to which they had free access. A shift in public expenditure away from the provision of subsidies on goods and services extensively used by the poor to sustain growth promoting investment in infrastructure may adversely affect poverty. Unsustainable growth brought about through inflationary financing could increase poverty. b. Sectoral Composition and Elasticity of Connection Sectoral composition of growth also significantly, affects poverty alleviation. In developing countries with highly unequal income and asset distribution, the poor may be substantially disadvantaged in the growth process. Much of the poverty-reducing impact of growth depends on the ‘elasticity of connection’ between the poor and the rest of the economy. Timmer (1997) has empirically examined the role of elasticity of connection using a cross-country framework. The `elasticity of connection' between the poor and the 28

est of the economy indicates the extent to which the poor share in the overall GDP growth. In particular, it is defined as the degree to which a percentage increase in overall GDP translates into a percentage increase in the income of the poorest quintile. Timmer (1997) regresses the level of per capita GDP growth on the level of income for all five income quintiles simultaneously, using a fixed-effects framework. This model found that while the poor do participate in growth in many economies, the extent of their participation is much lower in more unequal countries. Timmer’s model also examines the sectoral composition of growth between agriculture and non-agriculture in countries that have a significant agriculture sector, are reasonably large, and are considered as developing countries. In estimating the elasticity of connection, Timmer regresses the level of income of each quintile on overall per capita GDP, by including country and time fixed effects (dummy variables for each country included and for each decade from the 1960’s to the 1990’s). The country fixed effects allow shifts in the regression intercept for each country, but assume the same slope or elasticity of connection for all countries. The fixed effects for decades allow a shift in the regression intercept for each 10-year period. Timmer finds that in unequal countries, there is a pronounced Kuznets effect: the elasticity of connection for the poorest quintile is significantly lower than that for the higher quintiles. The poor appear to be much more disconnected from the growth process in these economies. The elasticity of connection for the poorest quintile is 0.257 for agriculture and 0.449 for non-agriculture. In contrast, for those economies with better income distribution, the elasticity of connection for the poor in the agriculture sector is 1.146 and 1.018 for non-agriculture. This is slightly higher than the elasticity values for the upper quintiles, suggesting a slight "anti-Kuznets" effect in these economies. These results indicate that two fundamentally different growth processes may be at work with respect to the role of labour productivity in agriculture and non-agriculture. In countries where the income gap is relatively small, labour productivity in agriculture is slightly but consistently more important in generating incomes in each of the five quintiles. Also, more agricultural productivity has a noticeable “anti-Kuznets” effect in these countries. A similar effect is seen for the non-agricultural sector and this impact is even more important for the poor because the non-agricultural sector is large (on average 75 percent of the overall economy). It grows faster than the agricultural economy over sustained periods of time. 29

World Comparative Economic And Social Data
Police Stations - Tamil Nadu Police
N u m b e r o f S c h o o l s - DISE
Census 2011 population of Latur district
PDF: 1.0MB - Population Reference Bureau