Indian Poverty and Inequality – A Paradoxical Result

 Indian Poverty and Inequality – A Paradoxical Result

Prof. Sukhdeo Thorat and Prof. Amaresh Dubey  have released a research paper from the Jawarharlal Nehru University,NewDelhi where they showed that in rural areas,decline in Indian poverty accelerated from 2.2% between 1993-94 and 2004-05 to 4.4% in the period 2004-05 to 2009-10.For the same period,poverty reduction in urban areas rose from 1.9% to 3.9%.During 1993-94 – 2009-10, Indian poverty reduction rate was found as 2.5% .On the other hand,the inequality rose marginally in both rural and urban areas in 2009-10 compared to 1993-94 and 2004-05 respectively.This result is , however, contradictory.At the same time,they claimed that inclusive growth and poverty alleviation strategy were successful enough including the reduction of sc/st  poverty ratio in the respective periods.

	Average Annual rate of decline in poverty (%) 1994-2004	Average Annual rate of decline in poverty (%) 2005-2010	Average Annual rate of decline in poverty (%) 1994-2010
Rural	2.2	4.4	2.5
Urban	1.9	3.9	2.3
Total	2.1	4.3	2.5

                                              Inequality of income (Gini Co-efficient)

	1993-94	2004-05	2009-10
Rural	0.30	0.30	0.31
Urban	0.36	0.38	0.40
Total	0.35	0.35	0.37

In South Asia and South East Asia , poverty ratios are declining whereas inequality are rising with the increasing growth rate.In some of the middle and high income economies, the same trends were observed. But,if growth –poverty nexus is valid, then inequality should remained the same. So, poverty may stimulates inequality if growth remains the same or declines. If poverty declines with the increase in growth rate then inequality should reduce through redistribution effects. Since, inequality rose, then we may infer that redistribution of income went against the poor and favoured the rich.This paradoxical results have been happening in recent years. Therefore, policy makers have lot of works to do in the process of income distribution for preparing pro-poor growth policy.