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Gujarat slips in poverty reduction rank from ninth to 11th in three years, suggests Planning Commission study

By Rajiv Shah
Latest Planning Commission estimates suggest a major setback to Gujarat as far as poverty reduction is concerned. If between 2004 and 2010, Gujarat witnessed 8.6 per cent reduction in poverty, which was higher than the national average of 7.4 per cent, between 2010 and 2012 not only the percentage of poverty reduction come down to 6.4 per cent, it was below the national average of 7.9 per cent, too. Worse, if during 2004-10 Gujarat’s poverty reduction rate was higher than in as many as eight states, the number of states which saw a higher poverty reduction in the 2010-12 phase went up to 10 out of 20 major states.
The states which have witnessed a higher reduction in the rate of poverty during 2010-12 than Gujarat are Andhra Pradesh (11.9 per cent), Chhattisgarh (8.8 per cent), Bihar (19.8 per cent), Haryana (8.9 per cent), Maharashtra (7.2 per cent), Punjab (7.6 per cent), Rajasthan (10.1 per cent), Uttar Pradesh (8.3 per cent), Uttarakhand (6.7 per cent) and West Bengal (6.7 per cent).
In fact, the trend of Gujarat failing to cope up as fast as other states in poverty reduction was there in the whole of last decade, and it has now continued in the new decade, too. Observing the trend of the last decade, Prof Indira Hirway, a senior economist, noted in a study she had carried out a year ago, “It is important to note however, that though the rate of decline in poverty during 2004-05 – 2009-10 in Gujarat was 8.6 percentage point, the state ranked 9th among the major 20 states in India in reduction of poverty. The relatively slow growing states like Uttarakhand, Tamil Nadu, Orissa, Madhya Pradesh, Karnataka, Himachal Pradesh etc. have experienced much higher decline in poverty during this period.”
She added, “In fact, Gujarat, which stood 7th in the incidence of poverty among the 20 states in 1993-94, maintained its 7th rank in 2004-05 but dropped to 9th rank in 2009-10. In other words, in spite of being the fastest growing state during 2004-05 – 2009-10, Gujarat slipped in its performance in poverty reduction. This shows that the growth alone does not count for poverty reduction, and something more is needed to translate growth into poverty reduction.”
Prof Hirway wonders, “The question is – can we reduce poverty faster? With more than 10 percent (10.27) rate of growth of SDP per year Gujarat state has achieved 1.7 percentage point decline in poverty. This implies that the elasticity of poverty reduction to growth is very low, 0.17. At the all India level this elasticity is 0.27. Is it possible to go faster when a little less than one fourth of the population is under poverty?”
The latest Planning Commission data have been culled out of the National Sample Survey Organisation’s new report, put out this year, and is based on household consumer expenditure mega-survey of different sections of society, involving the entire country.
No doubt, the percentage of persons below the poverty line in Gujarat remains lower than the national average of 21.9 per cent, standing at 16.6 per cent in 2012, down from 23 per cent in 2010 (when the national average was 29.8 per cent), yet the fact is, the proportion of poverty reduction has gone down, which observers believe is a matter of concern.

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