Death, health and social shocks identified as key reasons for households falling into poverty; People falling into poverty undermining impact of anti poverty measures
World Bank Report 'Moving out of Poverty : The Promise of Empowerment and Democracy in India' analyses questions like How do poor people define poverty? Who is poor and who isn’t? What factors, according to the poor, help them escape poverty and what push them into it. The Report brings together voices of more than 30,000 women and men from 300 villages across Andhra Pradesh, Assam, Uttar Pradesh and West Bengal between 1995 and 2005. It focuses on poor people’s interactions with local level institutions, social, political and economic and how these facilitate or hinder attempts to move out of poverty.
According to the study, poor people in the four Indian states cited well-functioning local democratic structures such as rural panchayats as critical in helping them move out of poverty. People in Uttar Pradesh reported that an improvement in the local government’s attention to citizens’ concerns increased their likelihood of moving out of poverty by 6 percent. By contrast, they felt that an increase in a household head’s education level, from illiteracy to primary schooling or from primary to secondary schooling, improved the family’s chances of moving up by only 3 percent.
Among the factors that depressed their chances of moving out of poverty, corruption was rated by them as lowering the likelihood of moving out by 10 percent. Jobs (26.6%), individual initiatives in agriculture (19.8%), individual initiatives in non-agriculture (13.7%) and multiple sources of income (12.0%), were cited as the key reasons for families moving out of poverty. Interestingly, a large number of youth interviewed, showed low preference for agriculture as a future career, opting instead for business and government jobs. In Uttar Pradesh, 41% wanted to start a new business, while 37% of the youth showed preference for government jobs. In West Bengal and Assam, these two options together accounted for 76% and 83% respectively. The study also explored the various triggers for households falling into poverty.
According to the people interviewed, death and health shocks (34%) followed by social shocks including family divisions and expenses towards marriages of children (27%) and financial setbacks such as high debt or the failure of crops (18%) were some of the main reasons for descents into poverty. Even in the household survey data, such shocks along with a decline in the overall state of the local economy emerged as strong associates of falling. Many of the poor people covered by the study reported that their initiatives to change their conditions often came up against blocked opportunities. Local democracies, they said, made a difference only to a chosen few as governance at the local level often descended into no more than a contest for spoils. Who benefited and who lost – in terms of access to markets, business licenses, jobs or support - depended largely on the local context. In Uttar Pradesh for instance, the local people suggested that caste affiliations played a role, while in West Bengal, they considered membership in the ruling party to be critical. The report finds that while India has continued to record steady progress in reducing poverty in recent decades, vulnerability remains a major issue. Focusing only on aggregate data can lead to sub-optimal policy actions as it masks the process of churning at the grassroots, where some people manage to climb out of poverty while others fall into it.
The study finds that when responsive local governments and economic opportunities match individual initiative and hard work, poor people’s journey out of poverty can be greatly facilitated. A combination of fair elections, improved access to information about local government programs, and collective action through organizations like women’s self-help groups can go a long way in unleashing the power of local democracy. The research also stresses the importance of reducing the rates of fall into poverty and underlines the urgency of devising new strategies to do so – including social and health insurance programs as well as improved access to savings and credit instruments.