Why Have Some Indian States Performed Better Than Others at Reducing Rural Poverty?
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Rural poverty rankings of Indian states in 1990 were very different from 1960.
This unevenness in progress allows us to study the causes of poverty in a developing rural
economy. We model the evolution of various poverty measures, using pooled state-level
data for the period 1957-91. Differences in trend rates of poverty reduction are attributed
to differing growth rates of farm yield per acre, and differing initial conditions; states
starting with better infrastructure and human resources saw significantly higher long-term
rates of poverty reduction. Deviations from the trend are attributed to inflation (which
hurt the poor in the short term) and shocks to farm and nonfarm output.
