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

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A Model-Based Assessment of India's Progress in Reducing Poverty in the 1990s

An econometric model of poverty incidence is calibrated to 20 household surveys for India's 15 major states spanning 1960-1994. The model builds on past research suggesting that the key determinants of the rate of poverty reduction at state level are agricultural yields, growth of the non-farm sector (depending on the state's initial conditions), development spending, and inflation. The model is used to predict the rates of poverty reduction over the period 1994-2000. The overall incidence of poverty is projected to have fallen from 39 per cent to 34 per cent over this period, suggesting that the rate of poverty reduction in the 1990s is slightly lower than the 1980s, and lower than one would have expected given the growth in the 1990s. We offer some explanations as to why the growth process in the 1990s has not done more to reduce poverty in India.

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