Poverty Alleviation and Pro-poor Growth in Odisha

During the 2000s, Odisha recorded a faster reduction in the poverty ratio than ever before. This paper examines the pro-poorness of growth in Odisha and among its regions during this time. The pro-poor growth index, poverty equivalent growth, growth incidence curve, and poverty decomposition methods have been used to estimate pro-poor growth. The fast decline in inequality with the growth in household monthly per capita expenditure resulted in a faster reduction in poverty in Odisha. All the regions of rural Odisha and the coastal region of urban Odisha recorded a faster decline in poverty during the period of analysis and were more pro-poor during the 2000s. The panel regression result shows that the districts with high per capita income in the tertiary sector witnessed faster poverty reduction, whereas the primary and secondary sector PCI had no significant impact on poverty reduction in Odisha.

Poverty reduction is one of the most pressing concerns of development policy across the globe. The supporters of trickle-down economics argue that as long as an economy is growing, the benefits will eventually reach the poor. However, critics have found that the benefits of growth within an economy are rarely spread evenly, and in fact, an unequal rise in incomes can slow the rate of economic growth altogether (Kakwani and Pernia 2000). The focus on poverty reduction has generated interest in pro-poor growth. Pro-poor growth is the growth that benefits the poor (United Nations 2000; OECD 2007). Despite rapid economic growth in recent decades, the main concern for policymakers is whether this growth has resulted in a reduction in inequality and poverty and whether it benefits all sections of the population. The pro-poor growth debate starts with the concept of “redistribution with growth” (Ahluwalia and Chenery 1974). The Indian government has used inclusive growth as a strategy to make the growth process pro-poor. India’s Eleventh and Twelfth Five-Year Plans emphasised inclusive growth and included different strategies to promote the well-being and participation of disadvantaged groups (Planning Commission 2008, 2011a). Very few works have studied the inclusivity and pro-poorness of growth in India at the regional or state level (Datt and Ravallion 1998, 2002; Thorat and Dubey 2012; Mishra 2015; Bhanumurthy and Mitra 2004). Our paper fills this gap by studying the pro-poor growth of Odisha and its regions during the post-reform period, especially during the 2000s.