SUDIPTA BHATTACHARYYA DEPT. OF ECONOMICS VIDYASAGAR UNIVERSITY T here is a long controversy related to impact of NEP on poverty. The government of India Economic Survey demanded that percentage of people below poverty line declined from 25.94 per cent in 1987-88 to 18.96 per cent in 1993-94. However at least two independent estimates [Tendulkar and Jain, 1995; Sen, 1996] contradicted this view. According to these estimates the official estimates seem to suffer from certain shortcomings. First of all there is a little justification to compare the data for 1987-88 and 1993-94 to get any impact of liberalisation policy on agriculture. It might be noted that 1987-88 was a drought year. The proportion of people below the poverty line in this year was somewhat higher than the subsequent years. On the other hand in 1993-94 the proportion of people living below the poverty line declined owing to withdrawal of some reform measure for an example increase in public expenditure. Therefore it is worthwhile to compare 1989-90 (just the previous year of the beginning of NEP) with the data of the reform period. Secondly, the official estimate is based not on the NSS data directly. It has replaced the NSS consumption estimates for every deciles by an adjustment factor which is the ratio between the CSO estimate of private consumption and that of the NSS estimate. The official estimate shows a comparatively low level of poverty precisely because this adjustment factor showed an upward trend in recent period. Using the NSS data directly Abhijit Sen (1996) and Tendulkar and Jain (1995) showed that rural poverty increased sharply in the post reform period. Thirdly, even using the official estimates of poverty, it was found that proportion of people below poverty line in 1993-94 were higher than in 1990-91, i.e. just before reforms began.However though both the independent estimates show an increase in poverty in the post reform period, they don’t have the uniform opinion on the impact of reform on poverty. Tendulkar and Jain have the opinion that since the rural sector was not much affected by the reform, it was not the economic reform, which was responsible for the increase in poverty in the post reform period. According to Abhijit Sen, employment elasticity of government expenditure and credit is a crucial factor in determination of poverty that has been ignored by Tendulkar and Jain. Sen hypothesised that during the 1980s there was an expansion of rural non-agricultural employment supported by the increasing government expenditure and availability of cheap credit. This expansion in rural non-agricultural employment had a positive impact on rural poverty. With the beginning of the Fund-Bank directed structural adjustment programme in agriculture in nineties there was a sudden withdrawal of government expenditure and credit that led to a quick and large decline in rural non-agricultural employment. This bulk of labour force released by the non-agricultural sector had no other way out but to spill over to agricultural sectors. As a result per worker incomes in agriculture declined. The inevitable consequence of this was the increase in proportion of people below the poverty line. Abhijit Sen also worked out state wise estimation of proportion of people living below the poverty line. According to his estimate the proportion of poor people in West Bengal were 68.3 per cent in 1977-78 against 53.1 per cent in India as a whole. Over time West Bengal’s poverty ratio declined and the rate of decline was faster than the national average. Therefore in 1989-90 West Bengal’s poverty ratio came down to 37.2 per cent which was just above the national average 34.4 per cent. However, in 1990-91 poverty of West Bengal witnessed a steep rise to 49.5 per cent against the much less national average 35.0 per cent. But during the crucial period of the market economic reform West Bengal’s poverty declined to 44.0 per cent in 1992 while in all India level poverty increased to 44.0 per cent. Therefore in 1992 West Bengal and India as a whole witnessed the same proportion of poverty. Ultimately from this identical level, poverty declined to 40.3 per cent in West Bengal in 1993-94, while the same decline was acute for all India to 37.5 per cent. We have mentioned before that the market economic reforms were getting diluted during 1992 to 1993-94 when the public expenditure was increased. In spite of this a comparison between 1993-94 with that of a pre reform period 1989-90 revealed an increase in poverty for both West Bengal and India. However it is observed that though over time West Bengal’s poverty declined to a significant level, over time period, in absolute term West Bengal’s poverty ratio is above all India average in 1993-94. Therefore the secondary source of information reveals the fact that the poverty still remains a great challenge before the Left Front Government though it had sharply declined over time. |
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