Resource information
The authors analyze five rounds of
National Sample Survey data covering 1983, 1987/8, 1993/4,
1999/0, and 2004/5 to explore the relationship between rural
diversification and poverty. Poverty in rural India declined
at a modest rate during this period. The authors provide
region-level estimates that illustrate considerable
geographic heterogeneity in this progress. Poverty estimates
correlate well with region-level data on changes in
agricultural wage rates. Agricultural labor remains the
preserve of the uneducated and also to a large extent of the
scheduled castes and scheduled tribes. Although agricultural
labor grew as a share of total economic activity over the
first four rounds, it had fallen back to the levels observed
at the beginning of the survey period by 2004. This
all-India trajectory masks widely varying trends across
states. During this period, the rural non-farm sector grew
modestly, mainly between the last two survey rounds. Regular
non-farm employment remains largely associated with
education levels and social status that are rare among the
poor. However, casual labor and self-employment in the
non-farm sector reveal greater involvement by disadvantaged
groups in 2004 than in the preceding rounds. The implication
for poverty is not immediately clear - the poor may be
pushed into low-return casual non-farm activities due to
lack of opportunities in the agricultural sector rather than
being pulled by high returns offered by the non-farm sector.
Econometric estimates reveal that expansion of the non-farm
sector is associated with falling poverty via two routes: a
direct impact on poverty that is likely due to a pro-poor
marginal incidence of non-farm employment expansion; and an
indirect impact attributable to the positive effect of
non-farm employment growth on agricultural wages. The
analysis also confirms the important contribution to rural
poverty reduction from agricultural productivity,
availability of land, and consumption levels in proximate
urban areas.
