Poverty Reduction In Poverty

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The poverty estimates for 2009-10 using the earlier Lakdawala method is 24.2% in rural India and 23.5% in urban India including the free meals, and 26.1% in rural India and 24% in urban India excluding the free meals. This show a much smaller reduction from the corresponding 2004-05 estimates. The poverty estimates at the international poverty lines using PPP ($1.25 and $2 a day) also emphasize the decline in poverty. So we can state that poverty has declined in between 2004-05 and 2009-10 but to what extent is economic growth responsible for this reduction in poverty? Is it growth alone or a combination of growth and redistribution policies?

It is general understanding that higher growth rates tend to yield more rapid absolute poverty reduction as for any given poverty line, any measure of absolute poverty will be a strictly decreasing function of the mean income on a constant Lorenz curve. On a constant Lorenz curve, the consumption of all strata changes by the same proportion, and so the poor are better off when the mean increases. It is often assumed in Indian context that the only thing that really matters for poverty reduction is the rate of economic growth. Economic growth is often taken as a substantial condition for poverty reduction. But it would be incorrect to assume that
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The Gini coefficient for rural India increased from 0.27 to 0.28 and states that had an increase in the rural Gini coefficient performed more poorly in poverty reduction than states with comparable growth rates which saw a decline or no change in inequality. For instance, Bihar, despite having high growth did not witness decline in rural HCR as the rural Gini co-efficient increased from 0.19 to 0.22 probably because of the adverse changes in distribution i.e. increase in inequality might have nullified the effect of growth causing virtually no change in

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