On the persistence of poverty in rural India

Using the ICRISAT panel survey for Maharashtra for 1979-84, a period of rapid growth in farm and non-farm activities, an attempt is made to analyse the factors that prevented the poor from participating in the growth process. Thus insights into the persistence of poverty are obtained. Limited endowments of the poor, specifically land and education, and their failure to benefit adequately from them tend to perpetuate their poverty. Despite some weakening over time, caste barriers continue to perpetuate the poverty of low-caste households. Education has a key role in helping them overcome their poverty by raising farm and non-farm earnings, lowering dependency burden and weakening caste barriers to economic mobility. The preoccupation with trickle down mechanisms is limiting, if not misleading as it risks overemphasizing allocative efficiency to the neglect of more fundamental concerns relating to the endowments of the poor and how to augment them, and ensuring that they benefit adequately from them. Efficient markets alone will not accomplish much unless they are accompanied by appropriate government interventions and community initiatives to implement them.