Home / Opinion / Online Views /  The correlation between poverty and per capita income

The richer the state, the less poverty it should have. How do Indian states stack up by that yardstick? One way of answering that question is to rank the states by their poverty headcount and per capita income, and see the correlation between the two.

The accompanying table takes the states’ ranking on the basis of the recent poverty numbers for 2011-12 (states with the lowest poverty percentage having the highest rank), and compares that with their ranking in terms of per capita net state domestic product for 2011-12 at constant prices. The 11 special category states as well as Delhi, Puducherry, Chandigarh and the union territories have been omitted.

Goa is numero uno on the list both in terms of having the lowest poverty headcount ratio and the highest per capita income. States that have a higher rank in the poverty list compared with their standing in the income list are Kerala, Punjab, Andhra Pradesh, Rajasthan, Uttar Pradesh, Bihar, Odisha and Madhya Pradesh. The states that have the same ranking in both the lists are Goa and West Bengal. On the other hand, the table shows that Maharashtra, Chhattisgarh and Gujarat score much higher ranks in terms of per capita income compared with their efforts in reducing poverty.

The table says it all, but a few observations may be in order. Goa is a very small state and may not be comparable with the much larger states. The big gap between Maharashtra’s performance in income and poverty eradication is due to the data being skewed by Mumbai, which pulls up the state’s per capita income considerably. Kerala’s excellent performance in reducing poverty is well-known and the Kerala model of development has been debated for decades. More of a surprise is the fact that Andhra Pradesh, Punjab and Rajasthan do much better in the poverty rankings compared with their rankings in the income table. Should we start debating the Andhra model?

The poverty list, however, has seen many changes. Goa, for instance, has moved up from fourth place to the top of the table. Andhra Pradesh has moved up from 6th to 4th place. Rajasthan, at number 10 in 2004-05, is now at number seven. Maharashtra has moved up two places. Odisha is up three places. On the other hand, Haryana has slipped two places. Karnataka has gone down from 8th to 11th place. Jharkhand is down three places. It would be interesting to find out the reasons for these changes.

There are other ways of comparing the numbers. Andhra Pradesh, with a per capita income of 25,321 in 2004-05, had a poverty ratio of 29.6% in that year, while in 2011-12 Jharkhand, with a per capita income (at constant 2004-05 prices) of 25,634, has a much higher poverty ratio of 36.96%. Consider also how Gujarat, with a 2004-05 per capita income of 32,021, had 31.6% of its people below the poverty line in that year, while Rajasthan with a lower per capita income (at constant 2004-05 prices) of 28,851 in 2011-12 had a poverty ratio of 14.71%.

In short, state policies have had different impacts on poverty, even at the same levels of income. Laggard states can learn from others that have had more success in reducing poverty.

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