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Why poverty in rural India is still a concern

The recently-released India Rural Development Report, which is endorsed by the government, says 7% of the rural population is ‘very poor’; villages in eastern Indian states are the worst affected.

A World Bank report released this week has proposed a new way to measure poverty (See Meaning), which suggests that India may have been overestimating the number of its poor. According to a separate set of figures and analysis endorsed by the Ministry of Rural Development, however, nearly 7 per cent of the country’s rural population is still living in “extreme poverty”.

Both estimates are for 2011-12. According to the government-endorsed India Rural Development Report 2013-14, however, poverty in rural India fell much faster in the period 2004-12 as compared to the preceding decade.

The report, released recently, is the second edition of the India Rural Development Report series prepared by the IDFC Rural Development Network. In 2006, the Rural Development Ministry under then Minister Jairam Ramesh, had entered into an agreement for the publication of an annual rural development report.


According to the India Rural Development Report 2013-14, 6.84 per cent of the rural population was categorised as “very poor” in 2011-12, down from 16.3 per cent in 2004-05. Chhattisgarh had the highest percentage of “very poor” across major states — 15.32 per cent — followed by Madhya Pradesh (15.04 per cent), Odisha (11.46 per cent), Bihar (10.45 per cent) and Jharkhand (9.23 per cent).

In 2004-05, the bottom five states were Odisha (34.3 per cent), Chhattisgarh (24.5 per cent), Bihar (23.5 per cent), Madhya Pradesh (23 per cent), Maharashtra (22.5 per cent).

However, the report also finds that the rate of reduction of rural poverty per annum nationally accelerated to 2.3 percentage points during 2004-11 as compared to 0.8 percentage points in the decade spanning 1993-2004. Poverty declined at a faster pace in poorer states like Odisha, Bihar, Madhya Pradesh and Uttar Pradesh during 2004-11 as compared to the decade preceding it. In 2004-11, the highest rates of reduction of rural poverty per annum among states were in Tripura (4 percentage points), Odisha (3.6), Maharashtra and Uttarakhand at 3.4 percentage points, and Bihar, Sikkim and Tamil Nadu at 3.1 percentage points.

Poverty among marginalized groups continues to remain high. Significantly, even in 2011-12, nearly 45 per cent of Scheduled Tribes and 31 per cent of Scheduled Castes in rural areas remained poor, although down from 62.3 per cent and 53.5 per cent respectively in 2004-05. Between 1993-94 and 2004-05, non-SC/STs saw a faster rate of reduction of poverty, the report shows. Between 2004 and 2012, all social groups saw a significantly accelerated rate of poverty reduction — the rate among SCs and STs was, in fact, higher than the average rate of reduction of poverty in rural areas, says the report.

And yet, more than half the SCs in the rural parts Bihar, which is headed to assembly polls next week, were found to be poor — the highest among states at 51.67 per cent. In Chhattisgarh, 48.19 per cent of SCs were poor, while in Madhya Pradesh, Odisha and Uttar Pradesh, the figure was around 41 per cent. The all-India figure was 31.52 per cent.

The incidence of poverty among STs remained high in Chhattisgarh, Bihar, Madhya Pradesh, Maharashtra and Jharkhand. Over half the STs in these states are poor, as per the 2011-12 figures.

Poverty among occupational groups in rural areas is the highest among agricultural labour (40 per cent), followed by other labour at 33 per cent and the self-employed in agriculture at 22 per cent.

However, poverty among the non-agricultural households is low.

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