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Home , Poverty in India

Policy Brief March 2007 No. 4

Chronic in : Policy responses Despite the huge efforts at eliminating poverty made in India since independence, it is estimated that up to 130 million Indians live in chronic poverty – defined as poverty that endures for at least five years, and often passes from generation to generation within a family. This briefing paper summarises the characteristics of and explanations for this phenomenon, discusses the context for policy today, and proposes a series of recommendations for policy changes that would move India towards eradicating poverty

Key Points

Public policy can make a difference. Social sector policies in particular have contributed to reducing multiple disadvantage in many parts of India, even in a poor state like Orissa. Political commitment is essential for sustainable, effective policies. Poverty needs to be high on the agenda of the political elite, and they will have to work with grassroots activists to build ‘policy constituencies’ to enforce ‘political contracts’ around poverty issues. Policy points include: • Improving financial flows to persistently poor states is a critical challenge. • Improving wages, conditions, security and volume of work for casual labourers What is Chronic is vital. Poverty? • Social protection is very valuable for the chronically poor. The distinguishing • care and interventions against hunger are important; health shocks are feature of chronic poverty a major factor in chronic poverty. is extended duration • Urban centres improve economic opportunities for poor people in the in absolute poverty. surrounding area – a more even spread of urbanisation may be positive for Therefore, chronically . poor people always, or usually, live below a • Building village level infrastructure helps poverty reduction. poverty line, which is • Social status and discrimination, particularly on caste and gender grounds, still normally defined in terms need combating, with a focus on the poorest. of a money indicator (e.g. consumption, • Public surveys and censuses should be adapted to collect data on the time income, etc.), but could span and multi-dimensionality of poverty. also be defined in terms of wider or subjective aspects of deprivation. Chronic Poverty in India their poverty on to their children, and This is different from for whom finding exit routes from the transitorily poor, Chronic poverty describes the situation poverty is difficult. It is estimated that who move in and out of people or populations (individuals, there are from 78 to 130 million people of poverty, or only occasionally fall below households, social groups, regions or in India living in such situations. the poverty line. territories) who are poor for significant The Millennium Development Goals periods of their lives, who may pass and India’s Plan targets (in particular www.chronicpoverty.org those relating to poverty ratios, education and states such as , or gender) cannot be met without addressing . Rural areas poorly connected to urban chronic poverty. Chronic poverty analysis matters centres are associated with particular problems. for policy-makers because policies designed to Remote forested areas often form such pockets assist the transitorily poor may not be effective of chronic poverty. Despite rich natural resource for those trapped in chronic poverty. Also, the bases, a combination of physical isolation chronically poor are a heterogeneous group, and and entitlements failures – of access to these policies targeted at them will thus also need to resources, to information, to wider markets and be varied. public services and to anti-poverty programmes The Chronic Poverty Research Centre - maintain many tribal people in chronic poverty. (CPRC) develops an understanding of Environmental degradation or climate change the social, economic and political factors may emerge as additional factors maintaining responsible for chronic poverty and its reduction, those poor households most dependent on through a typology of drivers, maintainers and natural resources in chronic poverty. interrupters. Many dryland areas are sites of livelihood insecurity. Both commercialisation of agriculture and out-migration have helped households cope, and indeed contributed to growth and poverty Who are the chronically poor? reduction. But there is a danger that pressure on water tables and recipient-area economies could There are many processes driving and block these mechanisms and increase chronic maintaining chronic poverty. However, some poverty. broad characteristics, which most will share some of, can be identified. Social status can be a maintainer of chronic poverty and/or a driver. Despite progress in some Casual labour: a great many of the chronically areas, members of Scheduled Tribes (ST) and poor are not excluded from the economy, Scheduled Castes (SC) remain disproportionately but included on adverse terms. Insecure poor. Evidence also suggests that ST face employment, low wages and poor working particular challenges (linked to remote rural area conditions trap people in poverty. Casual labour problems) in escaping poverty. is on the increase in India: 41% of all households But social status factors affect others too, in reported casual labour as their main income particular, women. Evidently not all women are source in 1999-2000, and there are around poor, but discrimination expressed in many areas 132 million rural casual labourers. Casual of life, from labour markets to intra-household labour is strongly associated with household decision-making, makes many women especially poverty: many casual labourers never emerge vulnerable to poverty and makes it harder for sustainably from poverty. poor women to escape from poverty. Other social categories that are often linked to poverty Persistently poor states: , and discrimination include “life-cycle” categories (and Jharkand), (and – old age or childhood, and certain forms of ill- Chattisgarh), Orissa, and are health, such as physical disability, HIV/AIDS, states having persistent and severe poverty and leprosy or mental illness. the majority of India’s most deprived districts. The first three, in particular, have a substantially Household composition: Household size by itself higher share of India’s poor in relation to their does not appear to be statistically associated share of the population overall. Adverse land with greater likelihood of chronic poverty. relations inherited from feudalism and the But chronically poor people do tend to live in zamindari system, political instability and upper households with a greater number of dependents caste domination of political power,1 poor green (e.g. children), or lesser access to the labour revolution performance and weak infrastructure market (e.g. with more women). have all combined to reproduce this pattern. Multi-dimensional deprivation: chronic poverty is Remote Rural Areas: Nevertheless, chronic related to nutrition and food insecurity, ill-health poverty exists in every state in India, with “pockets” (including environmental health) and lack of social in even relatively wealthy or low-poverty-rate well-being as well as income. There is a higher

2 incidence of chronic illnesses among the poor, who The major anti-poverty programmes represent a are particularly vulnerable to health “shocks”. The mix of all these approaches. They can be grouped various dimensions of poverty can become mutually into six categories: reinforcing over time, e.g. ill-health often undermines 1. Land distribution and land reforms; income earning capacity, leading to undernutrition, 2. Area-based approaches for community and rural inability to afford access to healthcare, and further development, focusing on marginal and small health deterioration. farmers, and areas with particular problems e.g. those that are drought-prone; 3. Individual-based targeted approaches, providing access to productive capital and skills among the How do chronically poor people exit poverty? poor, including vulnerable groups like women, SC, ST and the landless; Just as there are many drivers of chronic poverty, 4. Social security or safety-net programmes, so other processes can interrupt chronic poverty. comprising the National Social Assistance People have found a variety of routes to avail Programme (which includes the National Old themselves of economic opportunities and exit Age Pension Scheme (NOAPS)), employment poverty. Analysis of panel data on rural households and self-employment programmes and relief highlights a few key themes: works, distribution of commodities of basic needs like food (Public Distribution System (PDS) and Owning land: those poor households who have others), clothing, housing for the poor and the managed to retain some land are more likely to vulnerable groups; exit poverty (in urban areas, other assets - perhaps 5. Special schemes for education among socially- housing security or education - may be more marginalised groups such as Scheduled Castes important); and Tribes, subsidised primary education especially for girls, and special nutrition and health Migration is more often of member(s) of a household care programmes for women and children; rather than the whole household, to urban areas for 6. Reservation policies, in employment, education better employment opportunities, especially where and political representation, for particular groups. prior information and contacts can reduce costs and increase benefits; Policies in action Greater village level infrastructure and district India’s anti-poverty programmes in total amount urbanisation, is associated with a higher rate of to some 6-7 per cent of total household exits from poverty, through greater budgetary expenditure, or 1 per cent of GDP (IBRD, connection to economic opportunity (especially 2000). Poverty rates have declined and there have labour markets). been notable successes – e.g. the building of a social contract around famine prevention. Despite this, there remains a chasm between official policies on the one hand, and the experience of the poor on Policy context the other. In terms of technical policy design, while all the policy approaches outlined earlier contain Policy approaches useful insights, a disaggregated and dynamic There has been a vast array of Government of India analysis is generally lacking from all of them: anti-poverty policies since independence. Policy- weakening their effectiveness at engaging with the making has been informed by three main views of specific processes that drive people into poverty, or the causes of, and best approaches to combating enable them to escape, in particular contexts. poverty. Structuralist theories have suggested efforts Policy on poverty has tended to become part of to redistribute productive resources and break a political economy that proliferates ‘doles’, which down social barriers; another approach views this often exist more to allow political power bases to as problematic, and focuses on extending growth be consolidated than to help the poor. Thus, while into marginalised areas and population sectors. A there has been poverty reduction, anti-poverty third highlights the multi-dimensional deprivations budget increases have not made the contribution of poverty and calls for social security measures, that was hoped for; and the targeting of anti-poverty both to address these deprivations themselves and programmes is poorly handled, producing both support poor people’s participation in growth. errors of inclusion and exclusion.

3 State level implementation of programmes and seeking to claim their rights and improve their the performance of Panchayati Raj institutions, situation – a key factor for poverty reduction – has also been variable. In some cases, alliances face great dangers. Violent reactions to political that include some chronically poor groups have awakening and activity among sections of the had success, in others lack of financial resources poor, in particular scheduled castes and women, or patronage politics have weakened and continue to cause many tragedies. distorted implementation. Structural maintainers Meanwhile, at the level of national policy of chronic poverty, especially unequal distribution debate, growth, while important, has perhaps of land and social hierarchies, remain powerful. sometimes been over-emphasised at the State and sub-state political economy also often expense of specific policies for poverty leads to poor performance of rural development reduction. Yet this is not inevitable. There are a schemes which are notoriously prone to number of promising policies and policy areas “leakage” into a bureaucrat-contractor-village that government should consider, to stop the leader nexus, restricting their potential to boost operation of the processes that drive people into agricultural growth. poverty and maintain them there by blocking exit However, some progress on these problems routes, and increase opportunities to exit. can be observed. Electoral competition has driven government to focus on poverty more recently. And movements at the grassroots, such as the Mazdoor Kisan Shakti Sanghathan (MKSS) Policy Recommendations in Rajasthan and other “right to information” campaigns, have played a part in extending and deepening democratic politics beyond Persistently poor states and areas urban and literate classes. In some areas they The problem of persistently poor states is multi- have exposed the corruption and inefficiency of dimensional and not susceptible to quick fixes. poorly-performing schemes, even to the point However: of seeing corrupt officials pay back embezzled • improved flows of public sector and aid finance funds. At state and national level, anti-poverty could play an important role, and galvanise programmes have been subject to redesign and private sector investment in them. Creating the change in recent years. For example, even in institutional and political conditions for this is Orissa, which remains one of the poorest states in a major, but critical, challenge for the coming monetary terms, notable improvements in human decade. development indicators such as child , As discussed above, pockets of chronic poverty infant mortality and have been achieved. in wealthier areas have their own particular Several schemes have undergone reforms, problems. Policy recommendations given below, rationalisation and better targeting with a greater to assist dry land agricultural livelihoods, and STs role for local government in implementation and – who often constitute a significant number of for beneficiary selection and monitoring, a stress the chronically poor in forest “pockets” of chronic on transparency, making information available at poverty – should help to address this problem. the village level, and on social audits. This points to the tremendous positive potential of better central-local cooperation and the mobilisation of Social protection poorer people. Social protection is critical in enabling the However, while these reforms are very chronically poor to cope with risk (and so welcome, there is still a long way to go. increase their chances of exiting poverty), and Structural factors constrain government’s in preventing the transitorily poor from being ability to bring about any rapid change, despite driven into chronic poverty. This is particularly so repeated attempts to implement land reform, in India, where the very low asset base of many anti-discrimination policies, etc. In some areas, poor people (especially the landless) means enduring conflicts have erupted over land that “shocks” such as ill-health have long-term issues along caste-class lines. Tenancy reform devastating impacts on households. has helped poverty reduction in , • National Rural Employment Guarantee Act and tensions (generally) remain lower than in (NREGA). The NREGA guarantees 100 neighbouring Bihar, where the poorest have days of wage employment per financial year rarely benefitted. Across the country, poor people to those adult members of rural households

4 who demand employment and are willing to do data suggests they find it particularly difficult to exit manual work in 200 districts. It will be extended to poverty; the entire country in 5 years. Work is to be provided • poor women continue to face particular barriers within 15 days of demanding it. The choice of works to escaping poverty and interventions are needed suggested address causes of chronic poverty like especially in the fields of literacy, health and access drought, deforestation and soil erosion. If effectively to work. implemented, the employment generated could As a general policy direction, work to lessen myths reduce severe poverty. Extension of the scheme to and stigma surrounding certain health conditions (e.g. mandatory work on demand for individuals rather HIV/AIDS, leprosy, mental illness), and to support than households could enable escape from poverty sufferers not just in access to healthcare, but in for those willing and able to undertake manual work. economic and social activities too, could be useful. • Develop a “policy constituency” for social protection for the poorest. As noted above, political support and long-term commitment is key to asset transfer Economic Policy schemes reaching their intended beneficiaries. • Infrastructural development and village-level assets But the kind of “political contract” that has been remain key to boosting the opportunities and built around famine response does not yet exist for productivity of casual labour, higher real wages and “ordinary” hunger. livelihood diversification. Reducing corruption in • Building a policy constituency that will develop and implementation will require more informed popular enforce such a contract requires action from media, participation and accountability. As with social civil society and grassroots organisations. protection, government should consider how it could • Government has an important role to play too. work with grassroots groups to develop effective Recent shifts towards a more “empowerment” ‘policy constituencies’ to support infrastructure approach, looking at building social and political programmes for poverty alleviation. capital through self-help groups, and the Antyodaya • Support sustainable wage rises and employment principle of starting with the poorest and most security. Those dependent on casual labour are the vulnerable, hold promise. largest single group of the chronically poor. A policy • Strengthen and extend the NOAPS. Research from to support wages and employee rights of casual around the world suggests pensions not only alleviate labourers is key to reducing chronic poverty in both the poverty experienced by the elderly but can urban and rural areas. also reduce the burden on household expenditure • Help people manage migration. Exits from poverty and reduce vulnerability. The postal service can are sometimes associated with the migration of be used as a delivery mechanism, but while an household members to work in urban areas, but for estimated one third of India’s elderly are eligible many of the sometimes poor, the high costs and lack for the pension, funding caps limit its coverage in of well-placed contacts in towns make this more of a practice2 – as recognised when the Annapurna crisis response. Helping people engage in managed scheme was introduced – and lack of regularity in migration, through providing better information payment reduces its effectiveness. Recent budget about jobs and accommodation, would increase the commitments to increase the centrally-sponsored potential for this as a route out of poverty. rate and strengthen delivery are very welcome. • Make dry land agriculture stable and viable. Dry Expansion of the scheme to cover greater numbers land livelihoods are vulnerable to shocks such as of elderly people would be another useful step. drought, preventing households from exiting chronic poverty and pushing them into unsustainable coping strategies. Social groups • Asset transfers, including land reforms, have promise Legislation and policies are in place to protect and from the point of view of the chronically poor. Earlier support women and members of SC and STs, but experience has shown that land redistribution needs implementation is, at best, uneven. Policy should aim to be accompanied by access to affordable finance. to: This helps chronically poor households develop • increase the focus on the poorest members of these their new land, and cope with livelihood shocks groups – building on the Antyodaya principle; without having to sell it to raise funds. • increase access to justice for discriminated- • Support access to health care and food for the against groups, including promoting meaningful chronically poor. Existing schemes have had a implementation of the Prevention of Atrocities Act; mixed record. Affordable health and nutrition are • re-examine policies to assist STs in particular, as crucial both in preventing descent into poverty,

5 www.chronicpoverty.org and enabling poor people to make use • Further valuable measures could include of economic opportunities and break a mini-census in all 52 poorest districts poverty cycles. Chronic hunger needs to and known drought prone areas, and The Chronic Poverty be taken as seriously as famine. the enumeration of slum residents. The Research Centre (CPRC) is an international latter is already taking place in some partnership of universities, cities as a part of urban infrastructure research institutes and improvement plans. NGOs, with the central Information on chronic poverty aim of creating knowledge that contributes to both • The 2010 Census should carry a specific the speed and quality of poverty reduction, schedule on chronically poor households. and a focus on assisting This would provide a solid base for future those who are trapped in policy-making in this area. poverty, particularly in sub- Saharan Africa and South Asia.

Partners: Endnotes

Bangladesh Institute of 1 Harriss, 1999 Development Studies (BIDS), 2 Gorman, 2004 Bangladesh Development Initiatives, UK Development Research and About CPRC-India Training, Uganda Economic Policy Research CPRC - led from the Indian Institute of Public Administration (IIPA), Center, Uganda New . Core team partners include faculty at IIPA, the Institute of FIDESPRA, Benin Development Research, University and the National Council of HelpAge International, UK Applied Economic Research. Indian Institute of Public Administration, India For further information please see: www.chronicpoverty.org IED Afrique, Senegal Institute of Development Studies, UK Institute for Development Resources Policy and Management, UK This briefing paper is based on work by the CPRC India, in particular: Overseas Development Institute, UK Kapur Mehta, A and A Shepherd (eds) (2006) “Chronic Poverty and Development Policy in India” Sage Publications, New Delhi; Programme for Land and Agrarian Studies, South Africa Nath, Dr N. C. B (2005) “Policy Implications”, paper presented to the CPRC-IIPA Seminar “Chronic Poverty in India: Emerging Policy Options and Issues” on September 29-30 2005, at IIPA in University of Legon, Ghana New Delhi; University of Sussex, UK Kapur Mehta, A, A Shah, A Kumar and S Bhide (2005) “Getting Chronic Poverty on to Policy Agendas: The Case of CPRC India”, paper presented to the ODI/CPRC “Policy Influencing and Media Engagement” Workshop, January 2005, London.

Contact: Other references: Julia Brunt, Gorman, M. /Help Age International (2004) Age and security: how social pensions can deliver CPRC Programme Manager effective aid to poor older people and their families, Help Age International, London, UK. [email protected] Harriss, J. (1999) Comparing political regimes across Indian states, Economic and Political Weekly, November 27, http://www.epw.org.in/showArticles.php?root=1999&leaf=11&filename= © Chronic Poverty Research Centre 2007 722&filetype=html. Accessed 06.03.2007