POVERTY REDUCTION STRATEGY TN

which are significantly higher than rural prices. They find no evidence in the NSS
purchase data that corresponds with this finding. There is also a discrepancy between
the interstate price indexes incorporated in the Expert Group and official poverty lines,
and those generated by the purchase data in this study. One of the main conclusions of
their paper is that current official practice produces larger errors in calculating the
distribution of poverty within a country than in calculating the changes in poverty levels
over a period of time. Updating base poverty lines involves ‘correcting’ these for urban to
rural price and interstate price differences, and Deaton and Tarozzi have shown that such
specific numerical corrections are not easy to make.
The pattern of sectoral prices in Tamil Nadu can be captured by the sectoral
implicit price deflators. Table 2.13 shows the relative movement of agricultural, industrial,
and services sectors obtained with reference to the 1999-00 base series of current and
constant price GSDP data. The earlier series has been brought to the 1999-00 base with
suitable conversions factors. It is noted that while all the sectoral prices have increased,
the largest upward movement has been in the manufacturing sector prices, followed by
services, which started at a lower level in 1993-94 compared to agriculture but has
reached comparable levels by 2006-07. The growth in agricultural prices has been
relatively the lowest. This indicates that the people whose incomes are linked to
agriculture have experienced least income growth due to the increase in the prices of
their produce while they pay relatively higher for the purchases that they make of
outputs of the other two sectors.
Table 2.13: Implicit Price Deflators in Tamil Nadu: Sectoral Prices
(Base year 1999-00=100)
Year Agriculture Manufacturing Services
1993-94 73.81 72.91 63.81
1994-95 73.37 76.45 69.39
1995-96 82.74 80.51 77.13
1996-97 92.07 85.79 83.14
1997-98 97.18 88.60 89.41
1998-99 102.26 99.28 97.97
1999-00 100.00 100.00 100.00
2000-01 100.94 103.32 103.77
2001-02 102.34 105.12 107.85
2002-03 105.84 107.93 112.65
2003-04 110.39 113.83 117.72
2004-05 118.82 121.31 117.57
2005-06 125.64 125.50 120.57
2006-07 123.75 131.04 123.40
Source (Basic data): Government of India, Central Statistical Organisation.
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