A prosperous countryside!

The latest poverty data released by the Planning Commission, showing faster reduction in poverty in rural areas than in urban concentrations over 11 years to 2004-05, are hard to digest. That the overall poverty ratio has come down, as reported, is easy to understand in an economy that has seen accelerated growth during this period. Where the actual level of reduction and its rural-urban break-up are concerned, confusion has been caused by the two sets of numbers compiled by the National Samples Survey Organisation in 2004-05 (NSS 61st round) based on the Uniform Recall Period (URP) of 30-day consumption data and the Mixed Recall Period (MRP) of 365-day consumption data. However, what is common in both sets of numbers is that a significant proportion of the poor population has moved out of the poverty bracket between 1993-94 and 2004-05""at the rate of about 0.8 per cent of the total population every year. While the URP data put the poverty level in 2004-05 at 27.5 per cent, against 36 per cent in 1993-94 (or a drop of 8.5 percentage points in 11 years), the MRP-based numbers reckon it at 21.8 per cent in 2004-05, against 26.1 per cent in 1999-00 (a fall of 4.3 percentage points in five years).

While viewing these figures, it needs to be borne in mind that the two sets of figures are comparing the 2004-05 situation with two different base years, and using different baskets of consumption items, as also different lengths of recall period. Nevertheless, in their broad message about steadily declining poverty, the numbers appear consistent. What gives rise to misgivings is the fact that the data point to a much faster decline in poverty levels in the slow-growing rural sector than in the fast-progressing urban areas. Going by the URP-based statistics, which capture a longer period, the fall in rural poverty works out to a handsome 9 percentage points (from 37.3 to 28.3 per cent), against only 6.7 percentage points for urban poverty (32.4 per cent to 25.7 per cent). The picture presented by MRP-based figures for the more recent period 1999-00 to 2004-05 shows an even greater skew, with a drop of 5.3 percentage points in rural poverty (from 27.1 to 21.8 per cent) and only a meagre 1.9 percentage point fall in urban poverty (23.6 to 21.7 per cent).

These numbers must raise eyebrows because this was a period when the rural economy was under tremendous stress due to the sharp deceleration in agricultural production growth, and when the urban economy was doing much better. Employment in the rural sector, too, was not growing fast enough to make a big difference to the income levels of the poor. In such a scenario, it is hard to see what could have lifted so many rural poor out of the poverty bracket, unless it is argued that there is a big shift of the rural population away from agriculture to other activities. Even if that were the case, the contrast with the rate of poverty decline in the urban areas is hard to explain, except perhaps through migration. But, there is hardly any evidence to support the thesis that there has been an unusual surge in migration rates. Moreover, the fact that the proportion of the agriculture-dependent population has not declined by any perceptible extent also discounts the argument that people in the rural areas have moved away from unremunerative agriculture, to other, better-paying occupations. These issues need to be addressed before the picture painted by the new poverty numbers can be accepted as reflective of reality.