Globalization, growth and poverty in India

In this paper an attempt is made to assess the impact of economic reforms on the incidence of poverty by decomposing the change in poverty ratio between two time points into growth/mean effect, inequality effect and the population shift effect. Based on the National Sample Survey data an analysis has been carried out for two time periods: (i) 1983 to 1993-94 and (ii) 1993-94 to 1999-2000, broadly representing the pre-reform and reform-period respectively, for the rural and urban areas of the fifteen major states, and also for the all-India level. The growth/mean effect, which determines the extent of fall (rise) in poverty incidence due to rise (fall) in mean per capita consumption expenditure, dominates in both the periods over the inequality effect, that estimates the rise (fall) in poverty due to rise (fall) in inequality. It also dominates over the population shift effect, which assesses the net impact on all-areas combined poverty, of a decline (rise) in rural (urban) poverty caused possibly by rural-urban migration. The growth effect, which is beneficial for poverty reduction, seems to have gone up in the reform period. The adverse inequality effect also fell in magnitude in the second period compared to the first. States with a greater beneficial growth effect in the second period relative to the first, also show a fall in the magnitude of an adverse population shift effect in the urban areas, i.e., a relatively less rise in the incidence of urban poverty caused by rural-urban migration. – globalization ; economic growth ; poverty ; inequality ; population shift effect ; Decomposition ; India