India Chronic Poverty Report Towards Solutions and New Compacts in a Dynamic Context Aasha Kapur Mehta l Andrew Shepherd Shashanka Bhide l Amita Shah l Anand Kumar INDIAN INSTITUTE OF Chronic Poverty PUBLIC ADMINISTRATION Research Centre i INDIA CHRONIC POVERTY REPORT ii iii INDIA CHRONIC POVERTY REPORT: Towards Solutions and New Compacts in a Dynamic Context Aasha Kapur Mehta • Andrew Shepherd Shashanka Bhide • Amita Shah • Anand Kumar INDIAN INSTITUTE OF PUBLIC ADMINISTRATION INDRAPRASTHA ESTATE, RING ROAD, NEW DELHI-110002 iv © Indian Institute of Public Administration, New Delhi, 2011 Price 300 ISBN : 81-86641-41-6 Published by Indian Institute of Public Administration, New Delhi and Printed at New United Process, A-26, Naraina Industrial Area, Ph-II, New Delhi, Ph. 25709125 FOREWORD The “India Chronic Poverty Report: Towards Solutions and New Compacts in a Dynamic Context” is timely, coming as it does while the Approach to the Twelfth Plan is being formulated. Written by a group which has been researching chronic poverty for several years, the Report goes back to speeches made in the Constituent Assembly at time of Independence and reminds us that promises made then on the ‘fight to end poverty, squalor, ignorance and disease’ still remain unfulfilled. It draws attention to the gaps between actual achievements in this regard and constitutional provisions regarding equitable development. Given that the Eleventh Plan focus was to make “growth faster and more inclusive”, and that in this context efforts were also made to impart a “rights approach” in some major anti-poverty schemes, the Report is a reminder of the long-haul nature of India’s development promises. Like all previous plans, the Eleventh Plan was based on the understanding that the only way in which we can find meaningful solutions to the problems of mass poverty is through rapid economic growth. Rapid GDP growth and consequent rise in the state revenue made it possible to allocate larger resources for social sector expenditure. But the Eleventh Plan had also recognized that growth is not an end in itself - it must translate into better life for all citizens of our country. The Report notes that chronic poverty continues because almost all past growth-mediated poverty- reducing strategies have bypassed various historically marginalised groups and deprived regions. Persistent spatial backwardness and inequality have led to concentration of poverty in certain parts of the country, so there is a geographical dimension to poverty. Additionally, since poverty remains especially prevalent among certain occupational groups, there is a sociological dimension to its persistence. It summarises the debates around the measurement of poverty in India and suggests that while there are differences with regard to measuring poverty, longitudinal tracking of households through panel data enables analysis of the dynamics of poverty. Poverty dynamics recognises the existence of processes through which the poor either escape from poverty or fail to escape it and the non-poor either remain non-poor or become poor. Through analysis of a rural panel dataset covering about 3,000 households across the country it draws attention to the significant scale of incidence of chronic poverty; of non-poor households falling into poverty; and of a proportion of those who are poor managing to escape from it. The drivers-maintainers-interrupters framework discussed in this Report provides a nuanced approach to identify factors that cause entry into poverty (drivers) and those that cause poverty to persist (maintainers). It also identifies pathways (interrupters), which if strengthened can promote escape from poverty. This framework can be useful in designing programmes for employment generation, education, skill development, health care and social security measures to benefit the disadvantaged. Resources generated by rapid growth enable allocation of more resources for such programmes but, as discussed in this Report, many flaws remain in respect of programme delivery vi that need attention for these programmes to effectively bridge not just the development deficit but also the trust deficit to which the authors draw pointed attention. A major source of this trust deficit is that most programmes have in the past been designed centrally and based on mai-baap delivery – with no formal obligation on deliverers to actually deliver and no formal guarantee to make beneficiaries certain that they will actually receive. A relatively new innovation in this context is the “rights approach” that sets down justiciable duties and rights. Rights to information and education have recently been legislated and an employment guarantee (MGNREGA) enacted for rural areas, representing a partial right to employment. Moreover, a major effort is currently on to provide a legislated right to food. Although it is still unclear how much these recent acts have reduced the trust deficit, these along with greater powers to local bodies are an integral part of the architecture to make growth “inclusive”. Quite apart from addressing the trust deficit, the “rights approach” fits the analysis of this Report which highlights the fact that there is considerable and continuous exit from and entry into poverty and that therefore targeting only those currently poor is not always a good development approach. However, while this aspect is covered since any legal right must necessarily be the right of all citizens and therefore universal, the very concept of chronic poverty does demand some special entitlements for those most likely to be chronically poor. This issue is important in the context of the ongoing debate on food security. It is clear that the present targeted public distribution system (TPDS) is leaky, inefficient, corruption-ridden and also hugely untargeted because very cheap grain is being distributed on the basis of a very faulty below poverty line (BPL) identification process. Converting TPDS into law is difficult because the right to food cannot be targeted towards only the poor unless poverty can be legally defined and, as this Report makes evident, this is impossible to do realistically. However, the alternative of making entitlements universal is also impossible if these are to involve sizeable quantities at very low prices. Therefore, we need to combine aspects of universal food security, say along lines of availability at prices close to Minimum Support Prices (MSP), with extra entitlements of either lower prices or cash transfers for those whose ability to access food at MSP is likely to be remain chronically limited because of their inability to access universal livelihood supports such as MGNREGA. These latter groups would have to be defined on the basis of individual characteristics rather than simply on basis of being “poor”, and the research presented in this Report may be very useful for this purpose. Also, this research clearly shows that ill-health is a major driver into poverty and therefore limiting access to subsidised health care only to the pre-defined BPL will bypass many who will end up poor as a result. The design of what ought to be universal and what can be targeted in public healthcare can also therefore be guided by such findings. In sum, this Report by CPRC India is timely and will undoubtedly help policy makers, not only to focus better on eradicating chronic poverty but also address such issues as that of left-wing extremism which it deals with and which the Planning Commission is also grappling on. I commend the initiative taken by the Chronic Poverty Research Centre headquartered at the Indian Institute of Public Administration and the five academics who have co-authored it, for systematically studying and drawing attention to these issues. Dr. Abhijit Sen Member, Planning Commission, Government of India and Professor of Economics, Jawaharlal Nehru University PREFACE As opposed to transient poverty, chronic poverty involves people, households, and social groups who are poor for sustained and significant or extended periods of their lives and whose families and children may inherit this persistent condition. While chronic poverty is dynamic in that people do climb out of, or fall into poverty in significant numbers, exiting such poverty can prove difficult. Chronic poverty is often concentrated in certain geographic areas and amongst certain castes and occupational groups. It not only has economic dimensions, but also social and political ones. There are many factors why chronic poverty exists. Crop failures, ill health, disabling accidents, disasters (natural or manmade), and economic slowdowns can all lead to the non-poor becoming poor, and even becoming chronically poor. A large proportion of India’s poor are living in chronic poverty. Amongst other things this has resulted in protests, electoral defeats for ruling political parties and coalitions and the rise of extremism. The Chronic Poverty Report indicates that lack of resources or asset-lessness - lack of access to land, water, forests, housing, credit, literacy, capital – are all characteristics of poverty and that the poor are often hungry, lacking in shelter and clothing, sick and not cared for, illiterate and not schooled, and more vulnerable to events outside their control, as well as lacking in voice and power in the institutions of the state and society. The report reminds us that ending poverty, ignorance, disease and inequality of opportunity had been considered major priorities at the time of independence and that this had even found reflection in the Indian Constitution’s Directives Principles of State Policy. However despite successes through specific measures designated to tackle these issues, a lot is still required to be done especially if one looks at the condition of the various categories of the chronically poor in the country. Thus India’s Eleventh Five Year Plan and recent Budget Speeches have talked of inclusive growth and the Five Year Plan document has expressed the hope there would be major gains in the struggle for removal of chronic poverty, ignorance and disease during the plan period.