This paper is concerned with the way macro-economic strategies can affect the
incidence of poverty, especially among women, and also with the effectiveness of
various forms of government intervention in this regard. The focus is on India, but
the analysis may have more general implications for other developing countries.
The various concepts and definitions of poverty are discussed, and the continued
relevance of the income criterion in assessing time-trends is mentioned. The trends
in the incidence and pattern of poverty in India since the 1970s are also discussed,
with some attempt at disaggregation by region, type of household and gender. It
emerges that the period between 1973-74 and 1989-90 was characterized by a
sustained decline in poverty ratios in both rural and urban India, and that this
process is no longer clearly evident for the subsequent period of the 1990s. While
traditional explanations of poverty incidence rely on agricultural growth and
inflation rate, the observed trends suggest that other factors ó such as the effects
of public expenditure and the relative price of foodgrain ó should be
incorporated. Thus it is argued that the single most important reason for the
decline in poverty ratios over the 1980s was the increase in real wages of unskilled
labour in both urban and rural areas, which in turn was associated with the direct
employment generation, as well as the multiplier, effects of substantially increased
government expenditure evident throughout the 1980s. Similarly, the deceleration
in such expenditure as well as the sharp increase in food prices related to the
structural adjustment programmes of the 1990s have been associated with a
reversal in the earlier downward trend in poverty for all India as well as most
states.
All this leads to the conclusion that generalized policies of macro-economic
contraction, associated with stabilization measures which operate through demand
deflation and reduced government expenditure, are likely to have a negative effect
on the conditions of poorer groups. Also, any policies (including trade
liberalization, the encouragement of agricultural exports, and so on) which
increase the relative price of food are likely to lead to increases in poverty. So any
macro-economic strategy which seeks to reduce the incidence of poverty must
consciously abjure, or mitigate, these effects.