ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Suresh D TendulkarSubscribe to Suresh D Tendulkar

India's Growing Services Sector: Database Problems and Issues

The increasing importance of services in the Indian economy prompted the organisation of a seminar, 'Growing Size of the Services Sector in the Indian Economy' , in 2006. After briefly touching on the problems of collecting data relating to the size of the sector, this article introduces the content of the papers that were presented at the seminar and that follow in this issue.

Gokhale Institute

Lattars Eschew Capital Account Convertibility A t this juncture, Capital Account Convertibility (CAC) seems inadvisable. The fiscal situation, for instance, is still not strong enough to permit it. There has been only a small drop in the central government’s fiscal deficit whereas the deficits of...

To 'Ustad', with Love

B S Minhas, who died on August 30, was a distinguished economist and a down-to-earth policy analyst. Many of his research papers remain classics and many of his observations on policy two and three decades ago remain relevant even today. Minhas was also one of unimpeachable character and integrity who was not afraid to speak his mind, not infrequently in blunt language. The quality of his mind and his ability to convey the unvarnished truth without fear of consequences earned him the respect of politicians in and out of power.

The Poor in the Indian Labour Force

Comparable all-India estimates of the number of workers and unemployed in 'below poverty line' households - together defining the poor in the Indian labour force - are presented for 1993-94 and 1999-2000. Also presented is the gender, activity-status and the rural-urban composition of this group for the two time points. From a level of 115 million (43 million females and 21 million urban) the number of working poor declined by a little over 12 million - almost entirely in rural India - over the six-year period. Over 51 (36) per cent of the rural (urban) working poor were engaged in unskilled manual labour with a further 46 per cent (44 per cent in urban India) being absorbed by low-productivity self-employment.

Poverty among Social and Economic Groups in India in 1990s

This paper examines the levels and changes in poverty indicators of the rural and urban population in India disaggregated by social and economic groups. The analysis is based on the comparable estimates of poverty for the mixed reference period computed from the unit record data for the 50th (1993-94) and the 55th (1999-2000) rounds of the Consumer Expenditure Surveys conducted by the National Sample Survey Organisation. The issue is how far different social and economic groups shared the overall decline in poverty in the 1990s. The social groups most vulnerable to poverty have been identified to be scheduled caste and scheduled tribe households with both these groups having above average levels of poverty indicators in the rural and the urban population. Among the economic groups, the most vulnerable groups are the agricultural labour households (rural) and the casual labour households (urban) each having the highest levels of poverty indicators in their respective population segments. In terms of changes in poverty in the 1990s, it is found that while scheduled caste, agricultural labour (rural) and casual labour (urban) households experienced declines in poverty on par with the total population, scheduled tribe households fared badly in both the segments.

Political Economy of Indian Economic Policy

The Evolution of Economic Policy in India: Selected Essays by P N Dhar; Oxford University Press, New Delhi, 2003; pp 255.

Poverty in India in the 1990s

The authors examine the poverty situation in 15 major states across four distinct dimensions of headcount ratio, size of the poor population, depth and severity for the rural, the urban and the total population. The poverty situation, they find, worsened over the six-year period 1993-94 to 1999-2000 in Assam, Madhya Pradesh and Orissa. In the remaining 12 states there was a distinct improvement in terms of the most visible indicator, namely, the absolute size of the poor population. Overall, despite diversity across poverty indicators and across states, the overwhelming impression is one of greater improvement in the poverty situation in the 1990s than in the previous 10�½-year period.

Poverty Has Declined in the 1990s

In debates over Indian poverty trends in the 1990s, questions have been raised about the comparability of the quinquennial 50th and 55th rounds of the consumer expenditure survey (CES) carried out by the National Sample Survey Organisation in 1993-94 and 1999-2000. These focus on possible interference between alternative reference periods used to elicit expenditure data from sampled households. This paper resolves these concerns, using comparable consumer expenditure data from the employment-unemployment survey (EUS) of the 55th round, as well as data from four experimental rounds of the CES, conducted between the quinquennial larger scale 50th and 55th rounds. It shows that the size distributions of consumer expenditure from the 55th round CES are comparable to ones from the 50th round - subject to appropriate recalculation - and that there is accordingly unambiguous evidence that poverty in India declined in the 1990s, in all dimensions. Indeed, the average annual rate of reduction in the last six years of the 1990s is shown to have been higher than that between 1982 and 1993.

NAS-NSS Estimates of Private Consumption for Poverty Estimation

The fact that NSS estimates of aggregate household consumer expenditure (HCE) tend to be lower than NAS estimates of private final consumption expenditure (PFCE) has spurred suggestions to pro-rata adjust the NSS-based size distribution on the basis of this difference. Drawing on a joint CSO-NSSO exercise at cross-validation of NAS and NSS, this paper details weaknesses of both types of estimates, but shows that NAS cannot be accepted as a more reliable yardstick for either aggregate consumption expenditure or that on specific commodity groups. This is due to the inherent 'fluidity' of NAS estimates, weaknesses in their underlying database, and the fragility of the rates, ratios and norms used in the commodityflow balance underpinning the PFCE. Despite its shortcomings, it is argued that NSS is preferable because it is based on direct observations relating to the survey period and because, unlike NAS, it avoids recourse to adjustments based on arbitrary assumptions.

NAS-NSS Estimates of Private Consumption for Poverty Estimation

In the context of the controversy over the trends in poverty in India in the 1990s, this paper addresses the question of using the National Accounts Statistics (NAS) estimate of private final consumption expenditure (PFCE) in place of National Sample Survey (NSS) based estimate for calculating the proportion of the population below the poverty line or headcount ratio. A comparison is undertaken for the year 1993-94 between NAS estimate of PFCE and household consumer expenditure estimated from NSS disaggregated across item-groups of consumption and across selected fractile groups of the rural and urban population. Two alternative estimates from NAS - old series in NAS 1998 and the latest revision in NAS 1999 - are compared. Similarly, two alternative NSS estimates are considered - one directly available using a uniform 30-day reference or recall period and a synthetic one constructed to reflect the effect of using non-uniform reference period. The analysis of comparison of these four estimates suggests two major conclusions. One, the issue of accepting NAS estimate of PFCE as more correct and reliable than NSS estimate is far from settled. Two, the item groups that accounted for a very large proportion of the aggregate discrepancy between NAS and NSS estimates had a much smaller budget share in the consumption basket of the bottom 30 per cent fractile group in the rural and urban areas, whereas in respect of item-groups which together accounted for over 75 per cent of the consumption of the bottom 30 per cent, the divergence between the two estimates was much smaller than on the average for all item groups and negative in some cases.

Economic Reforms and Poverty

In the context of the ongoing debate in India about the possible impact of the economic reforms since July 1991 on poverty, this paper provides the available evidence from the National Sample Surveys conducted during 1991 (July- December) and 1992 (January-December). Contrary to the a priori expectations, there was a sharp increase in rural poverty whereas only a moderate rise took place in urban poverty. Based on the examination of the factors governing rural and urban poverty and the supplementary empirical evidence, the paper reaches the conclusion that the economic reforms-related decisions contributed indirectly rather than being the only or the major cause of the sharp acceleration of rural poverty during the period under consideration.

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