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Global Development Institute

WP203/2014

Revisiting the Great Indian Poverty Debate: Measurement, Patterns, and Determinants

Himanshu and Kunal Sen

In spite of rapid economic growth in the past three decades, poverty rates in India remain high, especially in certain regions and among the socially excluded groups. However, what has happened to poverty in India, especially after the onset of economic reforms in 1991, has been fiercely debated, both politically and statistically. In this paper, we revisit the Great Indian Poverty Debate, addressing both the measurement and causes of India’s persistent poverty. Our analysis of recent Indian poverty data suggests that there has been a higher rate of poverty decline in the second decade of economic reforms, in the 2000s, as compared to the first decade of reforms, in the 1990s. However, the rate of poverty decline in the post-reform period has not matched what was observed in the pre-reform period, in the 1980s. Further, there is evidence of sharply increasing inequality, both within the rural and urban sectors, as well as in a growing rural-urban divide. We suggest that the disappointingly low rate of decline in poverty in India in spite of high economic growth in the post-reform period may be attributed to declining growth in agricultural output, linked to low productivity growth in the sector, along with the increasing scarcity of arable land for cultivation.