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LATEST NEWS UPDATES | States' data cast doubt on growth-poverty equation; welfare schemes have a strong role to play by Devika Banerji

States' data cast doubt on growth-poverty equation; welfare schemes have a strong role to play by Devika Banerji

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published Published on Mar 27, 2012   modified Modified on Mar 27, 2012

The sharp drop in poverty estimates in the latest count has been attributed largely to the high growth over 2004-2010, but disaggregated state-level data does not seem to provide conclusive evidence.

The national poverty count dropped to 29.8% in 2009-10 from 37.2% in 2004-05, but in states such as Bihar, Chattisgarh, Uttar Pradesh and even Punjab the decline was much less even though they reported a visible improvement in economic growth over this period.

In contrast, states such as Rajasthan, West Bengal and Andhra Pradesh were successful in bringing down poverty ratios sharply despite a lacklustre economic performance. This seems to negate a conclusion that growth alone will lift people out of poverty.

"Poverty has declined in states where public expenditure on poverty alleviation schemes were increased during the period rather than states that just concentrated on high growth rates," said Himanshu, professor of economics with Jawaharlal Nehru University and a visiting fellow at the Centre de Sciences Humaines. A mapping of government's employment guarantee scheme

MGNREGS with poverty counts does suggest a strong role of welfare schemes in lifting people out of poverty. "If you look at the states that have been able to bring down poverty by around 10 percentage points or more, it correlates with the fact these were the states that were most efficient in implementing central sector welfare schemes particularly MGNREGS," said an official in the rural development ministry.

The poverty count is based on the Suresh Tendulkar methodology that pegs the number of poor in the country, based on per capita expenditure, at 354.6 m in 2009-10, down 15% from 407.2 m in 2004-05. Though the government has now set up another committee to look into the methodology after an outcry that Tendulkar Committee poverty line was too low, the underlying trends will largely remain the same even if a higher cut off is uses that will increase the number of poor.

Rajasthan and Andhra Pradesh were frontrunners in implementing the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) that was introduced in 2006. These two states had the highest demand for employment under the scheme during period and utilized the highest amount of central funds for the same.

Other successful government schemes like Pradhan Mantri Gram Sadak Yojana and Rashtriya Swasthya Bima Yojana also picked up steam in the period under consideration.

Planning commission member Mihir Shah also says that while it is difficult to ascertain whether trickle down of economic growth is weak , government intervention through expenditure and better targeting of benefits continue to hold the key to the reduce poverty. "It definitely shows that we gave money in the hands of the people and it has worked. Whether economic growth is trickling down or not needs to be analysed further," Shah told ET.

The Economic Times, 26 March, 2012, http://articles.economictimes.indiatimes.com/2012-03-26/news/31240437_1_welfare-schemes-poverty-count-mgnregs


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