Growth, Inequality and Population Effects on Poverty Reduction

This blog, meant for a general readership, is about my new paper Decomposing Poverty Change: Deciphering Change in Total Population and Beyond. This is published in The Review of Income and Wealth that is available under Early View and is also open access. A slide share explaining the method is also uploaded as Decomposing Poverty Change: Within- and Between-group Effects at my bepress page.

It is believed that growth in the economy would address poverty reduction through the trickle-down effect. At the same time, equitable distribution or lowering inequality will also help reduce poverty while also leading us towards a welfare state.

A question that assumes importance is that if in a society the incidence of poverty has reduced (say, from 50 per cent to 40 per cent) then then how much of this is on account of growth in the economy and how much is on account of reductions in inequality. 

Conventionally, poverty reduction has tried to compute these two effects by holding the other constant. What is the growth effect, if inequality is held constant; and what is the inequality effect, if there is no growth.

While dealing with the changes in the proportion of poor, the population remains hidden. However, if the population consists of different subgroups (say, rural and urban) and the overall incidence of poverty is an weighted average then the changes in population shares between the subgroups could also have implications in our understanding of poverty reduction. 

The literature refers to this change in population share as between-group effect (say, migration of people from rural to urban regions has helped reduced poverty in the rural regions, but it has increased it in urban regions while at an aggregate level it has helped reduce poverty). As against this, the growth and inequality effects are referred to as within-group effects.

Further, with the population being hidden, the conventional computations for delineating the effect of growth on poverty reduction have implicitly assumed that there is no change in total population. This is contrary to ground reality as also public policy concerns where increasing population has been an important aspect in designing appropriate poverty reduction strategies. 

Keeping the change in total population in mind, I propose an alternative measure where growth, inequality and population can be considered as within-group effects and this would be independent of the between-group effect on account of changes in population shares across subgroups.

Using the method to Indian data for 2004-05 and 2009-10, one observes the following:

• At the aggregate all India level, poverty reduced from 37.14 per cent to 29.77 per cent (-7.37 percentage points).
• Growth effect led to a reduction in poverty by 187 per cent (-13.77 percentage points); from this, 69 per cent is from rural (-9.45 percentage points) and 31 per cent is from urban (-4.32 percentage points).
• Inequality effect led to an increase in poverty by 2 per cent (0.13 percentage points); from this there was a reduction in poverty by 308 per cent in rural India (-0.40 percentage points) and an an increase in poverty by 408 per cent in urban India (0.53 percentage points).
• Population effect (total change) led to an increase in poverty by 88 per cent (6.51 percentage points); from this, 63 per cent is from rural India (4.13 percentage points) and 37 per cent is from urban India (2.39 percentage points). The percentage point increase in rural and urban in this as also in some other instances may not add up to the aggregate level due to rounding off.
• Total within-group effects (growth + inequality + total population change) led to a reduction in poverty by 97 per cent (-7.13 percentage points); from this, 80 per cent is from rural India (-5.72 percentage points) and 20 per cent is from urban India (-1.41 percentage points).
• Between-group effect (change in population shares between rural and urban regions) led to a reduction of poverty by 3 per cent (-0.25 percentage points), from this there was a reduction of poverty in rural India by 263 per cent (-0.63 percentage points) and an increase in poverty in urban India by 163 per cent (0.39 percentage points). By definition, this will have a negative impact on one region and a positive impact on the other region. The results imply that at an aggregate level rural to urban migration is likely to have contributed to reductions in poverty.
• From the aggregate all India level reduction (-7.37 percentage points), the contribution of rural India was 86 per cent (-6.35 percentage points) and that of urban India was 14 per cent (-1.02 percentage points).

Getting back to the method, we mention that the computation of the three within-group effects will depend on the choice of the base period and the sequence of computations. Further, the three within group effects as also the between group effects, as shown in our results for India, can all be mutually exclusive. These are discussed in the paper. 

The link to my open access paper Decomposing Poverty Change: Deciphering Change in Total Population and Beyond published in The Review of Income and Wealth. Also see the slide share explaining the method Decomposing Poverty Change: Within- and Between-group Effects that can be downloaded from my bepress page.

Some other recent blogs of mine on Poverty are:

New Poverty Estimate: Some Concerns

Poor in India: Region-wise Estimates

Group Differential Measure

This blog is meant for a lay explanation of the paper Group Differential for Attainment and Failure Indicators (see Enhanced HTMLview) in the Journal of International Development. It develops on the premise that if a society is progressing then it ought to reduce gaps across groups. In other words, as society progresses, it ought to be become increasingly inequity conscious.

For instance, if there exists a society, with equal proportion of female and male population, where literacy rate for females is 40 per cent and that for males is 50 per cent. After a decade, there is not much change in the population composition, but due to public policy interventions and the literacy rate for females increases to 50 per cent and that for males increases to 60 per cent. This increased attainment in literacy rates is commendable, but it is equally worrisome that the gap in literacy rates between the two groups remains the same at 10 percentage points. Thus, we would state that such an increase an attainment of literacy rate has fails a simple difference based level sensitivity. It is in this sense that this higher level of attainment is not commensurate with the society being increasingly inequity conscious.

A group differential measure that takes the simple difference of the measures for the two groups would fail this level sensitivity test.  

To address this, one could suggest, squaring of the literacy rates and then taking the difference and then after manipulation (for a comparable value that lies between 0 and 100) gives us a group differential measure that is {(50^2)-(40^2)}/100=9 percentage points in the first scenario and 11 percentage points in the second scenario. This satisfies level sensitivity, as it gives a lower value at the lower level of attainment. However, it fails to be policy sensitive at the lower level of attainment. In other words, when the actual gap between the literacy rates is 10 percentage points, our measure shows a 9 percentage point difference. Thus, it is possible that while this measure is not a representation of the actual percentage point difference, but it could lead to complacency at lower levels of attainment.

One possible way out is to take a ratio of the simple difference to the simple difference between maximum attainment and half of the attainment for female literacy rate and then manipulate to obtain a comparable value, that is {(50-40)/(100-20)}*100=12.5 percentage points in the first scenario and 13.3 percentage points for the second scenario.

Thus, we come up with a group differential measure that imposes greater inequity consciousness at higher levels of attainment and also is sensitive to policy implications. The discussion in the paper also shows that this approach also satisfies normalisation and montonocity properties. It also proposes an alternative measure that satisfy similar properties for failure indicators. The paper has examples using an attainment and a failure indicator that are relevant for the Millennium Development Goals (MDGs).

Other related papers

On measuring group differentials displayed by socio-economic indicators: an extension, Applied Economics Letters (2008)

On measuring group-differentials displayed by socio-economic indicators. Applied Economics Letters (2006)

Working Paper version of the Current Paper

Group Differential for attainment and failure

New Poverty Estimate: Some Concerns

Introduction

This blog post should be read as a complement to my recent note on Reading Between the Poverty Lines in the Economic and Political Weekly (27 September 2014). The note has been written in response to the Report of the Expert Group to Review the Methodology for Measurement of Poverty (Chair: C Rangarajan, hereafter Rangarajan report/method) that was submitted to the government on 30 June 2014 and is now available in the public domain. In this blog, I will raise some concerns based on my immediate reactions on this new method, but before that a quick background.

Source: Cartoonscape, The Hindu, 8 July 2014

Background

A Working Group suggestion of 1962 based on a balanced diet requirement by the Indian Council of Medical Research (ICMR) in 1958 arrived at monthly per cpaita poverty lines of Rs.20 for rural areas and Rs.25 for urban areas in 1960-61 prices.

In January 1979, the Report of the Task Force on Projection of Minimum Needs and Effective Consumption Demands (Chair: YK Alagh, hereafter Alagh report/method) used age-sex-activity specific calorie allowances recommended by the Nutrition Expert Group of 1968 to arrive at a per capita per day average calorie requirement of 2435 kcal for rural areas and 2095 kcal for urban areas (for convenience rounded off to 2400 kcal for rural areas and 2100 kcal for urban areas and referred to as the calorie norms for rural and urban areas respectively). Based on consumption expenditure around these average requirements, they arrived at monthly per capita poverty lines of Rs.49.09 for rural areas and Rs.56.64 for urban areas in 1973-74 prices. While anchored in 'calorie norms', these poverty lines are behaviourally determined and indicate the purchasing power needed to meet these norms with some margin for consumption of non-food items. This gives a consumption basket around the poverty line.

The July 1993 Report of The Expert Group on Estimation of Proportion and Number of Poor (Chair: Late DT Lakdawala, hereafter Lakdawala report/method) used the Alagh report's average calorie requirements and the commodity basket associated with the poverty lines for the base year, 1973-74. However, to address variations in prices and consumption patterns across states (and also over time) they used appropriate state-specific consumer price indices (separate for rural and urban areas) and applied the Fisher's index to arrive at state-specific poverty lines.  These poverty lines, as indicated earlier, indicated the purchasing power needed to meet the calorie norm, but the actual consumption could be different that gives us  a commodity basket pegged around the poverty lines for the base year.   

Over time, the updated poverty lines (say, for 2004-05) pegged to the 1973-74 base years differed substantially from the average calorie requirement/calorie norm (see Utsa Patnaik's A Critical Look at some Propositions on Consumption and Poverty). This and other considerations led to the setting up of an  Expert Group with SD Tendulkar as its chairperson. Their report (hereafter Tendulkar report/method) submitted in November 2009 had to do away with the dated average calorie requirement, but they did not have any alternative reference to begin with. Hence, for pragmatic considerations, they begin by using the proportion of poor for urban India, 25.7 per cent for 2004-05, computed by the Lakdawala method, as a base. The difference being that they shift away from the use of monthly uniform recall period (URP) data to the mixed recall period data that combines annual recall for five low frequency items (clothing, footwear, consumer durable, education, and institutional health expenditure) with monthly recall for the remaining items. 


Given the proportion of poor for urban India, the Tendulkar report computed a commodity basket for the third decile group (20-30 per cent). Now, the consumption amount for this decile group became the new base associated with the poverty line basket, which was used to arrive at all-India rural and also rural and urban state-specific poverty line baskets from an appropriate state-specific decile group. 

Another departure for the Tedulkar report was to discard the consumer price indices and instead use prices determined endogenously from the household level consumption expenditure data by taking the average per capita expenditure of a commodity per unit consumed. Like the Lakdawal report, the Tendulkar report also used the Fisher price index to obtain state-specific poverty lines and also for future updating of these poverty lines. Instead of separate poverty line baskets for rural and urban areas, as was the case for both Alagh and Lakdawala methods, the Tendulkar method had only the urban poverty line basket for 2004-05 as base. 

A number of questions have been raised on the Tendulkar method, see Poverty Estimates in India: Old and New Methods, 2004-05 for a critical discussion. This necessitated the search for a new method.

The Rangarajan Method

Meanwhile, the ICMR came up with the Nutrient Requirements and Recommended Dietary Allowances for Indians in 2010. Based on this and taking a cue from the Alagh method, the Rangarajan method superimposes the age-sex-activity specific composition and updates the average per capita per day dietary requirements for calorie (2155 kcal in rural and 2090 kcal in urban), protein (48 grams in rural and 50 grams in urban) and fat (28 grams in rural and 26 grams in urban). From a purchasing power perspective, all these are possible at a monthly per capita food expenditure of Rs.554 (sixth fractile group, 25-30 per cent) for rural India and Rs.656 (fourth fractile group, 15-20 per cent) for urban India.   

In addition, expenditure in the median fractile class (45-50 per cent) is considered as the norm for four essential non-food  items, viz., education, clothing, shelter (rent) and mobility (conveyance). This turns out to Rs.141 for rural and Rs.407 for urban areas.

For all other non-food items, the expenditure for the fractile group identified with the poverty line basket is behaviourally determined. This turns out to Rs.277 for rural and Rs.344 for urban areas. 

Adding up the above three gives monthly per capita poverty lines of Rs.972 for rural and Rs.1407 for urban areas. These give the associated poverty line baskets.

Like the Lakdawala method, the Rangarajan method uses Fisher price index on the all-India poverty line basket to state-specific poverty line baskets to obtain the state-specific poverty lines for rural and urban areas. The Rangarajan method continues with the Tendulkar method's use of prices from the household level consumption expenditure data. The state-specif poverty lines help compute the rural and urban state-specific poverty ratios and their weighted average gives the all-India poverty ratios.

A departure in the Rangarajan method is that its computations are based on the modified mixed recall period (MMRP) consumption expenditure data, which, from 2009-10, also collected weekly consumption expenditure data for some high frequency food items (edible oil, egg, fish and meat, vegetables, fruits, spices, beverages, refreshments, processed food, pan, tobacco and intoxicants). Under MMRP, like MRP, the five low frequency items continue to be based on annual recall. For all other items that are not identified as low or high frequency items, the monthly recall continues.

In short, the new method is an updating of the 'calorie norm' that is age-sex-activity standardised (Alagh method) to obtain poverty line baskets at the all-India level for rural and urban areas and then it applies the Fisher's index to obtain state-specific poverty lines (Lakdawala method) by using prices from the household level consumption expenditure data (Tendulkar method). In addition, the Rangarajan method uses MMRP and also adds a normative criterion for four non-essential food items.Thus, it is an improvement over the earlier methods. Nevertheless, it raises some concerns, which I elaborate below.

Some Concerns
The combining of expenditure from two fractile groups is statistically plausible, but it poses a behavioral dilemma. This is so because the aggregate all-India poverty line is derived from two different fractile groups - one for food and most non-food items and the other for four essential non-food items. An alternative could have been dual poverty lines, as suggested in my note, Reading Between the Poverty Lines (Economic and Political Weekly, 27 September 2014).

The aggregate all-India rural and urban poverty lines are not meant for computing poverty ratios. If computed then then this poverty ratio will not be sub-group consistent.  In other words, the poverty ratio computed through this method will not be equal to the poverty ratio that is a weighted average of the state-specific poverty ratios.

In particular, the quantities used at the all-India poverty line basket will not be weighted averages of the quantities associated with the state-specific poverty line baskets. Once we question the all-India poverty lines then its usage in the Fisher price index to derive the state-specific poverty lines also come into question.

If one uses the 2010 calorie allowances suggested by ICMR for each state separately then by superimposing the state-specific age-sex-activity composition one will arrive at state-specific average requirements. There is an argument that different average requirements call for different poverty benchmarks. However, continuing with the Lakdawala method, the Rangarajan method uses only the the all-India average requirement to ensure comparability.

In addition to calorie deprivation, the allowances of ICMR 2010 can also be used to compute protein and fat deficiencies. Comparing and contrasting these three deprivations might be insightful.

As already mentioned, the poverty lines indicate the purchasing power needed to meet the average requirements. In short, all the state-specific poverty lines (separately for rural and urban areas) would be identified with the same purchasing power. This, along with the fact that the all-India poverty lines are not sub-group consistent, calls for caution in comparing the all-India poverty lines with purchasing power parity (PPP) in dollar terms.

The Rangarajan method points out that the proportion of poor at the combined all-India level declined from 38.2 per cent in 2009-10 to 29.5 per cent in 2011-12; that is, 8.7 percentage point decline in poor. While this is commendable, one should not read too much into this decline, as 2009-10 was a drought year.

It is possible that some non-poor population just above the poverty line would have become poor if they would not have been the recipient of some welfare schemes. If possible, quantifying these would show the impact of such interventions.

While, the current poverty lines are an improvement over the earlier methods, the inclusion of four non-essential items is not based on an absolute norm and they do still miss out on some other essential items like health and sanitation among others.

Finally, even if one keeps aside the above points, the Rangarajan method points out that in 2011-12, the proportion of poor are 30.9 per cent in rural and 26.4 per cent in urban areas. This is still a substantial amount and a matter of serious concern from a public policy perspective.

Concluding Remarks

Notwithstanding the improvements in the Rangarajan method, there are important methodological and public policy concerns. One possible alternative that the Rangarajan report could have followed or at least given as an alternative was to calculate region- (rural and urban) and state-specific average calorie requirement. They being not comparable can be a matter of methodological debate, but its need was already pointed out by S Guhan in the Lakdawala report. And, in any case, this approach of having separate calorie norms is already being followed for rural and urban India and it has not come in the way of comparison at the combined level. In future, a move towards measuring multiple dimensions of poverty would also be helpful.

An elaborate version of this blog post has been published as Reading Between the Poverty Lines in the Economic and Political Weekly (27 September 2014).

A stroll from troll

The world is increasingly becoming virtual,

With friends having full freedom to stroll,

Even when one restricts posts on ones wall,

There is always the danger of a troll.

A real-life banter can also end up in brawl,

Breaking a bone or two can be for real,

It is no consolation for the Internet scrawl,

When your friendly foe holds you on trial.

Their slander campaign will make you boil,

Slowly and steadily it could drain your fuel,

Engage with utmost care to avoid turmoil,

Conserve for larger issues that need your gruel.

If a troll is still making life a hell-hole,

A stroll will keep you away from that troll.

Also listen to: A stroll in an exotic place.

[PS: Edited on 27 Sept 2014 where I replaced the last two lines. The earlier version was: 'If a troll is still taking your toll,/A stroll will take you on a roll.'] 

Farmers' Suicides in India, 1995-2012: Measurement and Interpretation

My paper, Farmers' Suicides in India, 1995-2012: Measurement and Interpretation has come out in the LSE Asia Research Centre Working Papers Series (#62).  The paper raises three broad concerns. First, there is a need to improve the quality of data associated with reporting of suicides in India. In addition to under-reporting,  it is worrying that there seems to be a deliberate attempt (that is quite evident in Chhattisgarh and West Bengal but is not absent in other states) to tamper with the classification so as to hide farmers' suicides. Second, a careful consideration of the definitions in the reported data has implications in the quality of measuring suicide rates. In other words, measurement of farmers' suicide rates for India is obfuscated because of inappropriate understanding of the Indian context. This is a bit unconvincing because some of the scholars using this data have been working on India and have a fairly good knowledge of India. Finally, it questions the larger development discourse linked to farmers' suicides being limited to the pros and cons of a particular seed technology. This, unfortunately,  has diverted the global attention from real issues with regard to sustainability of farming and the focus on livelihood where the quality of life of the farmer and their families matter. The summary of the paper is given below.

Background: Farmers’ suicides have become an important socio-economic concern in India that has profound implication on the quality of life of farmers and their families. There are not many epidemiological studies on this. We propose to estimate suicide rates for farmers and non-farmers across the states of India and over time. We will also contextualise our results to the discourse on agricultural technology and development in general and that of cotton farming in particular.

Methods: Suicide rates are computed per 100,000 people using suicide incidences for farmers and non-farmers reported by the National Crime Records Bureau (NCRB) from 1995 to 2012 and normalising the same with age-adjusted interpolated/extrapolated population computed from census.

Findings: At the aggregate all India level, one observes that the suicide rates for male farmers increases to a peak in 2004 and there is a second spike in 2009 but then it declines and also becomes lower than the suicide rates for male non-farmers in 2011 and 2012. However, state-specific analysis, while showing mixed pattern, indicates that the decline in recent years is largely on account of an abrupt drop in Chhattisgarh on account of changes in reporting and non-reporting of farmers’ suicides for West Bengal in 2012. The states of Andhra Pradesh and Maharashtra with large cotton-growing areas and with relatively higher incidence of farmers’ suicides, in contrast to the all India trend, show an increasing trend in recent years.

Interpretation: Relatively higher incidence of farmers’ suicides is symptomatic of risk and raises livelihood as also public health concerns among the population dependent on agriculture. Public policy should focus on livelihood-enhancing and sustainable agricultural practices. Public health interventions should address the need for mental health care, reduce response time to lower harm and prevent deaths from poisoning and other self-inflicted harm, and restrict and regulate the access to and use of organophosphorous poisons. We also call for shifting the development discourse linked to farmers’ suicides from a techno-centric yield or income focus to a people-centric livelihood and quality of life focus.

This paper was a substantial part of my work as the Subir Chowdhury Fellow on Quality and Economics for 2013-14 at LSE. The link to the paper:  Farmers' Suicides in India, 1995-2012: Measurement and Interpretation.

The link to my co-edited book: Agrarian Crisis in India.

Some other related blog posts: 

The farmers' strain (a poem)

Indian Agriculture: Emerging Issues and Policy Perspectives

India's best dramebaaz

Satyamev Jayte on Toxic Food

Farmers' suicides and crisis in Indian agriculture

Remarks on rural credit for globalising farmers

Opinions and priorities for agriculture in India

Your coming and going

Your coming and going

Your coming and going,

Left a motionless pause.

Leaving one in solitude.

Of being and not being.

A silent melancholy,

In denial and hope.

But, time ticks on,

Not stopping by.

One mourns and celebrates,

The footprints thy left.

Appreciating the fullness,

Of that emptiness.

Your presence here,

Will forever be felt.

For the moments between,

Your coming and going.

[Note: This poem started with the loss of a friend in late May of 2014. Mihir, you will be remembered.  The void is permanent, but perhaps it is not; it is just a transient separation.What comes will go. But, that going also signifies a second coming. 

Going beyond, this poem is also about those recurring patterns that one observes in our everyday life. Or, even the ferocity of that sudden calamity that devours and destroys everything that comes its way, but ultimately fizzles out and returns everything to a serene calmness that is profound and sublime. This poem also draws inspiration from Octavio Paz’s 'Between going and staying'.]

Srijit Mishra

---

Between going and staying

Between going and staying, the day is stuck,

a block of frozen transparency.

Everything is seen yet all is elusive:

the horizon untouchably near.

Papers on the table, a book, a vase:

all rest in the shadow of their names.

Blood ascends more slowly through my veins

a single syllable beating stubbornly in my temples.

The indifferent light transforms

opaque walls, time without history.

The afternoon has spread out: now it's a bay

rocking the world with its gentle swaying.

We are neither asleep nor awake:

We are, we just are.

The moment lets itself go:

we pull ourselves away; pauses in transit.

Octavio Paz

---

Another translation of Paz's poem:

Between going and staying

the day wavers,

in love with its own transparency.

The circular afternoon is now a bay

where the world in stillness rocks.

All is visible and all elusive,

all is near and can’t be touched.

Paper, book, pencil, glass,

rest in the shade of their names.

Time throbbing in my temples repeats

the same unchanging syllable of blood.

The light turns the indifferent wall

into a ghostly theater of reflections.

I find myself in the middle of an eye,

watching myself in its blank stare.

The moment scatters. Motionless,

I stay and go: I am a pause.

Octavio Paz

---

A link to a discussion of Paz's poem, http://reneegr1.edublogs.org/2009/03/17/analyzing-a-poem-between-going-and-staying/

Poor in India: Region-wise estimates

Recently Professor YK Alagh wrote two opinion pieces on Posture-nomics and Models and Realities in The Indian Express where he referred to my work on poverty estimates. Some of these were not publicly available and are now put up in a working paper, Incidence of Poor and Poverty Risk in India across NSS Regions for Rural and Urban areas, 2004-05 and 2009-10.

Abstract

The paper provides an estimate of incidence of poor and poverty risk in India across NSS regions for 2004-05 and 2009-10 in rural and urban areas. It raises concern on increasing poverty risk and also incidence of poor in some regions. These are not necessarily among the relatively worse-off CABMOUJ (kab mouj, referring to Chhattisgarh, Assam, Bihar, Madhya Pradesh, Odisha, Uttar Pradesh and Jharkhand) states, but they also happen to be in some of the better performing states like Andhra Pradesh, Delhi, Gujarat, Haryana and Punjab.

Extracts

...

Our NSS region wise analysis shows that poverty risk being greater than unity has reduced from 33 regions in 2004-05 to 26 regions in 2009-10 for rural areas and has increased from 35 regions in 2004-05 to 36 regions in 2009-10 for urban areas. Further, from the 26 regions with poverty risk greater than unity in 2009-10 for rural areas, 18 regions indicated an increase in poverty risk when compared with 2004-05 and poverty risk also showed an increase in another 10 regions. However, from the 36 regions with poverty risk greater than unity in 2009-10 for urban areas, 20 regions indicated an increase in poverty risk when compared with 2004-05 and poverty risk also showed an increase in another 18 regions. Relatively speaking, this indicates a tendency towards convergence or greater concentration of poverty in some regions for rural areas while there is an increase in spread across regions for urban areas. This may also explain the effect on account of population shift or migration from urban to rural areas in our understanding of decomposing poverty change (Mishra 2014). 

The CABMOUJ states, the North-East states, other hilly and mountainous regions and some smaller entities in rural areas do give the impression of the increasing incidence of poor and poverty risk in largely rainfed and other vulnerable regions. That apart a matter of increasing concern is that there are regions in well-performing states where one not only observes an increase in poverty risk, but also an increase in the incidence of poor. They are both rural and urban areas of Plains Southern in Gujarat (the concerns raised by Alagh (2014a, b)), Northern Punjab and Central Plains in West Bengal, and urban areas of Coastal Andhra Pradesh, Delhi, Eastern Haryana, Himachal Pradesh, Mountainous and Jhelum Valley in Jammu & Kashmir, and Eastern Maharashtra among others.

Concluding Remarks

With reductions in poverty, the public policy focus should be among regions and sub-groups with relatively higher incidences and higher poverty risk. At the same time, it should also be a matter of concern that the incidence of poor is increasing among a sub-group of populations. At first glance, they seem to be among some CABMOUJ states, but a deeper probing indicates that this seems to be emerging in North-East states and also in some regions among the better-off states like Andhra Pradesh, Delhi, Gujarat, Haryana and Punjab. This should be an important concern for public policy.

Other recent related work

Mishra, S. (2014). Decomposing Poverty Change: Deciphering Change in Total Population and Beyond, Review of Income and Wealth, forthcoming.

Pathak DC, Mishra S. (2011). Poverty Estimates in India: Old and New Methods, 2004-05. Working Paper No. WP-2011-015. Indira Gandhi Institute of Development Research, Mumbai.

Pathak DC, Mishra S. (2013). Poverty in India and Its Decompositions: A Critical Appraisal of the New Method, in S. Mahendra Dev (ed.) India Development Report 2012-13, Oxford University Press, New Delhi, pp.209-223 and 414-417, see pre-print version.

The link to the current paper is Incidence of Poor and Poverty Risk in India across NSS Regions for Rural and Urban areas, 2004-05 and 2009-10.

The Dutch Show

Four years ago, the goal SPUN;
Today is another day of fun.

It looked like a continuation of the show,
Till Van Persie changed the flow.

He flew like a wizard without a broom,
Playing Quidditch, our next Viktor Krum.

The second beauty from Blind was to Rubben,
He ensured to amend that miss of 2010,

Van Persie was waiting for his second,
That will haunt Casillias till his end.

Now, it looked like a high school game,
With de Vrij getting the first ever to his name.

The goal rout ended with Rubben's second shot,
Completing demolition like he was Voldermot.

On a Friday the 13th with full moon in glow;
The Spaniards faltered in the Dutch show.

#Blind  #Casillias #deVrij #Dutch #FIFA2014 #Football #HarryPotter #Holland #Netherlands #Quidditch #Rubben #Spain #Spaniards  #VanPersie #ViktorKrum #Voldermot #WorldCup2014

Acknowledgements: The essence and flow, particularly the Harry Potter connections, came while discussing with my daughter Nerika during the match and it happened to be her lunar birthday (the full moon). The connection to Friday the 13th was mentioned by a friend, Babjuji Bose, in a virtual closed group, Adda. My apologies for using the word Voldermot. It is not meant to show Rubben in a negative light, but to indicate the precision and vengeance with which he ended the demolition of the opponent, perhaps to exorcise the ghosts of 2010.

Indian Agriculture: Emerging Issues and Policy Perspectives

Indian Agriculture: Emerging Issues and Policy Perspectives[1]

Srijit Mishra 

Introduction

The summer of 2014 got drenched with the elections euphoria, but for Indian agriculture all eyes are set on the prospects of a good monsoon. Is there a possibility of an El Nino? Will it lead to a drought like condition and have an adverse impact on agricultural production? How will this impact those dependent on agriculture for their livelihood? What about farmers' suicides? These questions remind us of the larger agrarian crisis and its interrelated dimensions of an agricultural developmental crisis. The former is about declining share of the overall pie towards agricultural sector, poor returns to cultivation, and nutritional deprivation while the latter is about inadequate and inappropriate planning that led to a deceleration in the growth rate of production and productivity, and an increase in risk and vulnerability. This also calls for alternative policy thinking.

Agrarian Crisis

The share of agriculture and allied activities in gross domestic product at constant 1999-2000 prices decreased from 41 per cent in 1972-73 to 14.6 per cent in 2009-10 while during the same period the share of employment in the sector declined from 73.9 per cent to 53.2 per cent. This means that the average returns per worker in agriculture and allied activities as a proportion of average returns per worker in non-agricultural activities has declined from 24.5 per cent in 1972-73 to 15.0 per cent in 2009-10.

There is an increasing marginalisation of holdings as indicated through agricultural census. Between 1970-71 and 2010-11 the distribution of operational holdings indicate that the share of marginal (0-1 hectares, ha) increased from 51 per cent to 67.1 per cent while that of others declined - for small (1-2 ha) from 18.9 per cent to 17.9 per cent, for semi-medium (2-4 ha) from 15 per cent to 10 per cent, for medium (4-10 ha) from 11.2 per cent to 4.2 per cent and for large (10+ ha) from 3.9 per cent to 0.7 per cent.

A situation assessment survey conducted for the agricultural season of 2002-03 indicates that average monthly household income compared to expenditure is lower for small (Rs.1,659 and Rs.2,482), medium (Rs.2,493 and Rs.3,148) and semi-medium (Rs.3,589 and Rs.3,685) holdings while it is higher for medium (Rs.5,681 and Rs.4,626) and larger (Rs.9,667 and Rs.6,418) holdings. What is more, even after increasing the returns by one-third to account for the drought, per capita per day returns to farmer households was less than Rs.8. Assuming a 6 per cent annual average growth rate, which is much on the higher side, the per capita per day returns in 2013-14 would double to Rs.16. This explains the poor returns to cultivation. With nearly half the population being still dependent on agriculture, the non-farm opportunities remain limited.

The 2013 Global Hunger Index puts India at a rank of 63 from among 78 countries, which is lower than some of the Sub-Saharan countries and all the other South Asian countries. The per capita per day availability of foodgrains, as indicated in the State of Indian Agriculture 2012-13, has reduced from 510 grams in 1991 to 463 grams in 2011. This is also reflected in the per capita per day calorie and protein consumption as the national sample survey estimates of 1993-94, 2004-05 and 2009-10 suggest. Such an outcome is also because of a shift in the cereal production and their consumption from millets to rice and wheat. There have been recent initiatives to increase the millets production and their consumption.

The manifestation of the agrarian crisis has been identified with farmers' suicides. However, it is symptomatic and its absence does not necessarily preclude risks. A comparison of suicide mortality rates (SMRs, suicide deaths for 100,000 persons) between farmers and non-farmers suggests that at the all India level the difference in the rates diverged the most in 2004 (18.8 and 13.6) and then there was a secular decline in the gap till 2008 (16.9 and 14.7) to diverge again in 2009, a drought year, and then started converging again from 2010 to 2012. However, a closer look at the six states with relatively higher incidence of farmers' suicides indicate that for the recent three years (2010 to 2012) the rates are diverging in Andhra Pradesh, Maharashtra and Kerala and converging in Chhattisgarh, Karnataka and Madhya Pradesh. The turnaround in Chhattisgarh is because it has stopped reporting farmers' suicides and instead increased reporting of a category called self-employed others. In addition, West Bengal did not report profession-wise suicides data for 2012. Thus, the convergence that one observed at the all India level is more on account of inappropriate and incomplete reporting. In any case, one has to look up other aspects to identify possible changes.

Agricultural Developmental Crisis

Using triennium ending data divided to three sub-periods, 1981-82 to 1993-94, 1993-94 to 2004-05 and 2004-05 to 2010-11, an analysis of growth rates computed through a double-kinked exponential curve suggests that the growth of agriculture and allied activities in the first period (3.3 per cent) was statistically significantly higher when compared with the second period (2.7 per cent) and there has been an increase in the growth rate in the recent period (3.0 per cent). An analysis in terms of value addition points out that the growth rate in the first period was statistically significantly higher than the second period for cereals (3.3 per cent and 1.0 per cent), pulses (1.5 per cent and -0.03 per cent), oilseeds (6.1 per cent and 0.5 per cent), cotton (4.1 per cent and 1.0 per cent), milk (5.0 per cent and 3.7 per cent) and meat (5.1 per cent and 2.9 per cent); the growth in the third period was higher than the second period for all the above except for milk (3.5 per cent) and it was statistically significantly higher for pulses (2.5 per cent), oilseeds (4.8 per cent) and cotton (13.7 per cent).  The trends observed till 2010-11 have continued till 2013-14, but for a setback in 2012-13 because of delayed onset and deficient rainfall.

Conventionally, in monsoon India, the farmer was exposed to either yield or price shocks that were supposed to move in opposite directions counterbalancing each other. Today, the possibility of yield risk increases because of unavailability of power that in turn affects water availability at a crucial time, or because of spurious seeds or due to an increase incidence of pest attack or because of weather changes. Further, because of global integration, price volatility has increased and price shocks could be because of higher subsidies in the United States or the European Union. And, with these changes the two risks do not counterbalance each other and the farmer can also be exposed to both the shocks in the same season.

 

Over the years, the farmer is increasingly relying on the market for inputs. The link between ground realities and publicly funded research and extension is waning and the farmer depends on the input-dealer leading to a supplier-induced-demand. What is more, the private provisioning of inputs without any regulation to address the sale of spurious products or other market irregularities increases farmers' vulnerability. Further, with changes in technology, the farmers' current knowledge become redundant and there is deskilling.

Adequate, affordable and timely availability of credit would be essential for any enterprise, but this has been eluding the Indian farmer. In addition, agricultural credit is about doing the same things again and again and not linked to horizontal or vertical expansions. Thus, any shocks are likely to make debt non-serviceable and this would make the farmer ineligible for subsequent loans from formal sources. This would increase the reliance on informal sources at a greater interest burden.

Input-intensive cultivation practices bring in risks that go beyond weather and market uncertainties. There can be inappropriate fertiliser applications having an adverse impact on soil health resulting in yield fatigue or pesticides having harmful impact on livestock and human health or depletion of groundwater among others. A way out being propagated is an expansion of the same, that is, to bring more areas under the input-intensive approach - the look east policy being touted under a second green revolution or an evergreen revolution. The argument put forward in favour of this or other technology-driven approach is that there is no alternative (TINA).

Alternative Policy Thinking

In practice, multiple alternatives exist (MAE, an acronym that sounds as mother in some vernacular languages and we refer to it as mother earth depicting the multiple alternatives that she provides) that is context-specific. It differs across locations and evolves over time. It questions the one-size fits all approach. Such thinking takes advantage of the variability of the natural resource base and the diversity in the production systems. As each crop has a different life cycle, the diversity spreads out the vulnerability from each episode of unforeseen climatic events. In addition to an integration of different crops, the system is also integrated with livestock production. These could lead to low external input sustainable agriculture (LEISA). The application or propagation of this approach is knowledge centric.

Comparing knowledge-centric MAE to technology-driven TINA, one can state the following.

• MAE is bottom-up where different knowledge providers will not only have to keep the local specifics in mind, but will have to work in tandem with the users. TINA is top-down where the provider of the technological-fix, as a solution to some presumed problem, is considered hierarchically superior to the user of that technology.
• MAE is context-specific, requires an understanding of the system dynamics and evolving of effective structures to manage them. TINA is crop-specific and involves application of inputs/technology to enhance production.
• MAE focuses on the production of a complex system with an important emphasis on risk reduction. TINA focuses on a single crop or livestock with an emphasis on improving productivity.
• MAE understanding of efficiency is from a system perspective. TINA looks into efficiency in the technological and economic sense that is normalised per unit of input.
• MAE involves marginal lands with the crop-livestock system spread over a larger area and in that sense is extensive. TINA is mainly in areas with better soils and with access to water (preferably through irrigation) and input-intensive.
• MAE is about integration of mixed and multiple crops with livestock. TINA is about specialisation that espouses mono-cropping.
• MAE production on private lands is dependent on commons. TINA production is in owner-operated lands.

Despite these differences, MAE like TINA, cannot happen on its own. To promulgate it, one needs the support of appropriate knowledge, resources and adequate leverage with marketing opportunities and information technology. It also requires constant monitoring and evaluation.

One of the recent initiatives in-line with MAE is the interventions in comprehensive pilots through the Revitalizing Rainfed Agriculture Network (RRA-N) comprising of a number of civil society groups spread across the country. The comprehensive pilots are spread across different agro-ecological conditions and focuses on integrating knowledge-centric interventions on water, soil, seed, livestock, fisheries, credit and institutions among others. They also collaborate with the local-level line departments and other government functionaries, as that is very essential to scale-up within the pilot area. The interventions that started in Kharif 2012 have attracted the attention of the Planning Commission, the Department of Science and Technology and the Food and Agriculture Organization. This requires greater research engagement that will delineate the specificities in each comprehensive pilot and identify the similarities across comprehensive pilots to facilitate their application beyond the pilot areas.

To sum up, Indian agriculture has been going through a crisis that is agrarian as also agricultural. A way out of this is to explore context-specific knowledge-centric approaches. This, to borrow a term, has the potential for an inclusive, sustainable and food-secure India.

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[1] This is a slightly edited and hyper-linked version of a write-up that has been published in Yojana, June 2014, pp.58-60 (the PDF version of the issue is available in Google drive). It draws from some of my recent works. They include: Technology, Development, and Farmers' Suicides in India: A Misplaced Debate, Visiting Fellows Seminar, Asia Research Centre, London School of Economics and Political Science, 20 March 2014; Agriculture in India: Performance, Challenges and Opportunities (with S Mahendra Dev and Vijaylaxmi Pandey) in Ashima Goyal edited The Oxford Handbook of the Indian Economy in the 21st Century, Oxford University Press (OUP), New Delhi, 2014;  Rainfed Agriculture: for an inclusive, sustainable and food secure India (with A Ravindra and Ced Hesse), IIED Briefing Paper, April 2013; Persistence of Crisis in Indian Agriculture: Need for Technological and Institutional Alternatives (with D Narasimha Reddy), in Dilip Nachane edited India Development Report 2011, OUP, New Delhi, 2011; and Agrarian Crisis in India (co-edited with D Narasimha Reddy), OUP, New Delhi, 2009 among others.

Some earlier related blogs on this theme are:

India's best dramebaaz

Farmers' suicides and crisis in Indian agriculture

Remarks on rural credit for globalising farmers

Opinions and priorities for agriculture in India

The farmers' strain

An open letter from an ordinary citizen

The general elections have been concluded in India. It is a foregone conclusion that her next Prime Minister will be the Bharatiya Janata Party's (BJP's) Mr Narendra MODI. Much has been said and there are two broad possibilities that one foresees. The best-case scenario is the 'Making Of Democratic Institutions', an euphemism that I use for development, governance and all that the supporters are enthused about. As against this, the worst-case scenario is that it would 'Mar (nay, M...) Our Democracy Inevitably', an euphemism that I use for crony capitalism and divisiveness among others that many others fear. For both these scenarios, the acronyms match with the last name of our Prime Minister.

In this MODI vs MODI diatribe, the development vis-a-vis crony capitalism discussion will continue to remain a matter of interpretation and ideological moorings and the debate will be difficult to conclude. There will also be differences of opinion from withing the ruling party and its affiliates and one has to see which direction it takes. The so-called Gujarat-model or the trumpeted Kerala-model. Well, one has to take the best of both worlds and make Jagdish Bhagwati and Amartya Sen come to an agreement.

The contentious part will be juxtaposing governance and divisiveness. Ideally speaking, any polarization leading to divisiveness anywhere should be considered as a failure of governance. However, from a practical consideration it is possible that the government reaches out to a larger section while ignoring a smaller section. What is more, the principle of exclusion could be based on caste, class, gender, religion and other such identities. If these fears are addressed they will definitely not exorcise the ghosts of the past, but they will bode well for the country's future. Where will we head to? Only time will tell.

In reality, the actual path will be somewhere in between. Politically, if extreme adversities do not come in the way, the future looks like advantage BJP. It is hear that I am concerned as an ordinary citizen because for an effective democracy we need a credible and responsible opposition, which is missing. True, the drubbing of 2014 will lead to soul-searching by all parties, but it is difficult to know what would emerge.

The Congress still seems to have a proportion of population voting for them. Perhaps they identify them with the freedom movement or because of their loyalty to the family. However, if the party has to come-back then it has to go beyond these loyal voters and for that it needs to get out of dynastic politics and develop its grassroots organisation - a tall order indeed.

This is also true for the multitude of regional parties that have lost. They need to get back to their drawing board and re-invent themselves. Those who have withstood the change will end up supporting the ruling alliance because of the dynamics of centre-state relationships, but also because of their personal vested interests. 

Today, the only party that seems to be articulating against vested interest in word and deed is the Aam Aadmi Party (AAP). But then some of their elected representatives from Delhi seem to have developed cold-feet with the prospect of loosing a fresh election and are clamouring for a fresh go at government-formation. If hastily resigning was a sign of immaturity then their trying to get back to power again when they do not have the strength and after the recent drubbing will be identified with opportunism. This is a catch-22 situation for them.

AAP may try their old style referendum to know what people in Delhi want, but even if people want they cannot form a government because either BJP or Congress has to agree to that arrangement. In any case, BJP fresh with a victory may now like to go for a fresh election and this time AAP will have a tough time.

Yes, AAP did increase its vote share in Delhi, but it has also lost some supporters and the BJP has increased its share by a larger proportion. Will AAP be able to get back those votes that moved away from it if there is a fresh election? Will it be able to add votes from those who did not vote for them or BJP? Will it be able to counter the new BJP campaign that will also have their government at the centre? Will it have resources and volunteers to campaign for it if there is a fresh election? 

At the national level, obtaining resources and volunteers will be essential for building up a strong organisational structure. Where are they going to get this from in the next five years? How does it plan to address vested interests within their organisational structure? Does it plan to build alliances or at least seat sharing or not putting up candidates if another party seems to have a reasonable candidate who may have disagreements with them but subscribes to some people-centric principles and is not corrupt?

What are the plans that they have for the four constituencies that they have won in Punjab. In principle they are against use of MP and MLA funds. This will be an ideal set-up if the government is also theirs. However, with the conventional governance structure it would be better if the candidates for these four constituencies use the funds in a meaningful way. 

As an outside lay citizen, the advantage of AAP is that it has taken into its fold people with different views and ideologies. This would give space for internal deliberations and space for multiple views. This itself makes it like the Congress party of yore and it should take advantage of this.

Idealism is good and people respect AAP for that. However, practical considerations are also important. For instance, emphasis need not be on legislation always and that too when one does not have a majority, but rather focusing on governance and achieving many other things that could be possible without legislation.

To sum up, the future seems to be advantage BJP. Congress and the multitude of regional satraps need soul-searching. AAP that once provided hope and aspirations to some will have a lot of questions to answer. It is a churning between the Congress, the regional satraps and AAP that could perhaps give a reasonable opposition. Let us wait and see.

My other recent election related musings are:

A tall order there for pluralism to resurface

ABC of Indian Elections 2014

Rawlsian veil, Smithian impartiality and Indian Elections of 2014