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Poverty rate drops, rural wages up during six years of UPA rule by Devika Banerji & Rishi Shah
Finally, there's some good news for the United Progressive Alliance government. Consumption numbers for the past six years show that real incomes have grown much faster under the Congress-led coalition than during the National Democratic Alliance era.

What's more, poverty is trending down and rural wages are growing smartly. The 2009-10 survey by the National Statistical Survey Organisation (NSSO) shows real spending by each person in rural India rose 6.3% in the five-year period from 2004-05 to 2009-10, when the UPA in power. This compares favourably to the meagre 1.2% increase through 1999-2004 when the BJP-led alliance held power at the centre. Urban Indians did even better.

The average person's spending in urban areas went up 12.9% under the UPA (2004-2009) compared to a 6.7% jump under the NDA regime (1999-2004). The numbers also show that the percentage of poor Indians, using the Suresh Tendulkar methodology, also fell to about 32% of the population in 2009-10 from 37% in 2004-05. This seems to validate the UPA government's claim that its policies and schemes have eased poverty.

"Incomes and consumption expenditure have picked up significantly after 2004 and are in tandem with the growth picking up. People are definitely earning more and also spending more," said DK Joshi, chief economist with Crisil India.

Growth in India had picked up from 2005-06 averaging almost 9.5% for three years, before dipping to 6.8% in 2008-09 due to the global financial crisis. However, the stimulus measures taken by the government to prevent the consumption cycle from collapsing further helped push up incomes. "A major reason for the rise in incomes and consumption is the stimulus measures taken by the government which pushed up wages and stimulated spending," said Joshi.

The years after 2004 saw the government waive unpaid farm loans, announce pay hikes for government employees through the sixth pay commission and put in place its flagship rural employment guarantee scheme (NREGS). Economists now say these measures boosted incomes and wages all over the country. According to the labour bureau in Shimla, farm wages have risen between 24.1% and 106.5% across states through January 2008 to December 2010.

Former chief statistician of India and adviser in the Planning Commission Pronab Sen says the bargaining power of rural Indians has increased from 2009, coinciding with the universal coverage of NREGS that has created a floor for wages. The momentum of increase in income and expenditure has helped the growth of consumer durables, and encouraged retail, finance and other allied services to venture into the vast hinterland.

"The period from 2004 onwards has seen a rise in consumer durables industry and other allied services justifying the trend and aiding it. This is a combination of rising incomes and rising consumerism," said Madan Sabhnavis , chief economist with Care Ratings. As incomes have gone up, so has inequality.

Disparities between the poorest and the richest in both urban and rural areas and that between the urban and rural population is on the rise, leaving the UPA with plenty to do on its agenda of inclusion. The current survey reveals the spending of the top 10% of rural Indians is 5.76 times more than that of the bottom 10%. This gap was slightly lower, at 5.63 times, during the previous survey period (2004-05).

In urban India, inequality has widened faster. In 2009-10, the top 10% city dwellers spent 10.11 times more than what the poorest 10% could. In 2004-05 the ratio was 9.14. The rate of rise of incomes in urban areas was also way higher than in rural areas indicating that despite welfare programmes and NREGS, migration and dwindling agricultural incomes are not being effectively addressed by the government.

"Farm incomes have stagnated and are definitely not stable. Despite the rise in consumption pattern and savings trends, increased bargaining power core concerns like unstable agri income and migration are still very much there," Sabhnavis added.