Analysis of Poverty, Openness and Literacy in India

Abstract

The objective of this study is to explore the long-term impact of the degree of openness [(total exports + total imports)/GDP at current market prices] and overall literacy rate on poverty [per capita personal disposable income as a measure of ‘absolute’ and ‘relative poverty’] in India from 1952 to 2006. By using the annual data, the present study tries to explore the impact of these factors on poverty in India through time series tools (i.e. unit root and co-integration tests). Empirical results suggest that degree of openness and overall literacy rate have positive long-term impact on per capita personal disposable income. In other words, both degree of openness and overall literacy rate are jointly responsible for the reduction of poverty (i.e. increase in per capita personal disposable income) in India during the period. This study concentrates on only two factors of poverty in India such as degree of openness and overall literacy. However, other determinants of poverty such as landholding, type of house, food security, sanitation, consumer durables, status of children, type of indebtedness, etc., have not been take into consideration. The above findings, thus, suggest that if India wants to reduce poverty and enhance economic development, it should take some special measures to increase the literacy rate and deepen the ongoing reform process through a consensus among all political parties. There is not much study on poverty in India especially exploring the long-term relationship among poverty, openness, and literacy. Thus, the present study has its own originality and will add value to policy makers.