Poverty in Palanpur

14 a I THE WO RL D BANK E CON OM IC RE VIEW, VOL. 5, NO. 1: 23 -5 5 FILE COP overty in Palanpur Peter Lanjouw and Nicholas Stern The meaning and identification of poverty are examined using three indicators of standard of living in the North Indian village of Palanpur. The first is intended as a measure of "apparent prosperity" based on the personal assessments of investigators after intensive field work in the village over the full agricultural year 1983-84. The other two are income in 1983-84, and a measure of permanent income obtained by averaging incomes from four surveys conducted over a twenty-six-year interval. A comparison of these three indicators shows that income measured in any one year may give a misleading impression of the incidence of poverty. The risk of poverty for households is calculated. Vulnerability is high among low-caste households and those which are involved in agricultural labor. Categories, however, are not homogeneous; for example, whereas the landless and widows are more likely to be poor, some of such households are quite well off. It is argued that poverty in a good agricultural year is a better indicator of sustained poverty than poverty in a bad year. Occupational mobility out of agricultural labor is low, and changes in the distribution of land are largely accounted for by demographic processes such as household splits. We examine in this article the definition, identification, and determinants of poverty in the village of Palanpur in North India. We discuss correlates of poverty which are commonly analyzed or used in policy design, paying particu- lar attention to understanding why and to what extent they may be appropriate for such use. We draw on data from four detailed surveys conducted in Palanpur in 1957-58, 1962-63, 1974-75, and 1983-84, as well as data and observations recorded on frequent visits to the village since 1974-75. The relative advantages and disadvantages of large-scale surveys of poverty in comparison with small- scale, village-based studies is a matter of some debate (Bardhan 1989), but both have a role in increasing our understanding of poverty. The authors are at the London School of Economics and Political Science, University of London. This article is an outgrowth of collaborative work of the authors with Jean Dreze on social and economic change in Palanpur, a project in which he played a central role. Section 11 of this article draws extensively on his contributions to other joint papers within the project, and the authors are also indebted to him for his contributions to and detailed comments on earlier drafts of this article. The authors are also grateful for discussions with Christopher Bliss and Naresh Sharma and for the comments of Ehtisham Ahmad, Robin Burgess, Stephen Howes, and Jean Lanjouw. The project was supported by the U.K. Overseas Development Administration and the SuntJry Toyota International Centre for Economics and Related Disciplines at the London School of Economics and Political Science, University of London.