Abstract
This paper analyses the changes in Social Welfare and Inequality during post reform period in the framework of Atkinson Social Welfare Function. Our results suggest acceleration in the growth of social welfare at All India and broad expenditure groups of population. The acceleration of growth in Social Welfare was accompanied by worsening of inequality. This paper provides estimates of elasticity of poverty and welfare with respect to growth and inequality. It also evaluates the performance of states in poverty reduction. The results show substantial inter-state and inter social group variations in poverty reduction. In almost all the states relative poverty of Scheduled communities increased in the post reform period and relative poverty levels were higher for these communities in developed states including Punjab, Haryana and Kerala. Decomposition of poverty reduction between 1993/94 and 2009/10 and simulation exercises show that poverty reduction would have been substantially more, had all states achieved same growth of MPCE as that of All India and inequalities remained at 1993/94 level. This paper suggests an approach to pool two independent surveys data—NSS 61st round (2004/05) and NFHS-3 (2005/06) and provides estimates of multidimensional poverty considering income poverty, child malnutrition, and female chronic energy deficiency under alternative rules of aggregation. This paper also evaluates states performance in the reduction of multidimensional poverty and ranks the states on the basis of multiple deprivations.
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Notes
- 1.
The commodity group price indices, given in Ravi (2000) for NSS commodity groups separately for rural and urban areas of NSS rounds, compiled from disaggregated monthly wholesale price indices with weights based on NSS household consumption data have been updated using similar methodology.
- 2.
The NSS used Uniform Reference Period (URP) for the rounds of the first period—1983, 1986–87, 1987–88, 1988–89, 1989–90, 1990–91, 1992, 1993–94, 1994–95, 1995–96 and 1997; and Mixed Reference Period (MRP) for the rounds of the second period—1993–94, 1999–2000, 2000–01, 2001–02, 2003, 2004–05, 2005–06, 2006–07, 2007–08 and 2009–10. For a few rounds, NSS used both the reference periods. The absolute values of MPCE differ between the two. However, it is unlikely to affect their growth rates. While fitting the trend equation, some years belonging to the post reform period have been included for augmenting the degrees of freedom. The inclusion will not affect our comparative assessment.
- 3.
In the Atkinson social welfare function, inequality aversion parameter ε can take both positive and negative values. When it takes the value ‘0’ welfare is equal to µ i.e., mean expenditure. For all negative values of ε, welfare is against the poor in India. For all ε > 0, the welfare function favours the poor and in our inter-state analysis we have considered the value of ε at moderate level i.e., ε = 2.0, where consistency in welfare is observed (see Table 3.2). One can do the analysis for other values of ε also.
- 4.
Atkinson rural-urban inequality computed from unit level data of quinquennial surveys showed an increase in inequality between 1993/94 and 2004/05 and no change between 2004/05 and 2009/10. However, it showed an increase between 1993/94 and 2009/10 (see Table 3.7).
- 5.
In this paper we used the poverty lines of Expert Group (2009)/Planning Commission.
- 6.
The unit level households MPCE have been expressed at 1993/94 urban prices by adjusting for inter temporal, rural-urban and interstate price variations. The price adjustments have been made using Planning Commission’s rural and urban poverty lines at current prices for all India and states. The procedure assumes uniform price index for rural/urban expenditure groups within a state.
- 7.
It may be pointed out that the interstate correlation between Atkinson inequality and Gini coefficient is found to be close to one. Moreover, both show similar changes in inequality between 1993/94–2004/05–2009/10 across states.
- 8.
Atkinson Social Welfare Function is considered and total population is divided into mutually exclusive groups. For details see Blackorby et al. (1981), A New Procedure for the Measurement of Inequality within and among Population Subgroups, The Canadian Journal of Economics, Vol. 14, 665–685.
- 9.
The regions are: (1) North-Haryana, Himachal Pradesh, Jammu and Kashmir, Punjab and Uttarakhand, (2) Central Chhattisgarh, Madhya Pradesh, and Uttar Pradesh, (3) East-Bihar, Jharkhand, Odisha and West Bengal, (4) West Gujarat, Maharashtra and Rajasthan, (5) South-Andhra Pradesh, Karnataka, Kerala and Tamil Nadu, (6) North East-Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura and (7) Special Category-Goa, Delhi and Puducherry.
- 10.
More appropriate variables would have been mean and inequality in household incomes. However, relevant data on these variables do not exist. Omission of income inequality among the regressors may give rise to the endogeneity problem. It may result in downward bias in the estimates of the growth effects of MPCE and SW since income inequality may have a negative on MPCE and SW and ispositively correlated with per capita GSDP. On the other hand it may result in under estimation of the growth elasticity of poverty since income inequality worsens poverty. Data does not permit us to use more sophisticated econometric methods to address the problem of endogeneity.
- 11.
We have used the performance index proposed by Kakwani (1993) which takes into account the variations in the base poverty levels of the states and has some desirable properties.
- 12.
Decomposition of incidence of poverty gap between scheduled group (g) and non-scheduled group (n): (p g − p n) = ∑s g i (p g i − p n i ) + ∑p g i (s g i − s n i ) − ∑(p g i − p n i )(s g i − s n i ). The first term in this equation is ‘within differences in occupational groups’, the second term refers to ‘population distribution effect of the scheduled group compared to non-scheduled group’, and the last term is the interaction effect. Where, p g is the aggregate poverty level of gth scheduled group, and p n non-scheduled groups; and p g i and p n i are the poverty levels of scheduled and non-scheduled groups in ith occupation, and s g i and s n i are the population share in ith occupation of scheduled and non-scheduled groups respectively.
- 13.
Since sample sizes are small even after pooling rural and urban NSS samples for STs in the states of Goa, Delhi, Kerala, Haryana, Jammu and Kashmir, Punjab and Puducherry; for SCs in the states of Goa, Sikkim, Mizoram, Arunachal Pradesh, Nagaland, and Meghalaya; and for OBCs in the states of Nagaland, Arunachal Pradesh, Mizoram, Meghalaya, these estimates are likely to be less reliable. Hence, we have not drawn any inference from these estimates in the text. However, these estimates are found to be close to those based on Modified Mixed Reference Period sample, giving some confidence to the estimates.
- 14.
Households with a women and a child below 5 years age constituted about a third of the NSS sample households. Incidence of poverty among these households was higher as compared to all households.
References
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Acknowledgment
This is the revised version of a paper presented at the conference on “Perspectives on India’s Development and Policy” organized by the Department of Economics, Delhi School of Economics in honour of Late Professor Suresh Tendulkar during 19–20, July 2012. Comments by Professor KL Krishna, Professor V. Pandit and Professor K. Sundaram have improved the final version of the paper.
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Radhakrishna, R., Ravi, C., Sambi Reddy, B. (2017). Assessment of Well-Being in Multidimensional Perspective in Post Reform India. In: Krishna, K., Pandit, V., Sundaram, K., Dua, P. (eds) Perspectives on Economic Development and Policy in India. India Studies in Business and Economics. Springer, Singapore. https://doi.org/10.1007/978-981-10-3150-2_3
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