POVERTY REDUCTION STRATEGY TN

influence of increased income inequality is relatively larger, but the influence of growth is
predominant.
Table 2.9 shows that inequality in urban incomes is much higher than that in
rural incomes. To update the official poverty line used by the Planning Commission, the
Consumer Price Index for Africultural Laborers (CPI-AL) and the Consumer Price Index
for Industrial Workers (CPI-IW) are reweighted using national level consumption patterns
of people around the poverty line in 1973-74. The basic price data are the same as for
CPI-AL and CPI-IW, but the commodity level prices are weighted using the more recent
and more poverty relevant weights.
States
Table 2.9: Growth and the Head Count Ratio: 1993-94 to 1999-00
HCR50
Derivative
with Respect
to Growth
Six Years
Growth
Change in
HCR55
Inequality
Fixed
Change in
HCR55
Actual
Rural
Andhra Pradesh 29.2 -0.9 2.8 -2.5 -3
Karnataka 37.9 -0.91 9.5 -9 -7.2
Kerala 19.5 -0.62 19.6 -10.3 -9.5
Tamil Nadu 38.5 -0.9 15.7 -13.3 -14.1
All India 33 -0.88 8.7 -6.8 -6.7
Urban
Andhra Pradesh 17.8 -0.62 18.5 -9 -6.9
Karnataka 21.4 -0.6 26.5 -12.9 -10.6
Kerala 13.9 -0.46 18.2 -7.1 -4.2
Tamil Nadu 20.8 -0.66 25.1 -12.9 -9.6
All India 17.8 -0.56 16.6 -7.4 -5.9
Source: Deaton and Dreze (2002).
HCR50 and HCR55 - Head Count Ratio from 50 th Round and 55 th round,
respectively.
Bhalla (2002) uses the concept of ‘Shape of Distribution Elasticity’ (SDE), which
indicates proportionate change in the HCR, following a one percent change in growth,
assuming that there is no change in the distribution. He defines:
dP = (g + i)* SDE
where dP is the change in the head count ratio, g is the growth in average per capita
consumption and i is the change in the share of consumption of the poor on or near the
poverty line. Bhalla (2003) argues that the kind of elasticities estimated by Ravallion and
40