Page 158 - ES 2020-21_Volume-1-2 [28-01-21]

Inequality and Growth: Conflict or Convergence? 141

4.21 Using a panel of 21 states for 4 years, 1993-94, 2004-05, 2009-10 and 2011-12, the
relationship between economic growth and poverty is analysed (Table 1) . The variables used
5
in the regression are as defined in Box 3.

Table 1: Impact of Economic Growth on Poverty

Dependent variable is log Rural+Urban Rural Urban
of Head Count Ratio:

Ln (Real NSDP per capita) -0.453*** -0.711* -0.448*** -0.650* -0.445*** -0.623*
(-4.76) (-2.47) (-3.78) (-2.16) (-4.86) (-2.28)
Ln(Real Government Welfare -0.149** -0.144** -0.176***
expenditure per BPL family) (-3.54) (-3.29) (-4.42)
Inflation rate (in percent) -0.0014 -0.00145 -0.00157
(-0.52) (-0.51) (-0.61)
Rich to poor ratio of MPCE 0.595* 0.618* 0.406
(2.23) (2.22) (1.6)
Literacy rate percent (in 1991) -0.00232 -0.00604 0.00491
(-0.17) (-0.43) (0.38)
Life expectancy at 0.0281 0.0482 -0.0178
birth-years (in 1991) (0.69) (1.13) (-0.46)
Gini for land -3.385 -4.972 0.595
distribution (in 1991) (-1.01) (-1.42) (0.19)
State Fixed Effects Yes Yes Yes Yes Yes Yes
R-squared 0.27 0.38 0.19 0.31 0.28 0.44
N 84 63 84 63 84 63
t-statistics in parentheses; * p<0.05, **p<0.01, *** p<0.001

Box 3: Sources and definitions of variables used in panel regressions in Table 1

• The fraction of population below the poverty line, measured in terms of headcount ratio (POVR),
estimated by Tendulkar Committee for 2011-12 (erstwhile Planning Commission) is used as the
dependent variable.
• For income, real per capita Net State Domestic Product (PCY) at 2011-12 prices is sourced from
Ministry of Statistics and Programme Implementation.
• Consumer Price Index for Agriculture Labour (base = 1986-87) sourced from Labour Bureau is
taken as measure of inflation rate (INF).
• Cumulative average of social sector expenditure (EXP) by states per below poverty line person
for the years 1993-94, 2004-05, 2009-10 and 2011-12 is sourced from Reserve Bank of India
reports on Handbook of Statistics on State Government Finances and State Finances: A Study of
State Budgets. Cumulative average captures the accumulated effect of public sector expenditure
on poverty better compared to the expenditure in a particular year.

5 Based on availability of data, 21 major states were covered, excluding Union Territories, North Eastern States
except Tripura, Goa and Jammu & Kashmir. Because of the issues of comparability, as the design of the 55th round
1999-2000 questionnaire was different from that in earlier rounds, estimates of poverty for 1999-2000 are not used
in the analysis.