CESS

Rural Development and Poverty - CESS is known for its expertise on poverty studies. That is still continuing. District level poverty ratios and other analysis-Completed

Patterns of India's Economic Growth : Analysis of Inter-state Variations

Project Director	:	S.Subrahmanyam
Sponsored by	:	Reserve Bank Of India

Objectives:

(a) To examine the growth performance of domestic product of Indian states (b) To study changes in educational factors and relate them to changes in per capita domestic product (c) To find out the impact of growth on poverty in major states (d) To examine the hypothesis of convergence of per capita incomes of Indian states in various periods since the mid-sixties.

Growth Performance:

Among the 15 major states in India, Maharastra and Punjab have high per capita income of more than Rs.4200 per annum at 1980-81 prices. The bottom four states are Bihar, Orissa, Uttar Pradesh and Madhya Pradesh, with per capita income less than Rs.1800 per annum. The poorest state (Bihar) has less than one-fourth of the per capita income of the richest state (Maharastra). Bihar, Uttar Pradesh and Assam have shown a poor performance with per capita income growth rates falling below 1.5 per cent per annum. All the high income states, except West Bengal, showed a high performance of more than 2.7 per cent. Low population growth rate contributed for a high per capita income growth of Tamil Nadu and high population growth rate is responsible for moderate performance of Rajasthan. The poor performance of West Bengal is due to secondary sector whereas primary sector is responsible for the poor performance of Kerala, Bihar and Orissa.

Influence of Demographic and Educational Factors on Growth:

While birth rate and infant mortality rate decline with growth of per capita income, death rate is independent of per capita income. Inter-state variability in birth, death and infant mortality rates has significantly increased over time. Though sex ratio is not related to per capita income, the four states at the bottom of the income scale have been experiencing continuous decline in sex ratio. Dependency ratio is higher in the low income states as compared to high income states. The correlation between literacy rate and per capita income is weak.

Growth, Poverty and Inequality:

India achieved significant decline in poverty in the late seventies and eighties from 55 to 34 per cent. There is no clear indication of decline in rural poverty in the nineties. There is no systematic relation between per capita income and incidence of poverty. Among the high income states, Maharastra and Gujarat have high incidence of poverty. On the other hand, Kerala, West Bengal and Andhra Pradesh achieved substantial reduction even with a moderate level of per capita income. At the national level, for every 10 per cent increase in per capita income, head-count poverty ratio is reduced by 3.7 percentage points. All the low income states have a low response of poverty to growth of per capita income. The relationship between agricultural growth and rural poverty is stronger than the relation between overall growth and poverty.

Convergence of Per Capita Incomes Across States:

Inequality in per capita income was highest during 1979-80 and 1989-90 and lowest during 1972-73 and 1981-82. The liberalisation period has shown continuous increase of inequality in per capita income across Indian States. There is no convergence of per capita incomes in any of the three sub-periods.