The Evolution of Poverty and Inequality in Indian Villages

Abstract

Continued agricultural growth and diversification into nonagricultural activities are essential if India is to continue reducing rural poverty. But policymakers hoping to alleviate rural poverty must also be aware of the causes and implications of persisting, if not increasing, inequality within villages.

Jayaraman and Lanjouw review longitudinal village studies from a variety of disciplinary perspectives to identify changes in living standards in rural India in recent decades.

They scrutinize the main forces of economic change - agricultural intensification, changes in land relations, and occupational diversification - to explain changes in level and distribution of living standards in rural communities.

These forces of economic change appear to have offset or at least mitigated the pressure that growing populations can place on existing resources. But the decline in rural poverty has been slow and irregular at best. Nor is poverty reduction only a matter of economic development. For instance, the rural poor often attribute much of the improvement in their living conditions to reduced dependence on patrons. There are few reports in village studies of particularly effective government policies aimed at reducing poverty. The long-term poor still tend to be from the disadvantaged castes and to live in households that rely on income from agricultural labor.

There is little evidence that inequalities within village communities have declined. In some cases improved material well-being of rural households has led to greater social stratification rather than less, with women and members of the lower castes suffering the consequences.

Such inequalities could limit how policy interventions or continued growth can reduce poverty further. Policymakers must ensure accountability to keep abuses - for example, the privileged classes directing all benefits to themselves - to a minimum.

This paper - a product of Poverty and Human Resources, Development Research Group - is part of a larger effort in the group to study the dynamics of poverty in the South Asia region.