Regional Estimates of Poverty and Inequality in India, 1993–2012

Abstract

Using three quinquennial rounds of consumption expenditure data over two decades (1993–2012), this paper estimates the extent of money metric poverty and inequality in regions of India. Regions are made comparable, and the poverty head count ratio and the poverty gap ratio for 81 regions are derived using the state specific poverty lines as recommended by the Planning Commission of India. The gini index, rich–poor ratio and regression analyses are used to understand the extent of economic inequality in regions of India. Results indicate that though the extent of poverty has declined, economic inequality has increased in regions of India. During 1993–2012, the poverty head count ratio had decreased in 70 regions, increased in seven regions and remained similar in four regions of India. The southern regions of Odisha and southern regions of Chhattisgarh are reeling under high persistent poverty. The spread in poverty head count ratio among regions has increased from 0.38 in 1993–1994 to 0.64 in 2011–2012 confirming divergence in regional poverty in India. The pattern is similar with respect to poverty gap ratio. Regions of Tripura and Sikkim had highest improvements in poverty level. On contrast to poverty estimates, the gini index has decreased in 20 regions and increased in 61 regions. Likewise, 57 regions have recorded increase in rich–poor ratio. The rich–poor ratio was higher in developed regions and lower in less developed regions. Based on these findings, we suggest that regions with persistently high poverty be accorded priority in poverty alleviation program and explore the factors leading to increasing economic inequality.