The Hindu Business Line : Is poverty increasingly becoming an urban phenomenon?

New Delhi March 21 It may appear contrary to common perception. If official data is to be believed, poverty is becoming an increasingly urban phenomenon and the country's rural poor population has recorded an `absolute' decline in the post-reform era.

According to the Planning Commission, the total rural population below the poverty line during 2004-05 stood at 22.09 crore as per the 30-day Uniform Recall Period (URP)-based household consumer expenditure data of the National Sample Survey Organisation (NSSO). It is lower, at 17.03 crore, if the Mixed Recall Period (MRP) survey-based results are employed. The MRP method uses a longer 365-day reference period among respondents for five `infrequently purchased' non-food articles (clothing, footwear, durable goods, education and institutional medical expenses) and the usual 30-day recall for other items.

Whichever method is relied upon, the significant bit is that the number of rural poor has reduced in absolute terms: from 24.4 crore to 22.09 crore between 1993-94 and 2004-05 (URP) and from 19.32 crore to 17.03 crore between 1999-2000 and 2004-05 (MRP).

As against this, the population below the poverty line in urban India has risen: from 7.63 crore to 8.08 crore between 1993-94 and 2004-05 (URP) and from 6.7 crore to 6.82 crore between 1999-2000 and 2004-05 (MRP).

In relative terms, the proportion of rural poor has fallen sharply from 37.3 to 28.3 per cent between 1993-94 and 2004-05 (URP) and from 27.1 to 21.8 per cent between 1999-2000 and 2004-05 (MRP). The decline is much less in respect of the urban poverty ratio: from 32.4 to 25.7 per cent between 1993-94 and 2004-05 (URP) and from 23.6 to 21.7 per cent between 1999-2000 and 2004-05 (MRP).

The fact that poverty ratios in urban and rural India have more or less converged could mean two things. The first is that the economic reforms, far from bypassing the countryside, have actually brought down poverty levels in rural areas much more than in urban areas.

Migration?

If this may be hard to digest, the only other possibility is a massive distress-induced migration, so much so that the poor are relocating to the cities. But given that the overall rural share in total population has barely changed — from 73 to 72 per cent between 2003-04 and 2004-05 — the more benign explanation seems to hold. Of course, not everybody would be convinced.