Paradox of poverties

Paradox of poverties


During the decade of 1990s, poverty in Jammu and Kashmir was undergoing a paradoxical change. Two opposing trends were working at the same time. While poverty in absolute terms was reducing disproportionately faster in comparison to other states of India, in relative terms it was simultaneously increasing. The reducing poverty generated inclusive economic dynamics in the state, the resultant inequality was symptomatic of an ailing economy that forebode an increasingly compromised future for the people of the state.
According to the Lakdawala Committee, poverty with some increase in initial years decreased measurably through the 1990s, from 25 percent to a mere 3.48 percent from 1993 to 2000. This by all standards is one of the best examples of poverty reduction not only in Indian context but even globally.
However, this phenomenon becomes even more surprising in the background of the acute state of armed conflict that Jammu and Kashmir was undergoing. Normal economic history reveals a negative relationship between economic development and conflict. The state of poverty is usually expected to be accentuated by civil or armed conflict. The World Development Report 2011 brings home some of these essential features and the operating mechanisms.
For example, the report mentions that countries in protracted crisis can fall over 20 percentage points behind in overcoming poverty, or those that experienced major violence over the last three decades have a poverty rate more than 21 percentage points than a country that subsisted without it. As such the state of Jammu and Kashmir presents a unique case where poverty reduction in absolute terms went hand in hand with conflict. Ironically, the worst period of conflict happens at the same time to be the best in terms of poverty reduction.
With modification in poverty criterion, particularly by the Rangarajan Committee, the poverty in the state is still far too lower than the all India level. In 2011-12, for the state the report records a poverty ratio of 15.1 percent while as at the all India it was 29.5 percent. In percentage terms India is twice as poor as the state.
However, this positive trend is counteracted concomitantly by a negative one. Due to moderate growth rate over the period in comparison to all India level, the state is increasingly becoming poorer in comparison to other states. One of the chief indicators of economic wellbeing, the per capita income (PCY), in case of the state economy, as such, is lagging behind by a significant margin from the all India level.
According to official Economic Survey, the per capita income for the state is rupees 37,903 against an all India average of rupees 45,933. Thus, the state lags behind the all India average by no less than 18 percent. India being one of the poor states on the basis of per capita income, states with lower income within the federation move towards the lower extreme of the income scale. A sense of this can be gleaned from the following comparison.
According to the UNDP’s Human Development Report 2014, per capita income by PPP method for India in 2011 was $ 5150, against $ 13723 global average. Thus per capita income for India was only 37.5 percent of the global average. The number of countries with more income than India is more than twice than those having less income than it. Among the 187 countries for which data is published, India ranks at 129th position. With 135th HDI rank, India is falling towards lower end of the medium human development. A decrease by 18 percent to the PCY of India gives us $ 4223 PCY for the state. This is a mere 30.7 percent of the global average. If Jammu and Kashmir was a separate state, then it’s ranking within 188 countries would be 137, followed by 51 states which include the poorest ones of the world. Even the average per capita income of countries falling in medium human development range is 141 percent that of ours.
Comparison with neighbouring states also reveals this grim reality. The state enjoys only 56.48, 66.40, 50.52 per cent of per capita real income than that of Himachal, Punjab, and Haryana respectively. Thus our per capita income ranges between half and two thirds of these states. It must be emphasised that Haryana’s economy is four times larger than ours and Punjab’s more than three times in real terms.
What is important in the background of above statistics is that both in terms of per capita income and human development index, the state has faced deceleration in its relative position in India. According to the RBI handbook of statistics, 2014-15, per capita net state domestic product at factor cost at 2004-05 constant prices for the state economy has at 4.19 percent annually from 2004-05 to 2013-14. Contrary to it, the per capita NDP has increased at 5.74 percent annually during the same period. As such, the gap between state per income of J&K and all India average has increased from rupees 2409 in 2004-05 to rupees 4856 in 2013-14. The same holds true in case of earlier periods. Similarly, in case of HDI value, the state has faced deterioration.
The paradox of decrease in poverty in absolute terms and increase in its relative value with respect to per capita income of other states essentially exhibits the strengths and weakness of the state economy. While as the former depicts a relatively inclusive growth that emanates from contribution of masses in the economy, the latter is symptomatic of a trailing growth that is leaving people at an accelerating disadvantageous comparative position. The inclusive aspect needs not only retention but even further strengthening. However, the lack of growth needs a careful attention on part of the policy formulators to avoid further deterioration.

—The writer is a Lecturer of economics and can be contacted at

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