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Issues of Poverty in India

SHUBHASHIS GANGOPADHYAY

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Abstract
Using the NSS consumption and employment surveys, this paper raises some poverty related issues that have not been consistently researched in India. It argues that close to one-third of all the poor live in only 8 of the 78 NSS regions, there is a gender bias in the incidence of poverty and bigger urban centres achieve higher labour productivity. The poor are poor because of low productivitynot because they are without jobs. Generating human capital is the dominant policy option in the war against poverty.

I. Introduction
In academic circles, as well as among policy-makers, poverty has been a major issue for debate. The debate became politicised with the garibi hatao campaign of the seventies and took it out of the confines of an economic problem. Not surprisingly, there seems to be no consensus regarding either its extent, or the nature of the mechanisms necessary to get rid of it. Nevertheless, all agree that poverty continues to be an important issue that needs to be tackled. In this paper, I will try to steer clear of the controversies and, concentrate on the nature, more than the extent of the problem. In the process, hopefully, one will be able to generate some broad ideas on the policy directions that need to be followed. At the very outset, I will like to mention that this paper is not a comprehensive survey of issues relating to Indian poverty. If at all, this paper should be read along with the huge, and excellent, literature that already exists. Indeed, were I to paraphrase them for the readers of this paper, I will not do justice to their effort. Instead, I will touch upon some issues that I feel have not been seriously looked into in the study of Indian poverty. Here I will concentrate on the research that I have undertaken with my collaborators. Wherever necessary, however, I will refer to the work of others. For the sake of completeness, it is best to start with how poverty is measured. Most official estimates, and the major part of the academic literature, start with the definition of a poverty line. In simple terms, this is the money equivalent of a minimal set of goods and services that are
The author is on the faculty of the Indian Statistical Institute and SERFA, New Delhi.

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considered essential for human existence. That part of the populace whose money equivalent of consumption is below this value, are termed poor. It is immediately obvious that the poverty line is a subjective norm. While scientists can determine biological standards for food intakes, it is difficult to fix the amounts and qualities of minimum clothing, housing, medical facilities, etc., on a purely objective basis. Much of the debate on poverty hinges on this particular aspect. The next hurdle is the determination of the value of the given basket of goods and services. Different households, at different places, could buy similar baskets at different prices. Moreover, given the subjective nature of the norm, and the fact that consumption patterns as well as the availability of goods and services change over time, there is an additional problem of determining the right price index for each region of the country. To make matters worse, the poor consume commodity and service bundles, which are quite different from that which is consumed by the average person. And, finally, because the poor and non-poor operate in different economic environments, the two groups pay different prices for the same basket in the same region. The best one can do is to fix a consistent methodology of measurement and demonstrate how sensitive the results are to the assumptions made in the exercise. Observe that the simplest measure of absolute poverty, the HCR or the head-count ratio, which is the number of poor people divided by the total population, can never be invariant to the methodology used. It will certainly depend on the value of the poverty line. However, one can check the robustness of some of the more qualitative results the direction of change over time, relative ranking of a region vis-vis other regions in the country, relative incidence of poverty by gender of the head of the household, comparative proportions in rural versus urban areas, etc. In Gangopadhyay, Dubey and Jain (1997) and Dubey and Gangopadhyay (1998), such a comparison, with a common data set, was carried out. It was found that the qualitative results were invariant to the particular methodology used. Hence, throughout the rest of this paper, I will use one particular methodology and not refer to the corresponding results using other methodologies. The data that will be referred to in this paper are the 1987-88 and 1993-94 National Sample Survey (NSS) household consumption and employment surveys. The price indices used for different regions and the two time points are explained in Dubey and Gangopadhyay (1998). For the first use, and development of this methodology, see Minhas et. al. (1988). In addition to different prices for different regions, this methodology takes into account the consumption basket of the poor in deriving the weights for the price index. This paper will try and give a glimpse of some of the characteristics of Indian poverty. It will not go into any detailed analysis, but will refer the reader to the original research where the complete methodology is worked out. In Section II, I will highlight the nature of the problem. Section III considers the relationships among adult employment, child

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The best one can do is to fix a consistent methodology of measurement and demonstrate how sensitive the results are to the assumptions made in the exercise.

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labour and poverty. Section IV deals with gender bias and Section V with urban poverty. In Section VI, I conclude.

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II. Attacking the Problem

Recently the debate on poverty has been bogged down in semantics. As we have already indicated, many argue about the value of the poverty line. These have led to poverty estimates ranging from 40 per cent to 12 per cent. Some others have argued that the concept of using a nominal poverty line itself is flawed. In fact, a number of researchers and organisations use deprivation indices, instead of the poverty line. In many cases this is a rough and ready measure that does no worse than the poverty line, while in other cases it highlights the areas in which households fall short of achieving a reasonable level of existence. For instance, it is not uncommon to find an urban slum where the majority of households have colour television sets, but no access to proper sanitation. Or, a household in a village may be above the poverty line, but unable to send the children to school as the nearest functional school may be many miles away. However, these examples do not necessarily mean that the classical measure of poverty using the poverty line, is useless in any study of the problem. This is because as a first step, the society must ensure that it is potentially feasible for a household to command the basic amenities of life. Once individuals are empowered with purchasing power, they will themselves get what they need. Of course, this does not mean that all non-poor households will, for example, educate the girl child and, in reality, girls may consistently be deprived of minimum education regardless of the poverty status of the household. However, this is not a problem of poverty, but one of social awareness and has to be tackled differently from that of poverty alleviation. The debate on the variables to use in the deprivation index, or which of them are more significant than others, may be a perfectly valid academic pursuit, but waiting for the resolution of this debate will be valuable time lost in the war against poverty. A better approach would be to ask oneself how different will be the outcomes, and hence their policy implications, if one were to use deprivation indices as measures of poverty, rather than the more traditional expenditure approach. Will regions that fare very badly in terms of one measure perform well in terms of another? In other words, is it possible that we will make a mistake in targeting if we choose a particular measure? To understand the nature of the problem, let us first identify a broad zone for targeting so that we can minimise on the leakage. Second, let us establish that current measures of poverty are sufficient for the immediate implementation of programmes. Third, the resources needed to have an impact on poverty are miniscule. In other words, if we so want, we should get going in right earnest instead of wasting unnecessary time in quibbling about how to measure poverty. By the poverty line calculations, as much as 32.17 per cent of all

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The debate on the variables to use in the deprivation index, or which of them are more significant than others, may be a perfectly valid academic pursuit, but waiting for the resolution of this debate will be valuable time lost in the war against poverty.

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the poor people in India live in only 8 NSS regions (out of a total of 78). We define a regions contribution to all India HCR by the ratio of the poor in that region to the total number of poor in India. The 10 worst (largest contributions to all India HCR) regions account for 37.69 per cent of all the poor in India. Of these, 8 are contiguous and account for 32.17 per cent of the total poor. These are listed in Table-1.
TABLE 1 Poverty Profile of Selected Regions, 1993-94

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State
Bihar

Region Name
Southern Northern Central

Region Number
51 52 53 252 253 254 262 263

HCR
63.05 65.45 59.66 29.79 45.27 46.99 55.06 31.66

Food HCR
72.42 78.57 69.14 53.08 67.12 65.06 68.27 47.81

Contribution to All India HCR Food HCR

3.34 5.69 3.80 4.23 3.08 6.56 2.80 2.66 32.17 2.67 4.76 3.07 5.25 3.18 6.32 2.42 2.79 30.46

Uttar

Western Eastern

Pradesh Central West Bengal Eastern Plains Central Plains

Total of Contribution

Note:

The food poverty line has been defined as 81% of the overall poverty line.

Why are we interested in these regions? First, they are the worst performing in terms of the incidence of poverty and should be the first place to start any poverty alleviation programme. Second, they are geographically contiguous and hence any spatial spillover of poverty subsidies will go into other regions that are poor. And, third, we will argue that when poverty is truly desperate, it does not matter what measurement is adopted. Let us examine how these regions fare in terms of food deprivation. For that, we use the household food expenditure data in the NSS surveys. The Expert Group (1993) uses a food weight of 0.81 in the total household expenditure, while the weight derived from our calculations is 0.77. We first identify the number of households whose food expenditure is less than 81 per cent of the poverty line, and consider them to be deprived of the minimum amount of food. We repeat the exercise with food weights of 0.75 and 0.70 to check the sensitivity of the food weights. We can then compare the household groupings by these alternative measures of poverty. The results are given in Table-2. If there was perfect correspondence between the poor by the poverty line calculations and those that were deprived of food, then the entries in the APL/BFPL and BPL/AFPL cells1 should be empty. For all the
APL stands for Above Poverty Line; BPL for Below Poverty Line; BFPL for Below Food Poverty Line; and AFPL for Above Food Poverty Line.
1

We will argue that when poverty is truly desperate, it does not matter what measurement is adopted.

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TABLE 2 Food Poverty and Expenditure Poverty , 1993-94 Poverty, Unit: Figures represent percentage of households.

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BPL
FPL = 0.81*PL BFPL AFPL FPL = 0.75*PL BFPL AFPL FPL = 0.70*PL BFPL AFPL 41.37 0.45 39.69 2.14 36.69 5.13

APL
16.81 41.36 10.99 47.19 7.18 51.00

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Note:

Abbreviations are as follows: PL: poverty line; BPL: below poverty line; APL: above poverty line; BFPL: below food poverty line; AFPL: above food poverty line.

The cost of removing poverty here and now does not require too much resource.

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three food based poverty lines (FPL), the entries in the APL/BFPL cells are larger than that in the BPL/AFPL cells. That is to say that there are households that are deprived of food, but not counted as being below the poverty line. However, these numbers are relatively small compared to those in the South West diagonals of Table-2. In other words, for a quick estimate of whom to target, either method will capture a large amount of the intended households. So, for our purposes, we will stick to the nominal poverty line measure of poverty, though we will give corresponding FPL figures wherever necessary. Also, all our analysis is done using the 1993-94 NSS consumption survey data, which is the latest large sample currently available. What is the minimum amount of direct transfer needed to drive the poverty incidence down to zero in these regions? Table-3 gives the total amount of money the poor households in these regions need to become nonpoor. We calculate this for both the poverty line and food deprivation measures of poverty. In 1993-94, a total of Rs 7,691 crore was needed to eradicate close to 33 per cent of the poverty. Interestingly, during that year, the government, in the name of helping the poor, spent Rs 12,864 crore on different (explicit) subsidies1.6 per cent of the GDP. If we assume that there has been no change in the all India HCR since 1993-94 and we adjust our expenditure figure for inflation between 1993-94 and 1998-99, the expenditure needed in 1998-99 turns out to be Rs 10,888 crore. This is less than half of the budgeted subsidy bill in 1998-99 and a mere 0.6 per cent of the GDP in that year. Even if poverty was stagnant between 1993-94 and 1998-99, as the World Bank would want us to believe, the cost of removing poverty here and now does not require too much resource. If one considers

TABLE 3 Expenditure Needed for Poverty Reduction: 1993-94 Unit: Rs Million for Poverty/Food Gap

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Food Gap Rs in Million

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Region Name

Region Number

Poverty Gap

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Bihar

Southern Northern Central

51 52 53 252 253 254 262 263

742.20 1,258.19 807.78 708.56 626.27 1,179.07 582.52 504.52 6,409.13

739.48 1,316.66 845.39 1,246.83 866.02 1,510.14 611.19 626.47 7,762.18

Uttar Pradesh

Western Central Eastern

West Bengal Total Expenditure

Eastern Plains Central Plains

Note :

(i) Food PL has been defined as 0.81*PL (ii) Figures represent monthly expenditures

the food deprivation calculations, the total requirement in 1998-99 is Rs 13,186 crore, 0.7 per cent of GDP in that year. In terms of food deprivation, this group of 8 dominate other regions. Together, they contribute 30.46 per cent of the all India food-HCR (calculated as the proportion of persons whose food expenditure is below 0.81 times the poverty line). So, any policy action in these regions will affect close to one-third of all poor people, by whichever criterion one uses. The added advantage, in terms of policy, is that, they are contiguous. This will make it that much easier for policy makers to move resources and personnel, through economies of scale in transportation, etc. Consequently, it is possible for the government to create a Big Bang in poverty reduction! There is one thing we must guard against. Given Indias vastness and the academics eye for details, we have spent considerable amount of time and effort in studying various regional aspects of poverty. Unfortunately, this has facilitated the politicisation of the problem as every group can fall back on the output of a serious researcher to highlight a particular aspect of the poverty profile. This means that any broadly defined, and hence easier to implement, poverty alleviation programme becomes burdened with special provisions to take into account the particular characteristics of a particular set of people in particular regions. To give a simple example, consider the following. The Integrated Rural Development Programme (IRDP) is a programme specifically targeted at the rural poor. However, in its implementation there is a clause that says a minimum proportion of the funding in each region must target poor women. A statistic that is often used by many is that put out by some international organisations. This says that the sections most vulnerable to poverty are women and children. Whatever may be the merit of this, in

Cons equently, it is possible for the government to create a Big Bang in poverty reduction!

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India, poverty is a household characteristic. There is very little data that allows us to consistently argue that women are poorer than men. Yet, the IRDP has a special provision for women. This is not to say that there is no gender bias against women. Indeed, in a later section we will address this issue. But, as we will demonstrate, poverty and gender bias operate in different ways. More importantly, gender bias is quite independent of the poverty status. Poverty is a major issue by itself. The best way to tackle it is to attack it directly and not use programmes specifically designed for poverty alleviation as a panacea for all socio-economic ills.

Employment alone may not guarantee a non-poor status. This is because wages or incomes earned in jobs may not be sufficient to buy the minimum consumption basket.

III. Employment and Poverty

In the earlier section we showed how at least 30 per cent of all poor could be targeted. From now on, we will look at the problem more generally and, concentrate on some of the characteristics of the Indian poor. Most of the issues touched upon in the rest of this paper have an already existing literature. However, to the best of my knowledge, these are not as exhaustive, and systematic, as what is described below. The classical definition of poverty concerns the inability of a person to achieve certain minimum basic level of consumption. The ability to consume, in a market economy, depends on the nominal expenditure and the commodity prices. The level of expenditure depends on the purchasing power, which, to a large extent depends on the income earned. Incomes are earned if jobs are held and, hence, the relationship between employment and the incidence of poverty. It is not surprising that, in the presence of insufficient subsidies and low levels of wealth, unemployment will be correlated with high degrees of poverty. However, employment alone may not guarantee a non-poor status. This is because wages or incomes earned in jobs may not be sufficient to buy the minimum consumption basket. It is important, as a policy matter, to know whether poverty is a result of a lack of employment opportunities, or due to low wages. If the former, i.e., all employed persons get enough wages to stay above the poverty line but not all persons are employed, the requisite approach is one of employment generating policies. If, on the other hand, people are employed but have very low productivity (and, hence, earn low incomes), then the policy prescription is one of increasing the productivity of labour. We want to investigate whether the employment status can be used to characterise the poor. In India, the actual poverty calculation is done as follows. The consumption of the entire household is obtained and divided by the household size. This gives the per capita consumption in the household. If this is below the given poverty line, then the entire household is termed poor. Poverty is, thus, a household characteristic. It is probably more precise to talk about poor households rather than poor persons. Employment characteristics, on the other hand, are surveyed for each and every member of the NSS household. In other words, unlike the poverty status, there is no employment status of the household. This allows us to

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ask questions of the following type: Is the unemployed more likely to be in a poor household? If one looks at the employment trends and their characteristics, one sees a fair degree of stability in the patterns, over the last three decades. Given that poverty in India continues to be large, one is forced to conclude that employment related programs have not been very significant in reducing poverty. This is not to say that employment programs do not reduce poverty in the short run or, during calamities like drought and flood. However, for massive reductions in poverty one needs major structural changes in employment at both the macro and micro levels. At the macro level, the role of agriculture in employment generation has to give way to a larger degree of importance of the manufacturing and the services sector. At a micro level, labour productivity has to increase significantly, regardless of the sector in which they are employed. The first major observation from an analysis of past trends is the relatively low incidence of open unemployment, especially among the poor (Table-4). This is independent of the method of estimation, of which the NSS uses threeusual status, current weekly status and current daily status. The general pattern in these three measures is that, the unemployment rates by the usual status is lower than that by the current weekly status and the latter rate is lower than that by the daily status (excepting for urban females in 1977-78). This suggests that some people who are otherwise employed, or out of the labour force, get classified as unemTABLE 4 Different Measures of Unemployment Unit: per cent

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The first major observation from an analysis of past trends is the relatively low incidence of open unemployment, especially among the poor.

Year Female

All India Male Person Female

Rural Male

Urban Person Female Male Person

1972-73 1977-78 1983 1987-88 1993-94 1972-73 1977-78 1983 1987-88 1993-94

1.0 3.3 1.2 2.9 1.4 5.9 5.0 4.8 5.0 3.8

1.9 2.2 2.3 2.6 2.2 3.7 4.4 4.4 4.8 3.5

1.6 2.6 1.9 2.7 1.9 4.3 4.5 4.5 4.8 3.6

1972-73 1977-78 1983 1987-88 1993-94

11.5 10.0 9.3 7.5 6.3

7.0 7.6 8.0 5.6 5.9

8.3 8.2 8.3 6.1 6.0

Usual Status 0.5 1.2 2.0 1.3 0.7 1.4 2.4 1.8 0.8 1.4 Weekly Status 5.5 3.0 4.0 3.6 4.3 3.7 4.3 4.2 3.0 3.0 Daily Status 11.2 6.8 9.2 7.1 9.0 7.5 6.7 4.6 5.6 5.6

0.9 1.5 1.1 2.0 1.1 3.9 3.7 3.9 4.2 3.0

6.0 12.4 4.9 6.2 6.2 9.2 10.9 7.5 9.2 8.4

4.8 5.4 5.1 5.2 4.0 6.0 7.1 6.7 6.6 5.2

5.1 7.1 5.0 5.4 4.4 6.6 7.8 6.8 7.0 5.8

8.2 7.7 7.9 5.2 5.6

13.7 14.5 11.0 12.0 10.5

8.0 9.4 9.2 8.8 6.7

9.0 10.3 9.6 9.4 7.4

Source: Visaria (1996)

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It is not work, but work with sufficient pay that alleviates poverty.

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ployed by the two current status measures. Of course, it is possible that the current status measures pick up those who are not actively seeking work because they feel that they will not get any regular employment (Visaria and Minhas, 1991). The literature on employment issues is huge. However, not all of them use data from the same source, and hence, do not use similar sampling methodologies. Consequently, comparing the findings from all the various studies could result in inconsistent analyses. We will, therefore, concentrate only on the NSS employment surveys, since then, one has comparable data sets over the years. Even within the NSS surveys, we will stick to the large sample data, an exercise conducted every five years, and ignore the data from the thin samples carried out every year. Gangopadhyay and Wadhwa (1999) studied the relationship between employment and poverty in India. Their first major finding was that the poor cannot afford to be unemployed, i.e., most of the poor are already employed. This is true in both the rural and the urban sectors. On the other hand, much of the unemployment is in the non-poor households. One way of explaining this apparent anomaly is to remember that it is not work, but work with sufficient pay that alleviates poverty. To check this, we did a simple analysis on the data. We considered individuals who are employed and yet are either engaged in a subsidiary activity and/or seeking additional work. These we termed as the underemployed. Given our definition, rural underemployment is higher than urban underemployment across all employment groups. In the rural sector, underemployment is as high as 58 per cent for casual labourers. The corresponding figure for the urban sector is 30 per cent. Importantly, once we allow for underemployment (according to our definition), one gets a positive relationship between underemployment and poverty. This could be explained by the following story. The poor try to earn as much as they can. However, they get the low paying jobs and hence, to get their minimum consumption basket, they have to work at more than one job. This suggests that employment creation is not sufficientone needs high productivity jobs. This would imply that alleviation of poverty requires a better trained/skilled work force. Indeed, in our empirical analysis we find that basic education and technical or other vocational skills reduces the incidence of poverty across both the sectors. There is a huge gap in human capital acquisition between the poor and the non-poor. Therefore, if the poor are poor because of low productivity and, human capital leads to higher levels of productivity, then the only way out is to educate and train the poor. The answer, however, does not lie in higher education. In fact, a large proportion of the unemployed has graduate or higher degrees, which raises serious issues about the quality of our higher education programs. Instead, what is needed is basic formal education along with some vocational training. Before finishing this section, we will briefly touch upon an issue that has become very important these dayschild labour. What we have said so far regarding employment is that of adults onlythose who are

more than 15 years old. What about the workers in the age group of 5 to 14 years? Gangopadhyay and Wadhwa (1999) looked at the determinants of child labour. The first major finding was that while economic status is a significant determinant of the incidence of child labour, the poverty status is not. In other words, there is a threshold of per capita household consumption below which child labour is more prevalent, but this threshold does not coincide with the poverty line, in either of the two sectors. This clearly suggests a difference in perception, in what constitutes economic distress, between researchers and decision-making households. However, in both sectors the threshold is lower for girls. We have only considered economic activities outside household chores, consistent with the NSS definition of work. If we allow for household chores the incidence of child labour for girls increases. The second major finding was that the education of parents significantly lowers the incidence of child labour. Moreover, the mothers education continues to have a significant impact even when controlling for the fathers education. In general, parents will send their children to work as a last resort. This is consistent with the hypothesis that parents are altruistic towards their children. A common thread in the analysis of adult and child labour is the importance of human capital, though they work in different ways for the two groups. Human capital, either in the form of formal education or vocational skills, reduces the incidence of poverty, by increasing the income earning capabilities of the educated adults in the household. For children, it is the educational qualifications of the parents, which acts as a deterrent to child labour. Being educated, parents earn enough not to send their children to work or, they are more aware of the positive effects of education on a childs future welfare.

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If women are less skilled than males, then the responsibility for this kind of discrimination lies within the household, where the parents train, or educate, the boy child more than the girl child.

IV. Gen der Bias Gender

Since poverty is a household characteristic, and the NSS does not give the individual consumption of household members, it is difficult to directly calculate the gender bias in the incidence of poverty. However, the gender of the head of the household is available in the survey data. It must be stated that in the Indian literature, the head of the household has always been taken as a mere reference point. In Dubey, Gangopadhyay and Wadhwa (1999), we look closely at this hypothesis and find no evidence in support of it. If the head is someone with income earning responsibility, or holds decision-making powers within the household, then the gender of the head can be used as a determinant of gender bias, if any. Gender bias can operate in (one or both of) two different ways. First, women may be discriminated against in the workplace; discriminating employers may prefer males to female applicants. Alternatively, women may not be hired in well-paying jobs, not because the employer discriminates against them, but because they are not found suitable for such jobs. This could happen if the job requires skills, and women are less

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skilled than males. This will get reflected in lower incomes among females. If women are less skilled than males, then the responsibility for this kind of discrimination lies within the household, where the parents train, or educate, the boy child more than the girl child. While less schooling means less of human capital, there is another reason why females may earn less income. Females may also own less of income generating physical capital. For urban areas, the NSS does not give data on the household ownership of physical assets. In rural areas, however, the data reports the amount of cultivable land owned by each household. Cultivable land is obviously one of the most important income generating assets in rural India. At first glance, it was difficult to find any significant difference in the incidence of poverty among female headed households (FHHs) and male headed households (MHHs) in the rural sector, though there was a significant difference in the urban sector. However, when we dropped those FHHs where the heads were currently married, the poverty incidence of the remaining FHHs was significantly different from that of the MHHs, in both rural and urban sectors. The reason for dropping the currently married female headed households was a simple one, and consistent with the survey method followed by the NSS. In the male dominated Indian society, it is difficult to comprehend a situation where a female member is the head of the household in the presence of an adult male. For the currently married female heads, it is fair to assume that the husband is away from the household, say as a migrant labourer. This hypothesis is consistent with the definition of an NSS householdthose who share a common kitchen. Thus while a migrant male labourer will not be counted as a member of the household, his income will augment the purchasing power of the household. Once we do this, we observe a marked difference in the incidence of poverty between MHHs and FHHs where the head is not currently married. This suggests that there is a gender bias. We then looked at how the bias works, given the two possible routes I have referred to above. A direct empirical test of these gender issues will be to compare the incomes earned by similarly trained males and females. However, data on incomes are hard to come by in India. Also, poverty is calculated using actual consumption. Hence, we tested whether female headed households were more vulnerable to poverty than male headed ones, and how much of this difference could be explained by female education and land holding. Our major conclusions are the following. Households headed by widows or divorced/separated women are the most vulnerable to poverty. In the urban sector, this differential poverty incidence can be partially explained by the fact that female heads are less educated than the male household heads. In the rural sector, in addition to this educational difference, FHHs also have smaller land holdings. This also contributes to a higher poverty incidence in rural FHHs. However, even after controlling for these factors, FHHs remain more vulnerable to poverty as compared to MHHs. This implies a clear gender bias in the incidence of poverty.

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V. Urban Poverty
I will deliberately not deal with rural poverty. This is because there is a rich literature that does precisely this. Instead, I will touch upon urban poverty, as the literature here is far smaller (Pernia, 1994; Vashishtha, 1993; Nath, 1994). Studies on urban poverty are of two types. One group is based on surveys of slums in particular metropolitan cities. The other group uses the NSS surveys to study urban poverty. The literature is lacking in two respects. In the first group of studies, all slum dwellers are assumed to be poor and poverty lines are not used to determine the poor. Couple to this the fact that different researchers conducted these surveys in different cities. These studies do not follow a common methodology and are non-comparable, across cities and over time. A time profile of urban poverty can be obtained from the NSS surveys as they follow more or less the same methodology in each survey. However, these studies look at urban India as a whole, clubbing together cities of various types. They implicitly assume that the characteristics of urban poverty are uniform across different town sizes. The urban system in India consists of various sizes of towns and cities. The smallest towns have less than 10,000 people, while a metropolitan centre like Delhi, or Mumbai has more than 10 million people. Empirical evidence suggests that, as the city size increases, the productivity of factors increases (Sviekauskas, 1975). Towns of larger size have higher concentrations of population, allowing greater specialisation and economies of scope, compared to smaller towns. Moreover, small towns may function as local area markets, while the larger ones could be the seats of local or federal governments. Consequently, the structure of employment and earnings are different in different sized towns. An aggregate measure of urban poverty may, therefore, hide more than it reveals. Dubey, Gangopadhyay and Wadhwa (2001), studied the characteristics and determinants of poverty in different sized towns. They demonstrate that smaller towns have higher levels of poverty. One hypothesis could be that larger cities have more educated labour, which has greater productivity and, hence, are less poor. Indeed, education plays a positive role in reducing poverty, regardless of the city size. However, while it is true that larger cities have higher educational levels, this factor by itself does not explain the differing poverty incidence in towns of different sizes. One explanation could be that larger cities tend to have better social and economic infrastructure. While the economic infrastructure may affect poverty incidence through greater income earning potentials, the social infrastructure may directly help in reducing poverty by allowing greater access to poverty reducing transfers.

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While it is true that larger cities have higher educational levels, this factor by itself does not explain the differing poverty incidence in towns of different sizes.

VI. Conclusion
There are two important lessons one learns from the brief observations made here. First, a massive reduction in poverty is not a difficult issue in the short run. It is easy to identify a third of the Indian poor by their geographic location. The resources needed to bring them up to the poverty

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line are meagre compared to the resources we apparently spend on them. Also, it is unimportant how we measure povertythe same people turn up as being poor regardless of the methodology for classifying them as such. The second observation is that, in all the issues related to poverty, the importance of human capital cannot be over-stressed. India, in spite of its lofty egalitarian goals, has singularly failed to educate its people. Be it gender bias, child labour or low adult productivity, the lack of training stands out as a major determinant of these ills. The time has therefore come to stop discussing irrelevant issues like reforms, growth and poverty. Government policy has got to concentrate on providing basic social infrastructurethe job they are expected to do. Everything else is a waste of time, and most importantly, of resources.
References
Dubey, Amaresh and Shubhashis Gangopadhyay (1998): Counting the Poor: Where are the Poor in India?, Central Statistical Organisation, Delhi. Dubey, Amaresh, Shubhashis Gangopadhyay and Wilima Wadhwa (1999): FemaleHeaded Households In India: Incidence, Poverty And Socioeconomic Characteristics, mimeo. (2001): Occupational Structure and Incidence of Poverty in Indian Towns of Different Sizes, Review of Development Economics 5, 49-59. Gangopadhyay, Shubhashis, L.R. Jain and Amaresh Dubey (1997): Poverty Measures and Socioeconomic Characteristics: 1987-88 and 1993-94, Central Statistical Organisation Report, Delhi. Gangopadhyay, Shubhashis and Wilima Wadhwa (1999): Employment and Poverty, ILO, Delhi. Minhas, B.S., L.R. Jain, S.M. Kansal and M.R. Saluja (1988): Measurement of General Cost Of Living for Urban India, All-India and Different States, Sarvekshana 12, 1-23. Nath, V. (1994): Poverty in Metropolitan Cities of India, in Ashok K. Dutt, Frank J. Costa, Surinder Aggarwal and Allen G. Noble (ed.), The Asian City: Process of Development, Characteristics and Planning, Kluwer Academic Press, Dordrecht. Pernia, E.M. (ed.): (1994), Urban Poverty in Asia: A Survey of Critical Issues, Asian Development Bank, Manila. Sveikauskas, Leo (1975): The Productivity of Cities, Quarterly Journal of Economics 89, 393-413. Vashishtha, P.S. (1993): Regional Variation in Urban Poverty in India, Margin 26, 483-524. Visaria, P. (1996): Structure of the Indian Workforce, 1961-1994, Indian Journal of Labour Economics 39, 725-40. Visaria, P. and B.S. Minhas (1991), Evolving an Employment Policy for the 1990s: What Do the Data Tell Us?, Economic and Political Weekly 26, 969-79.

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