Rural poverty and agricultural performance in India

This paper examines time series evidence on rural poverty over the past two decades. The time series shows that the incidence of poverty fluctuates in response to variations in real agricultural output per head, but there is no significant time trend. There is a statistically significant inverse relationship between rural poverty and agricultural performance for India as a whole, suggesting that agricultural growth by itself tends to reduce the incidence of poverty. The analysis for individual states presents a somewhat different picture. The inverse relationship between output per head and rural poverty is observed in several states but there is also evidence that there are processes at work which tend to increase the incidence of poverty, independently of variations in agricultural output per head.