Dimensions of Rural Poverty in Bihar: A Village Level Study
12 Pages Posted: 26 Sep 2013
Date Written: September 25, 2013
The measures of poverty involves a) the specification of the threshold income level below which a person is considered poor (the poverty line) and b) construction of an index to measure the intensity and severity of poverty suffered by those whose income is below the poverty line. Sen (1976) has proposed several criteria that a poverty measure must satisfy to be able to assess the changes in social welfare whereas Foster et al (1984) proposed a class of poverty measures that are additively decomposable and that satisfy all the criteria for an ideal poverty measure.
For this study, we used a method known as FGT index to measure the incidence of poverty (headcount ratio), intensity of poverty (poverty gap ratio) and severity of poverty (squared poverty gap ratio). To find out the determinants of poverty, affecting the probability of an individual being poor, we estimated a Probit model using poverty as a dependent factor-a binary (poor-1 and non-poor-0) and a set of agricultural and socio-economic variables as explanatory variables.
Despite annual growth of more than 10 percent in Bihar’s economy, poverty remained the same during 2004-05 -- 2009-10. Incidence of poverty was double among agricultural labours than that of farm households and the poverty gap between farm and agricultural labour households increased during last two decades. The decline in poverty has been also higher among farm households than the decline observed among agricultural labour households during last two decades however the decline in poverty was comparatively high among agricultural households than farm households during 2004-05 -- 2009-10, mainly due to adverse weather at one hand and increase in wages of agricultural labour at another during the period.
The comparatively high poverty incidence, gap and severity are observed in less developed village than developed villages in Bihar. Hence it may inferred that the level of development has direct influence on poverty alleviation that is; higher the development, lower the level of poverty in rural area. In villages, land is the main income generating asset hence the poverty incidence, gap and severity level are comparatively low in case of large households but the observation does not hold true in case of medium and small households because their land base is very low in Bihar. The highest poverty incidence, gap and severity are not found among labour households. It is only due to larger proportion of earning members and the majority of them are employed in non-farm activities on comparatively high wage whereas family member of households with even small piece of land do not prefer to work as labour, resulting less income flow and higher level of poverty among them. Various agro-economic and social factors are responsible for poverty.
The three key determinants that help the household in keeping away from poverty are education, number of earning and family size. The education enhances the skill, chances of getting remunerative employment and increasing labour productivity which lead to higher income and decline in poverty. Larger proportion of earning members in the household also helps increasing income flow whereas smaller size of family leads to comparatively less expenses and more income to the household hence low level of poverty. These findings of poverty determinants call for establishment of effective educational and training infrastructure and streamlining of their functioning in rural area. The family welfare programme needs to be strengthened for population control since smaller family is likely to be away from poverty.
Keywords: Rural poverty, Determinants of poverty, Bihar, Probit model
JEL Classification: H8, J1, J18, O2, O00
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