28.02.2018 Views

POVERTY REDUCTION STRATEGY TN

You also want an ePaper? Increase the reach of your titles

YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.

Table 2.7: Decomposition of the Head Count Ratio in 1999-00: Rural<br />

States<br />

Head Count<br />

Ratio<br />

(Percent)<br />

Total Difference<br />

with all India<br />

Ratio (Percentage<br />

Points)<br />

Mean Component<br />

(Percentage<br />

Points)<br />

Distribution<br />

Component<br />

(Percentage<br />

Points)<br />

Andhra Pradesh 11.76 13.06 9.29 3.77<br />

Karnataka 16.38 8.44 7.5 0.95<br />

Kerala 12.88 11.94 17.22 -5.28<br />

Tamil Nadu 18.98 5.84 10.15 -4.30<br />

Source: Dhongde (2003).<br />

However, the mean component offsets this negative effect and keeps the rural<br />

ratio of these states below the national average level. In the case of Andhra Pradesh and<br />

Karnataka, better distribution of income also has a positive effect on reducing the rural<br />

poverty ratio. In Tamil Nadu, urban HCR is slightly lower than all-India urban ratio. As in<br />

the case of rural HCR, mean income component has a positive effect on reducing urban<br />

ratio while distribution component has a negative effect.<br />

Table 2.8: Decomposition of the Head Count Ratio in 1999-00: Urban<br />

States<br />

Head Count<br />

Ratio<br />

(Percent)<br />

Total Difference<br />

with all India Ratio<br />

(Percentage<br />

Points)<br />

Mean Component<br />

(Percentage<br />

Points)<br />

Distribution<br />

Component<br />

(Percentage<br />

Points)<br />

Andhra Pradesh 26.35 -1.37 -1.95 0.58<br />

Karnataka 27.2 -2.22 -3.15 0.93<br />

Kerala 20.25 4.74 3.73 1.00<br />

Tamil Nadu 23.81 1.17 2.92 -1.75<br />

Source: Dhongde (2003).<br />

In another study, Deaton and Dreze (2002) provide a decomposition of the fall in<br />

the poverty head count ratio between 1993-94 and 1999-00 as being due to growth and<br />

change in inequality (Tables 2.9 and 2.10). Clearly, a very large portion of the decline is<br />

attributable to growth rather than any reduction in inequality. Growth implies an increase<br />

in average per capita expenditure (APCE). Column 2 in Table 2.9 shows Deaton and<br />

Dreze’s estimate of percentage point reduction in HCR associated with a distribution<br />

neutral one percent increase in APCE. This depends positively on the fraction of people<br />

living at or near the poverty line. The estimates show (column 4 in Table 2.9) that<br />

growth alone would have reduced the poverty HCR more than the actual, implying that<br />

the impact of increased inequality has been used to reduce the effect of growth. In the<br />

case of rural poverty, growth almost fully accounted for the reduction of poverty with a<br />

much adverse impact of worsened income distribution. In the case of urban poverty, the<br />

39

Hooray! Your file is uploaded and ready to be published.

Saved successfully!

Ooh no, something went wrong!