Poverty

1. Introduction

This chapter analyses disparities in levels of consumption and incidence of poverty across socio-religious categories (SRCs) in India. The absolute dimension of poverty (in the country) has remained a challenge for the government even in this century. The target to reduce HCRs (Head Count Ratios) by half as a part of Millenium Development Goals by 2015 seems difficult unless the recent GDP growth of over 8% is sustained while simultaneously reducing inequality within population groups.

2. Differentials in Levels of Consumption Expenditure

Historically deprived groups have exhibited lower levels of living in economic terms including levels of consumption. In the following, differentials across SRCs are discussed by place of residence.

The all-India average MPCE for the year 2004-05 is Rs. 712 with a high of Rs. 1,023 for H-General followed by Rs. 646 for H-OBCs, Rs. 635 for Muslims and Rs. 520 for the SCs/STs. The average MPCE varies across SRCs considerably in urban areas - from Rs. 1,469 for H-General to about Rs. 800 for SC/STs and Muslims. What is striking is that the MPCE of the H-General is about 80 percent more than the MPCE of SCs/STs and Muslims. In urban areas, at the aggregate all-India level, the level of consumption of Muslims is about the same as the level for SCs/STs. The MPCE in rural areas is low at about Rs. 579 and the SRC differentials are similar to the one described in the case of the all-India scenario; the MPCE for H-General is higher than all other categories, but not to the extent found in urban areas. Thus, relative deprivation of the Muslim community in terms of consumption expenditure is much higher in urban areas than in rural areas.

Given the particularly adverse conditions faced by Muslims in urban areas, it is important to know if the intensity of consumption deprivation differs according to sizes of cities and towns. It is clear that while the average levels of consumption are positively associated with the size of towns for all SRCs, the conditions of Muslims in relative terms is the worst in smaller towns with <50,000 and 50,000 to < 2 lakh population size. In fact, the MPCE for Muslims is slightly lower than that of SCs/STs in the smaller towns across India.

In urban areas, the largest proportion of Muslims falls in the range of Rs. 400-Rs. 500 and about half of all Muslims are in the expenditure range of Rs. 300 to Rs. 600. The SCs/STs show slightly better distribution of consumption compared to Muslims, followed by OBCs. Less than 20% of urban Muslims have a spending capacity equivalent to or higher than the national average of Rs. 1,050. While the conditions of SCs/STs and OBCs are somewhat better, the status of H-General is substantially better as more than 50% have capacity to spend above the national average. In rural areas, however, Muslims are at par with OBCs; again, over 50% of H-General have a higher MPCE than the national average.

A substantially larger proportion of the Muslim (and SC/ST) households in urban areas are in the less than Rs. 500 expenditure bracket, compared to H-General and ‘all others’. While the proportion of middle income households (between Rs. 500-Rs. 1,000) is also higher among Muslims, SCs/STs and OBCs, the share of high income households (above Rs. 1000) is much lower among them.

The pattern of distribution of households of SRCs by broad expenditure classes in rural areas underlines the inequity existing in these areas. A large proportion of Muslim, SCs/STs and OBCs households are located in the below Rs. 500 expenditure class; the proportion of H-General and ‘all others’ in this class is much lower. While there is a substantial proportion of households in all SRCs in the Rs. 500 to Rs. 1,000 expenditure bracket, the share of such households among Muslims, OBCs and SCs/STs is lower, relative to the other SRCs. The proportion of households from these three SRCs with expenditure levels above Rs. 1,000 is also very low. One of the reasons for low expenditure levels among Muslims in rural areas is due to low incidence of land ownership among Muslims.

Differentials across SRCs in MPCE levels in different states are similar to those observed at the national level in both urban and rural areas. In urban areas in almost all the states where Muslim proportion is high, the MPCE of Muslims is substantially below that of other SRCs except SCs/STs. In fact in West Bengal, Bihar, Andhra Pradesh, Gujarat, Rajasthan and Madhya Pradesh they have levels lower than even the SCs/STs. Excepting Assam, Muslims in all the states have recorded lower than state average consumption levels.

As compared to urban areas, the condition of Muslims is relatively better in rural areas, although the MPCE level itself is much lower than that in the urban areas.

A commonly used measure of inequality is the ‘Gini Coefficient’. (A higher value of the Gini coefficient denotes higher levels of inequality, with the maximum possible value being unity. In an egalitarian society, Gini is zero.)

This measure expresses inequality within a group. Overall, inequality is higher in urban areas than in rural areas. Although Muslims, SCs/STs and H-OBCs have comparatively lower levels of expenditure than H-General and other minorities, consumption differentials within these SRCs are also lower. On the other hand, the H-General and other minorities are relatively richer but record higher levels of inequalities, particularly in urban areas.

State-wise estimates of the Gini coefficient show that the estimate is around 0.30 in almost all states. It is slightly higher in states like Maharashtra, Kerala and Tamil Nadu, but substantially higher in Kerala and Haryana. Inequality is least in Assam, Bihar and Jharkhand. As observed at the all-India level, inequality is higher in urban areas compared to rural areas in most of the states.

3. Poverty Estimates and Differentials Across SRCs

An aggregate all-India level analysis of HCRs according to SRCs and place of residence suggests that overall 22.7% of India’s population was poor in 2004-05. In absolute numbers, this amounts to over 251 million people spread across India. The SCs/STs together are the most poor with an HCR of 35% followed by the Muslims who record the second highest incidence of poverty with 31% people below the poverty line. The H-General is the least poor category with an HCR of only 8.7% and the OBCs hold the intermediary level HCR of 21%, which is also close to the all-India average.

It is noteworthy that incidence of poverty among Muslims in urban areas with a HCR of 38.4% is the highest, followed closely at 36.4% for SCs/STs. The urban-rural differential in poverty is the highest amongst Muslims with 11 percentage points higher incidence amongst urban Muslims followed by H-OBCs (5 percentage points). All other SRC groups have a lower urban-rural differential.

The differentials in poverty across SRCs estimated from the 50th Round survey data by size class of cities reveal that the incidence of poverty among Muslims is the highest in smaller towns with populations below 50,000, followed by the next size class of 50,000 to 2 lakh population; their condition improves substantially as the size of the urban areas increases. However, in the case of SCs/STs improvements in poverty conditions do not take place with increase in size of town; they have 45% poor compared to 28% for Muslims and 14% for H-General in the million+ cities of India.

The HCR only considers the number (proportion) of persons who are below the poverty line, it does not consider how far below the poverty line they are. In other words, the HCR considers only the extent of poverty, not its depth or intensity. A simple way to analyse the intensity of poverty across SRCs is to examine mean expenditure of the poor as a ratio of the poverty line for each SRC. A lower value of the ratio implies a higher intensity of poverty.

In general, it can be seen that the intensity of poverty (shown through bars) is higher for all SRCs, except H-General, in urban areas compared to rural areas. In urban areas, the intensity of poverty is the highest among SCs/STs, closely followed by Muslims. Poor Muslims consume only 75% of the poverty line expenditure on an average. The situation of OBCs is much better than these two SRCs. In rural areas, however, the intensity of poverty is much lower among Muslims as compared to other SRCs except H-General.

For the first time in the Post-Independence period the level of urban poverty is marginally higher than rural poverty. Urban poverty is very high in Orissa, MP, Chhattisgarh and Bihar (range between 36-40 percent). Other states with higher urban poverty are Maharashtra, UP, Karnataka, Rajasthan and AP (ranging between 26-30 percent).

It is worth noting that urban poverty is most pervasive amongst both Muslims and SCs/STs. The Muslim-HCRs are considerably higher than the state average in Orissa, MP, Chhattisgarh, Uttar Pradesh, Bihar, West Bengal, Jharkhand, Rajasthan, Maharashtra, Karnataka and AP. In urban areas of Maharashtra, Gujarat, West Bengal, Chhattisgarh and UP poverty amongst Muslims is higher than the SCs/STs. At the all-India level, however, the incidence of urban poverty among Muslims is slightly lower than that of SCs/STs, but considerably higher than the OBCs and H-General category.

Even in rural areas poverty levels among Muslims are high; in some states the HCRs among Muslims is much higher than the SCs/STs, not to speak of OBCs and H-General. West Bengal and Assam stand out in this respect, where the poverty among Muslims is very high in rural areas. It may be noted that in most states, except Assam and West Bengal, urban poverty is very high as compared to rural poverty among Muslims.

The analysis of differentials in poverty across SRCs shows that Muslims face fairly high levels of poverty. Their conditions on the whole are only slightly better than those of SCs/STs. As compared to rural areas, Muslims face much higher relative deprivation in urban areas. Over time, changes in poverty levels also show that the economic conditions of Muslims in urban areas have not improved as much as the other SRCs. No systematic patterns emerge when, over time, changes in poverty levels of various SRCs are analysed. A more detailed analysis is required to unravel these changes.