C1.1: Sabyasachi Tripathi: Has Urban Economic Growth in Post-Reform India been Pro-poor Between 1993-94 and 2009-10?

Has urban economic growth in Post-Reform India been
pro-poor between 1993-94 and 2009-10?
Dr. Sabyasachi Tripathi
Fellow
Indian Council for Research on International Economic Relations
New Delhi -110003
Email: sabya.tripathi@gmail.com
6/6/2014 1
Prepared for the presentation in UNICEF and IDS Conference: Rethinking
Urbanisation and Equity in Asia: Harnessing the Potential of Urban Living for All
Children, Monday 9 June 2014, Institute of Development Studies, Brighton , UK.

Outline of the Presentation
1. An overview of India’s Urbanization, Urban Economic growth, Urban Poverty and
Inequality
2. Review of literature, Research gap and Research questions : Pro-poor growth
3. Methodology and data used
4. Empirical results
5. Major Findings, Conclusions, and Policy Implication
6/6/2014 2

Motivations : From Indian Perspective : Urbanization
Cens
us
Year
Urban
population (in
million)
Percentage
Urban
Annual
Exponential
Growth Rate (%)
No. of
towns/UAs
1961 78.94 17.97 - 2657
1971 209.11 19.91 3.23 3081
1981 159.46 23.34 3.79 3891
1991 217.18 25.72 3.09 4615
2001 286.12 27.86 2.75 5161
2011 377.10 31.16 2.76 7935
Figure 1: Proportion of Urban Population in different size categories
Notes: Based on population size Census classifies urban centres in to following six categories.
Class I (100,000 or more), Class II (from 50,000 to 99,999), Class III (from 20,000 to 49,999)
Class IV (from 10,000 to 19,999), Class V (from 5000 to 9999), and Class VI (below 5000).
Source: Author’s estimation based on Indian Census data for various years
Table 1: Urbanization Trend in India (1961-2011)
6/6/2014
0%
20%
40%
60%
80%
100%
1961 1971 1981 1991 2001
Class VI
Class V
Class IV
Class III
Class II
Class I
3

Motivations : From Indian Perspective : Urban Economic Growth
0
200000
400000
600000
800000
1000000
1200000
1400000
1970-71 1980-81 1993-94 1999-2000 2004-05
Figure 2: Urban NDP at Broad Sector
Values at constant (1999-00) prices (Rs. Crore)
Agriculture Industry Service Total NDP
4.9
39.4
55.7
5.4
37.4
57.2
4.6
32.5
63.0
3.5
25.3
71.2
2.4
25.6
71.9
Agriculture Industry Service
Figure 3: Urban NDP at Broad Sector
% Share at Constant (1999-00) Prices
1970-71 1980-81 1993-94 1999-2000 2004-05
4.4
3
3.9 3.6
5.2 5.4
7.3
6.5
4.6 4.8
11.5
9.3
-0.8
7 6.9 6.7
Agriculture Industry Service Total NDP
1970-71 to 1980-81 1980-81 to 1993-94 1993-94 to 1999-00 1999-00 to 2004-05
Source: Author’s estimation based on National Accounts Statistics at various years
Figure 4: CAGR of Total Urban NDP At Constant (1999-2000) prices
6/6/2014 4

@ These poverty estimates are calculated following the new poverty lines as worked out by the Expert Group,
which was set up by the Planning Commission of India in 2009 under the Chairmanship of Prof. Suresh Tendulkar
which uses MPCE based on mixed reference period (MRP). The urban poverty lines as per the Tendulkar
methodology were Rs. 578.8 and Rs. 859.6 in 2004-05 and 2009-10, respectively.
Table 2: Poverty and inequality situation: all-India Urban
Motivations : From Indian Perspective : Total urban poverty and inequality
Year Gini Coefficient Poverty head count ratio @
Total Adult Child Total Adult Child
1993-94 0.34 0.38 0.34 31.8 N.A. N.A.
2004-05 0.38 0.39 0.36 25.7 25.5 37.9
2009-10 0.39 0.39 0.36 20.9 20.5 31.2
6/6/2014 5
Source: Author’s calculation using NSS unit level data on MPCE for various years.

Years
All India:
Adult
Adult
Social group Sex
ST SC OBC Others Male Female
Gini
Coefficient
1993-94 0.38 0.32 0.31 NA 0.35 0.35 0.35
2004-05 0.39 0.34 0.32 0.34 0.38 0.38 0.38
2009-10 0.39 0.41 0.33 0.36 0.41 0.39 0.40
Poverty head
count ratio @
1993-94 NA NA NA NA NA NA NA
2004-05 25.5 31.1 34.9 26.6 12.6 20.2 22.3
2009-10 20.5 26.6 28.7 21.4 9.6 16.9 17.9
Sample size
(Persons)
1993-94 116227 7509 12437 NA 96226 63172 58431
2004-05 126537 9420 17199 44945 54950 64453 62084
2009-10 116607 9818 16403 43760 51350 59150 57457
Table 3: Growth rate of poverty and inequality from 1993-94 to 2009-10 for Adult
Notes: NA: Not Available; @: Same as Table 1; OBC: Other Backward Classes; SC: - Scheduled Caste; ST: Scheduled Tribe
6/6/2014 6

Year
All India:
Children
Social group Sex Education
ST SC OBC Others Male Female
Not
literate Primary Secondary
Higher
Secondary
Gini
Coefficient
1993-94 0.34 0.29 0.29 NA 0.33 0.33 0.33 0.31 0.32 0.30 0.36
2004-05 0.36 0.33 0.29 0.31 0.37 0.35 0.36 0.34 0.35 0.35 0.37
2009-10 0.36 0.33 0.30 0.34 0.38 0.36 0.38 0.36 0.35 0.34 0.36
Poverty head
count ratio
@
1993-94 NA NA NA NA NA NA NA NA NA NA NA
2004-05 37.9 40.3 47.4 38.7 22.2 31.9 35 45.8 31.2 13.8 8.2
2009-10 31.2 32.6 40.1 32.4 16.7 25.8 29.2 37.5 26.8 14.8 7.1
Sample size
(Persons)
1993-94 80463 6212 10626 NA 63593 42604 37859 26656 13617 4968 1797
2004-05 79992 7363 12480 30004 30122 42100 37892 24247 14980 5654 2104
2009-10 64805 6259 9866 24425 24243 34428 30377 16852 10401 6025 2666
Table 4: Growth rate of poverty and inequality from 1993-94 to 2009-10 for Children
Notes: NA: Not Available; @: Same as Table 1; OBC: Other Backward Classes; SC: - Scheduled Caste; ST: Scheduled Tribe.
6/6/2014 7

6/6/2014
Research Question:
Has urban economic growth in Post-Reform India been pro-poor between 1993-94 and 2009-10?
Review of Literature: Main findings
Datt and Ravallion (2009): Post reform growth process has become less pro-poor.
Liu and Barrett (2013) : Current administrative rationing of MGNREGS is not pro-poor
Dev (2002) : Growth rate of employment declined between 1994 and 2000.
Research gap in Indian context:
Poverty figures are useful to design, monitor, and implement anti-poverty policies. However, little is known about
distributional aspects of this phase of urban economic growth and how it compares with the previous growth
periods in terms of poverty reduction.
8

Theoretical framework
For the measurement of pro-poor growth, we follow the the theoretical framework proposed by Duclos (2009) and
Araar et al., (2007, 2009)
 The relative approach, we label a growth process pro-poor if the growth rate of the poor exceeds some standard
(usually the average growth rate – of the median or the mean), e.g., are the poor growing at 5 percent?
 The absolute approach, we label growth as pro-poor if the absolute incomes of the poor increase by at least
some standard, e.g., have the incomes of the poor increased by Rs. 100?
With either of these standards, there are two approaches:
 First Order approach: we require that all the poor grow at least at the standard imposed.
 Second Order approach we are willing to allow for some of the poor to fall short of the standard provided that
those even poorer are growing at higher than the standard.
6/6/2014 9

for all
A movement from y1 to y2 will be judged as first order relatively pro-poor if
….. (1)
A distributional change is second-order relatively pro-poor if for all
….. (2)
Relative pro-poor judgments
A movement from y1 to y2 is deemed to be first-order absolutely pro-poor if
for all ….. (3)
Absolute pro-poor judgments
A movement from y1 to y2 is deemed to be second-order absolutely pro-poor if
….. (4)
Theoretical framework :
6/6/2014 10

6/6/2014 11
Table 5: Growth in MPCEURP at current and constant prices since 1993-94 to 2009-10, all-India Urban
Data Used: Urban monthly per capita consumer expenditure (MPCE) data from 50th round for 1993-94, 61st round for
2004-05, and 66th round for 2009-10 are used.
Year Average MPCE URP (Rs.) Price deflator for
urban sector #
Average MPCEURP Urban (Rs.):
base 1987-88
1993-94 458 173 264.76
2004-05 1052 338 311.35
2009-10 1786 503 355.03
# derived from Consumer Price Index (CPI) for urban non-manual employees with base 1984-85 = 100

Figure 5: 1993-94 to 2004-05 is first-order absolutely pro-poor:
is shown on the vertical axis
-.04-.02
0
.02.04
0 400 800 1200 1600 2000
Poverty line (z)
Difference
Lower bound of 95% confidence interval
Null horizontal line
Empirical Results 1: For all age groups
6/6/2014 12
Source: Author’s calculation using DASP software and NSS unit level data on MPCE for various years

6/6/2014 13
-.15
-.1
-.05
0
0 400 800 1200 1600 2000
Poverty line (z)
Difference
Upper bound of 95% confidence interval

6/6/2014 14
-.2
-.15
-.1
-.05
0
0 400 800 1200 1600 2000
Poverty line (z)
Difference

6/6/2014 15
Figure 8: 1993-94 to 2004-05 is not statistically first-order relatively pro-poor:
-.02
0
.02.04
0 400 800 1200 1600 2000
Poverty line (z)
Difference

6/6/2014 16
Figure 9: 1993-94 to 2004-05 is not statistically second-order relatively pro-poor:
-.05
0
.05
0 .19 .38 .57 .76 .95
Percentiles (p)
Difference

6/6/2014 17
Figure 10: 2004-05 to 2009-10 is first-order relatively pro-poor:
-.15
-.1
-.05
0
.05
0 .19 .38 .57 .76 .95
Percentiles (p)
Difference

6/6/2014 18
Figure 11: 1993-94 to 2009-10 is not first-order relatively pro-poor:
-.02
0
.02.04.06
0 400 800 1200 1600 2000
Poverty line (z)
Difference

6/6/2014 19
Figure 12: 1993-94 to 2009-10 is not second-order relatively pro-poor:
-.15
-.1
-.05
0
0 .2 .4 .6 .8 1
Percentiles (p)
Difference

6/6/2014 20
Children Adult All age groups
Absolute
pro-poor
growth 1993-94 to 2004-05 Yes No Yes
2004-05 t0 2009-10 Yes Yes Yes
1993-94 to 2009-10 Yes Yes Yes
Relative
pro-poor
growth
1993-94 to 2004-05 Yes No No
2004-05 t0 2009-10 No No No
1993-94 to 2009-10 No No No
Table 6: Major findings: Comparison of pro-poor growth among children, adult and all age groups
Source: Author
Conclusions: Strong statistical evidence for all age groups that India’s urban
economic growth has been absolutely pro-poor but relatively anti-poor between
periods 1993-94 - 2004-05, 2004-05 - 2009-10, and 1993-94 - 2009-10.

Table 7 : Major Recent Policies
6-Jun-14 21
Policies and Programmes Main objectives
1 Nehru Rozgar Yojana (NRY) launched in
October 1989
Providing of employment to the urban unemployed and
underemployed poor
2 Urban Basic Services for the Poor
(UBSP) implemented in Eight Five Year
Plan (1992-97)
Community organisation, mobilisation and empowerment and
convergence through sustainable support system
3 Prime Minister's Integrated Urban
Poverty Eradication Programme (PM-
IUPEP) launched in November, 1995
Small towns development
4 Swarna Jayanti Shahari Rozgar Yojana
(SJSRY) operationalised on December 1,
1997
Gainful employment to the urban unemployed or underemployed
poor by encouraging the setting up of self-employment ventures or
provision of wage employment
5
The Twelfth Five Year Plan (2012-17)
Rajiv Awas Yojana (2013-22) : Supply of affordable housing, and
expanded access of subsidized healthcare and education to the urban
poor.
Main Problems: Very little recognition in the planning era than the requirement,
lack of age specific policy, the policies are suffered due to limited funding and
implementation problem, and lack of political will.
Source: Author’s compilation

6/6/2014 22
Policy Implications:
1. Aggregate level policy may not work. Need for effective urban poverty reduction policy and programmes especially
by focusing on children.
2. City specific policies are needed as different size (measured by population) of cities show different
levels of poverty and inequality (Tripathi, 2013).
3. Greater access to and better quality of education, job creation, skill development of the worker, access of better
health, improvement of basic amenities (such as, water, electricity, roads, sanitation, and housing) by focusing on
employees working in informal sector and living in urban slums.
4. Good political will
Future research : Some important case studies are required

C1.1: Sabyasachi Tripathi: Has Urban Economic Growth in Post-Reform India been Pro-poor Between 1993-94 and 2009-10?

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