Production, prices and poverty in rural India

This paper challenges the view that increases in agricultural production have reduced poverty in rural India. Rural poverty is related directly to the consumer price index number for agricultural labourers, and inversely to agricultural production. The underlying time trend term indicates a residual rising trend in rural poverty after accounting for the influence of these two factors. There are plausible, though conjectural, reasons for believing that to a significant extent, the price factor as well as the variables implicit in the time trend term both derive their strength, if not their existence, from the nature of the growth processes which have generated the observed growth in agricultural production. These results contradict Ahluwalia's earlier conclusions, even though they are themselves based on essentially the same data set.