On the chronically poor in rural India

Despite a voluminous literature on, and a growing concern for, alleviation of poverty in rural India, few analyses of chronic poverty are available. Utilizing a panel survey of rural households a characterization of the chronically poor is presented here. Contrary to some assertions in the literature, a logit analysis shows that moderately poor households faced a high risk of chronic poverty, and a subset of these were more prone to this risk than the poorest. The effect of adverse weather conditions on the risk of chronic poverty was positive but weak, while that of technological advancement was negative. The claim that the chronically poor are distinguishable not so much by low income in a year as by low variation in income over a period of time is supported by two decompositions. On the basis of the first decomposition it is shown that the chronically poor recorded the lowest variation in household income, and the bulk of this variation was due to the variation in wages over the survey period. The second decomposition, while confirming the lowest variation in per capita income among the chronically poor over the survey period, emphasizes the critical role of earnings per worker. Considering that differences in earnings per worker reflect the combined influence of differences in endowments, and in the ability to augment earnings from them, it follows that effectiveness of anti‐poverty interventions is conditional on whether the endowments and/or the ability of the chronically poor to augment their earnings from them can be raised substantially. What specific interventions are necessary cannot of course be inferred from this (essentially descriptive) analysis.