Regional Analysis of Poverty in India

Lacking assets is both a cause and an outcome of poverty. Poor health, deficient skills, scant access to basic services, and the humiliations of social exclusion reflect deprivations in personal, public, and social assets. Assets are also central to coping with shocks and reducing the vulnerability that is a constant feature of poverty. Poverty is an outcome not only of economic processes. It is an outcome of interacting economic, social, and political forces. In particular, it is an outcome of the accountability and responsiveness of state institutions. Values, norms, and social institutions may reinforce persistent inequalities between groups in society - as with gender-based prejudice throughout much of the world, the caste system in India, and race relations in South Africa and the United States. In the extreme, these social divisions can become the basis of severe deprivation and conflict. The paper finds that the potential for economic growth and poverty reduction is heavily influenced by state and social institutions. Action to improve the functioning of state and social institutions improves both growth and equity by reducing bureaucratic and social constraints to economic action and upward mobility. However, devising and implementing these changes require strong political will, especially when the changes fundamentally challenge social values or entrenched interests. Governments can do much to influence public debate to increase awareness of the societal benefits of pro-poor public action and build political support for such action. Economic development brought about essentially by liberalizing trade and markets, investing in infrastructure, and providing basic social services to poor people to increase their human capital was seen as key to reducing poverty. The paper finds that growth in per capita income and poverty reduction is inversely related to each other. The relationship between poverty and unemployment is positively related that decline in poverty leads to decline in unemployment except Andhra Pradesh, Assam, Bihar, Tamil Nadu and West Bengal where decline in poverty leads to increase in  rural unemployment and decline in urban unemployment. However, Uttar Pradesh is the only state where decline in poverty leads to increase in both rural and urban unemployment during 2011-12. Himachal Pradesh shows something different result, where decline in poverty leads to decline in rural unemployment and increase in urban unemployment