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Journal of Agrarian Change, Vol. 13 No. 2, April 2013, pp. 263281.

Agrarian Poverty, Nutrition and Economic

Class A Study of Gujarat, India
ANITA DIXIT

This paper analyses poverty and calorific undernourishment in the Indian state of Gujarat,
where high and market-led industrial growth has resulted in rapid economic improvement.
The study is carried out through a combination of secondary and survey-based data. We
conclude that the neoliberal agenda of uncontrolled, outward-looking growth has not resulted
in significant reduction of poverty or malnourishment in rural areas. Furthermore, while land
ownership is officially used as a proxy for wealth distribution, class position appears a better
predictor of poverty status in the rural areas than landownership per se. At the policy level,
there is a need to revive the agrarian economy and create new non-agricultural assets, and
the primary focus in the state must shift to the distribution of created assets rather than a
single-minded focus on growth.
Keywords: growth, poverty, agriculture, inequality, nutrition, class, Gujarat, India
INTRODUCTION
The impact of growth on well-being is of primary relevance to any discussion on welfare and
development. In India, especially since the marked intensification in the economic liberalization
process in 1991, market-led economic growth has been viewed as the panacea to end all ills. State
controls and intervention have been drastically reduced in most fields of the economy. The
impact of these policies, especially their distributional aspects, has been a subject of great
controversy.
To study the impact of growth on well-being, it is first essential to arrive at clear measures
of poverty/well-being. Recent Indian literature has brought to light the shortcomings of an
income- (or expenditure-) based approach to estimating poverty, and has underlined the need
for more broad-based, multi-pronged poverty estimators (see the third section). The Indian
government has undertaken several rounds of below poverty line (BPL) surveys starting from
1992, with a view to putting such a broad-based approach into practice. However, the measures
used in these have yielded highly controversial results (see the second section). Moreover, none
of the poverty measures used in these surveys has so far taken into explicit account the link
between well-being and asset ownership, and thus, class location.
In this paper, I present the case of Gujarat, a state in which a market-led industrial growth
trajectory has resulted in tremendous economic progress. I offer an understanding of poverty
and undernutrition based on an analysis of rural economic classes, applying the labour
exploitation measure of class of Patnaik (1987) to a field survey of 179 households in two
districts of Gujarat. This analytical study indicates that class position is a better predictor of
Anita Dixit, Azim Premji Foundation, Bangalore, India. E-mail: anidixit@gmail.com
I thank Barbara Harriss-White, Utsa Patnaik,V.K. Ramachandran, Madhura Swaminathan and seminar audiences
at Jadavpur University, Kolkata University and the Indian Statistical Institute (Kolkata) for helpful discussions. I also
thank two anonymous referees for detailed and enlightening comments. The views expressed in this paper are my
own and not necessarily those of the Azim Premji Foundation.
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264 Anita Dixit

poverty status in the rural areas of the state than landownership per se. On the basis of class
analysis of these 179 households, I conclude that economic growth in the state coexists with
concentration of asset ownership.
I start in the next section with a critical analysis of the shortcomings of the poverty measures
currently in use in India, and why economic class may be a more accurate measure. As a
background to this, the third section deals with the controversies surrounding poverty measurement at the national and international level.These two sections therefore lay the conceptual
foundations for the empirical study. The fourth section highlights the coexistence of high
economic growth and poor performance in rural well-being in the state. It serves as a
background to the survey in the fifth section, where the class nature of the prevailing rural
poverty and calorific deprivation in the state is analysed. The fifth section notes the absence of
any redistributional impact of economic growth, and highlights the fact that in itself, capitalist
growth is not a solution to poverty (Harriss-White 2006), that concentration of investible
surplus through growth results in poverty and calorific deprivation.The final section concludes.
ECONOMIC CLASS AS AN INDICATOR TO IDENTIFY THE POOR
The poverty line is defined in India as the level of monthly expenditure that enables an
individual to consume a minimally defined number of calories per day. The Task Force on
Projection of Minimum Needs and Effective Consumption Demand of the Government of
India (GoI 1979) located the required daily allowance (RDA) of calories at 2,400 calories per
day per capita for the rural population and 2,100 calories for the urban population, based on
the specifications of the Indian Council of Medical Research. This method was later adjusted
to use consumer price indices as deflators to prepare poverty lines.
Subramanian (2005) specifies two problems in the assessment of poverty identification
(appropriate stipulation of a cut-off level of income or poverty line) and aggregation (calculating the amount and/or depth of poverty). Academic debates in India1 relate to both of these,
and have not been able to come to a resolution. The parameters for measuring poverty have
been mired in controversies.
As the expenditure-based criterion came under severe criticism, with increasing demands for
a more broad-based approach to poverty, the Government of India responded by institutionalizing the BPL survey in 1992. The first round of BPL surveys conducted in 1992 was widely
recognized to have produced unreliable results, and the Expert Group of the Planning Commission recommended, in 1993, the use of a multi-pronged deprivation approach to identify the
poor (GoI 1993). Accordingly, the BPL survey in 1997 used a two-part approach to identify the
poor. The first part included criteria for excluding households, and the second part identified
the poor households from among the remaining households on the basis of various non-income
criteria.2 This created additional confusion and resulted in a new set of criteria3 for the next
1

See the third section.

Part A the exclusion criteria included the following: (i) a pucca (concrete) house; (ii) more than 2 hectares
of land; (iii) a member earning more than Rs. 20,000 per year as salary/profit; (iv) a television set, refrigerator,
ceiling fan, motorcycle, scooter or three-wheeler; and (v) a tractor, power tiller or combined harvester/thresher. A
household with any of these criteria was to be treated as non-poor. Part B the inclusion criteria included
information about: (i) land ownership, livestock, housing and the occupation of the household; (ii) the education,
training and skill levels of the household members; (iii) the consumption expenditure of the household; (iv) the
indebtedness and migration status of the household; and (v) the participation of the household in poverty
alleviation programmes (Hirway and Panth 2001).
3
The criteria to identify poor households were as follows: size of land holding, means of livelihood, type of
house, school attendance and wage-work by children, average availability of clothing, type and source of credit,
2

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Agrarian Poverty, Nutrition and Economic Class Gujarat 265

round of BPL surveys, conducted in 2002.The BPL census method and estimates based on this
have been criticized by a number of authors (notably Hirway 2003; Sundaram 2003; Shah and
Yagnik 2007) as not being precisely defined.
Poverty, however defined, is inextricably linked to asset ownership. Traditionally, National
Sample Survey (NSS) data, when dealing with the rural sector, has been classified on the basis
of land ownership.The reason is that land, understood to be the main asset of rural households,
is taken to proxy the surplus or deficit of resources compared to the households consumption
needs.
However, this classification does not present the true picture of the agrarian economy. First
of course, irrigated and rain-fed land is not comparable, since productivities are drastically
different. Standardizing accounts for the impact of irrigation and double/multiple cropping, but
many other issues remain. Production cannot take place independently of the amount of capital
and labour used and the way in which these inputs are combined in the process. Ownership of
non-land assets may play a key role here. The combination of operated area, technology
(including irrigation) and labour use constituting scale of production reflects the true
classification of economic status or wealth.
The distribution of assets has been established to be linked to economic class. Roemer
(1988, 1996) has established that unequal distribution of property results in exploitative property
relations, or relations of production whereby economic surplus gets expropriated from one class
and concentrated with another.4 In the agrarian economy, unequal distribution of a vector of
land and non-land assets results, at the household level, in an imbalance between assets and the
availability of family labour to make productive use of them. The conditions of production in
different categories, or classes, of households differ, so that a household may have either an
excess or a shortfall of family labour in comparison to its holding of land and non-land assets. There
emerges, from these varying relations with capital, a set of exploitative relations of production
between the classes, reflected in (a) hiring in and out of labour and (b) leasing in and out
of land.
Lerche (1998) argues that the relation between capitalist growth and socio-economic
dominance is extremely complex and regionally differentiated. In a survey of Uttar Pradesh
(UP) villages, the author finds that the poor (the lower scheduled castes) in Eastern UP,
despite its feudal structure, have benefitted from land reforms, while capitalist growth in
Western UP has bypassed the small and poor peasants and has reinforced the agrarian class
hierarchy, with the erstwhile middle peasantry becoming the exploiters. In fact, the positive
impacts of agrarian reform have been obliterated in Western UP through the capitalist growth
trajectory, due to the control of the middle-caste Jats, as a group, on land. Class, therefore, is also
about socio-economic power.
In a related vein, a recent survey study in Andhra Pradesh by Ramachandran et al. (2010)
brings out the stark differences in wealth and incomes between rural classes. In some of the
survey villages, there was found to be an income difference of as much as eleven times between
food security, reasons for migration, type of toilet facility, type of government assistance preferred, consumer
items, whether widow-headed, the literacy status of the most educated member of the household, whether a
female-headed household, the status of the household labour force (presence of bonded or child labour) and
whether the household had a handicapped member.The parameters were scored and households with a total score
of up to sixteen were identified as very poor; those with a score between sixteen and twenty were identified as
other poor (Shah and Yagnik 2007).
4
Exploitation occurs when one section of the population produces a surplus whose use is controlled by another
section . . .The extraction of surplus value is the specific way exploitation takes place under capitalism . . . surplus
takes the form of profit and exploitation results from the working class producing a net product which can be sold
for greater than they receive in wages (Bottomore 1991, 183).
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266 Anita Dixit

the rich and the lower-middle peasants. The study indicates the class-specific nature of the
agrarian crisis afflicting the Indian countryside the rich peasant category registers a cumulative increase in wealth while incomes of lower-middle peasant households stagnate. Thus the
agrarian crisis may actually increase class differentiation. The study therefore implies that
agricultural development (and agrarian poverty) cannot be understood without relation to class.
Relations of exploitation between classes develop due to their location in the class structure.
Notwithstanding the implications of class relations described in the above paragraphs, I have
used in this paper the concept of class-in-itself ; that is, a class in terms of its relation with
capital. Thus the location of each class in its control over capital is emphasized, rather than its
conflictual relation with other classes. On the other hand, class-for-itself is a concept (not
analysed here) where each class is united in a struggle against other classes, and the determining
element is a set of social relations.5
The question, therefore, is whether class location is a better predictor of rural poverty than
land ownership per se. Athreya et al. (1986) have emphasized the limitations of farm size as a
measure of scale of production. They find that the impact of intensity of input use and class in
determining productivity is likely to be higher than that of land size or the total value of inputs
used. Harriss (1983) argues that differing conditions of production for different categories of
households result in unequal exchange relations, and therefore in unequal investible surplus.
Attempting to understand poverty merely through the distribution of land excludes the impact
of factors such as non-land assets, technology, labour use and the process by which imbalance
in asset ownership results in the expropriation by one set of households of the surplus created
by another set of households. Distribution of land is a good proxy only when these conditions
of production are uniform; but in other cases, the concentration of surplus and therefore
poverty can be better understood through class location, which depends upon all these
factors.
This has implications on the politics of agricultural development a class-neutral understanding of agricultural growth would imply promotion of agro-commercial capital without
attention to its distributional fallouts. Defining agrarian poverty in terms of expropriation of
surplus value and its differential impact on the various classes means that the focus is on
redistribution rather than merely on welfare programmes or doles. Moreover, as argued by
Patnaik (1972), mere redistribution of land without taking class location (based on input use per
acre, technology etc.) into consideration, could possibly increase inequity. With the focus on
redistribution of all assets not merely land poverty alleviation programmes take the form of
assistance in terms of income-generating non-land assets. This makes a policy case for agricultural credit at differential rates, subsidized provision of irrigation and other agricultural inputs,
and so on, apart from land redistribution.
The Labour Exploitation Criterion
This paper has analysed poverty and well-being from a class perspective. The concept of
economic class takes into account the three interrelated criteria of extent of output, employment of capital and employment of labour, in a single measure. An accurate index of differentiation of agrarian households should therefore take into account the per capita distribution
5

Byres (1981, 407) defines class-in-itself as follows: men and women with a common relationship to the means
of production, a common relationship to the appropriation of surplus product, and a common relationship,
therefore, to one another: these relationships giving rise to an objectively given, common set of economic interests
vis--vis other classes (other interests). This is different from the concept of class-for-itself , which is hardly
applicable in the context of Gujarat, where agrarian struggle has never taken root.

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Agrarian Poverty, Nutrition and Economic Class Gujarat 267

of endowments (use of capital) and the resulting labour-use pattern, which together produce a
given level of output. I use the labour exploitation criterion (Patnaik 1987) and classify the
surveyed households on the basis of labour hiring and land leasing.6 The labour exploitation
index (E) is a ratio explaining the appropriation or expropriation of labour, relative to
self-employment.7 Similar use has been made of the E-criterion by Rakshit (2011).

CONTROVERSIES IN THE ESTIMATION OF POVERTY

The previous section has argued for the superiority of economic class as an indicator of poverty,
in the light of various attempts at an accurate poverty measure. This section contextualizes this
further, as I show that the definition and measurement of poverty is mired in controversy, and that
none of the definitions has explicitly used the concept of concentration of wealth/asset ownership.
One important bone of contention in international comparisons is whether poverty should
be based on some absolutely defined set of needs (absolute poverty), or whether it may be
allowed to increase with increase in average income levels (relative poverty). A study by
Blackburn (1998) finds that poverty conclusions are sensitive to which of the two methods of
measurement is used.
At a different level, a question has been raised regarding the adequacy of income as a poverty
measure.Various issues have been raised in support of a multidimensional measure of poverty.
The United Nations Millennium Development Goals (MDGs) cover a range of issues,
including (apart from income) education, gender equality, child and maternal mortality, as
issues broadly related to an index of development. In a related exercise in multidimensional
poverty measurement, Alkire and Santos (2010) find that 1,700 million people in the world
live in poverty, a figure that is in between the estimates by the World Bank (2000, 2002),
based on its $1.25-a-day and the $2-a-day poverty lines. However, rather than being based on
a fixed level of income, the figure is based on a set of functionings required for understanding
poverty. In doing so, the multidimensional poverty index (MPI) follows from Sens (1992)
argument.
Overall, therefore, there is no agreement either on how to identify the poor or on the best
way to measure poverty.This lack of international consensus on both process and identification
is paralleled by debates in the Indian context, which I now proceed to discuss.
As mentioned earlier, the poverty line in India was defined as the level of monthly
expenditure that enables an individual to consume a minimally defined number of calories per
day. A massive controversy has been raging in India regarding the appropriateness of the price
index-inflated poverty line as a measure of poverty. A repetition of the debate is not relevant

The labour exploitation criterion may be defined as follows:

E = X /Y =

( H i H o ) + (Lo L i )
,
F

where E is the labour exploitation index, Hi is the number of labour days hired in to work on own (or leased in)
land, Ho is the number of family labour days hired out to work on land owned by others, Lo is the number of
labour days worked on land leased out by the household, Li is the number of labour days worked on land leased
in by the household (with own or hired labour) and F is the number of family labour days worked on the
operational holding (Patnaik 1987).
7
The classes are defined as follows: landlord, E (no manual labour in self-employment); rich peasant,
E 1 (main earning through hired labour); middle peasant, 1 > E > 0 (earning through family labour
supplemented by hired labour); small peasant, 0 E > 1 (mainly self-employed but also hires out labour); poor
peasant: E 1 (mainly hires out labour); landless labourer: E (entirely hires out labour) (Patnaik 1987).
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268 Anita Dixit

here. Suffice it to say that official poverty-line figures have diverged from the percentage of the
population not actually consuming the specified calories. The percentage of the calorifically
undernourished population is in fact much higher than that officially defined as poor. This
divergence was noted first by Nayyar (1991) and then by several other authors (e.g. Mehta and
Venkataraman 2000; Suryanarayana 2000; Meenakshi and Vishwanathan 2003; Patnaik 2005,
2007).
Recent literature seeks to strike at the root of the debate and resolve it by calling into
question the effectiveness of calorific adequacy in terms of nutritional outcomes, and therefore
reverting to the expenditure-based poverty line. The Planning Commission Report of the
Expert Group to Review the Methodology for Estimation of Poverty (GoI 2009) has moved
away from the calorie-intake based poverty line, since independent surveys find that calorie
intake is not well correlated with nutritional outcomes. However, it recognizes that defining the
consumption poverty line requires a reference Poverty Line Basket (PLB) (a basket of goods and
services consumed by those at the poverty line), the nominal value of which is somewhat
arbitrary. This situation is resolved by situat(ing) the recommended reference PLB in some
generally acceptable aspect of the present practice (GoI 2009: 1). Since the estimated urban
poverty ratio is less controversial than the rural ratio, the report recommends using this
percentage (with the same expenditure-based poverty norm) as the base and adjusting it to
rural-relative-to-urban and state-relative-to-all-India price differentials.
The report thus does not address the principal concern regarding the expenditure-based
poverty line; namely, the increasing divergence between the level of minimum specified calorie
intake and the current level of calorific intake possible with the poverty-line expenditure. The
fact that the urban poverty ratio happens to be less controversial (there is less divergence) is a
coincidence. This does not make its use any more theoretically sound than the use of the rural
ratio, since the urban poverty ratio is also calculated using the same method. The report has in
fact taken the easy option by not examining the theoretical inadequacies of the expenditure
method, and therefore has not established any new norms to replace the abandoned norm based
on calorie intake.
In line with this position of the Planning Commission, Deaton and Drze (2009) have also
taken the position that the calorie-intake norm is insufficient as a nutritional indicator. They
explain the downward drift in the calorie Engel curves by suggesting the possibility of
calorie-rich diets being substituted by more diverse diets, rich in other nutrients not adequately
summarized by total calories. This is a reasonable argument, but there is no comprehensive
database (such as the calorie-intake data of the NSS) to verify it. While acknowledging the
superiority of a comprehensive nutrient set approach, therefore, this paper uses the calorieintake norm (the authors do acknowledge that calorie intake is an important factor in achieving
better nutrition) as an imperfect substitute in the absence of a suitable comprehensive database
of nutritional intake.
Moreover, both Deaton and Dreze (ibid.) and Suryanarayana (2009) argue that calorie intake
has severe limitations as a nutritional indicator, and they emphasize the need to focus on
outcome-based indicators. Similarly, Himanshu (2010) argues that nutritional adequacy of the
poverty lines based on the new (GoI 2009) norms should be judged against nutritional
outcome indicators. The problem here, as Deaton and Dreze point out, is that different
indicators often move in different directions, and that different databases give different results
for the same indicator. There is no universally accepted index of nutritional outcomes that can
be used.
The controversy, therefore, is centred on the distinction between a resource-based and a
capacity-based poverty line.The official (Planning Commission) methodology requires that the
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Agrarian Poverty, Nutrition and Economic Class Gujarat 269

poverty-line commodity bundle remain invariant over time. It therefore emphasizes the amount
of goods that can be purchased. Patnaik (2007), on the other hand, is one of the proponents of
the calorie-intake approach, which emphasizes not the actual goods that the individual should
consume, but the nutritional achievement (measured in calories) that is a required norm at the
poverty line. This is similar, but not identical, to Sen (1992), where the understanding is that
goods are not useful in themselves but for the needs they fulfil or for what they enable the
individual to achieve. The emphasis therefore is on functionings or capabilities that an
individual achieves, over the commodities that the individual consumes.
In this paper, however, I choose not to engage with but, rather, to sidestep these thorny
controversies. For the purposes of this analysis, I have treated calorific undernourishment/
inability to purchase adequate food as concepts separate from poverty. While I have used the
Patnaik (2007) method to calculate calorific undernourishment (see the section entitled The
Poverty and Undernourishment Picture), I have not used it to estimate poverty. My argument is
that Gujarat, despite its high economic growth, has fared poorly (a) in reduction of rural poverty
(traditionally defined, as per the expenditure norm) and (b) in reduction of the percentage of the
calorifically undernourished population. Further, the survey data from Gujarat empirically
verifies and validates the earlier argument, that economic class is a better predictor of well-being
than land ownership. These two issues are discussed in the following sections.

GUJARAT HIGH GROWTH AND STAGNANT WELL-BEING

The Growth Picture
Gujarat has always been listed as one of the high-growth states of India, recording moderately
high growth rates even before reforms were initiated in 1991. The main source of growth in
the state has been the secondary (especially manufacturing) sector. Dixit (2009a) notes the low
(compared to the all-India average) share of the primary sector in state income even in the
initial years of the states formation. After 1982/83, the share of the secondary sector has
increased substantially. Between 1960/61 and 2005/06, the states primary sector increased by
4.29 times its original (1960/61) value in real terms, as compared to the secondary and tertiary
sectors, which have increased 17.67 times and 15.8 times, respectively. According to estimates
by Dholakia (2007), the trend rate of growth in the agricultural subsector is so small as to be
statistically insignificant, both in the decade of the 1980s and from 1991/92 to 2003/04.8
However, these declines are offset by increased growth in manufacturing, construction, trade
and hotels, and transport and communication. Thus, overall, in terms of average annual growth
of per capita NSDP, the state has moved up from being the seventh of the fifteen major states
in 1983/84 to fifth in 1994/00 and third in 2000/05.
An important source of income in Gujarat is non-domestic investment; that is, investment
abroad as well as in other states within India. The net export surplus of the state is estimated
for 1999/00 to be about 10 per cent of its GSDP (Aiyar, 2008). Economic growth in the state
has been relatively market-based and free of external controls. The number of labour days lost
8

As against this, Shah et al. (2010) argue that the state has undergone miraculously high growth in agriculture
from 2000 to 2007.This claim has been contested by Dinesh Kumar et al. (2010), who view the perceived miracle
as a mere recovery from an agricultural downturn in the previous years. Moreover, Dixit (2009a) has used a long
time series (19602006) to show that agricultural growth has been fluctuating: twenty out of the forty-five years
show negative growth, and even in the period from 2000 to 2006, every second year shows a downturn in
agricultural production.

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270 Anita Dixit

to industrial disputes has also been relatively low (Labour Bureau of India 2004). The Index of
Economic Freedom for the States of India (Debroy and Bhandari 2005) rated Gujarat as the
most economically free state in India in 2004 (and number two in the same exercise in 2005).
The Employment Picture
There is thus ample evidence that growth in the state has been rapid, outward-oriented, largely
market-based and industry-led. On the other hand, employment has largely failed to shift out
of the primary sector. The National Sample Survey Employment Unemployment Survey
(NSSEUS) data used in Table 1 indicates the share of the agricultural sector versus the other
sectors in employment, by principal and subsidiary status taken together.9 The proportion in
agriculture has hardly declined in the case of Gujarat. In 1993/94, the proportion of agricultural
workers in the rural sector was almost the same at the national and state levels 78.7 per cent
for Gujarat, 78.4 per cent for all India. However, while the all-India agricultural population
declined to 72.7 per cent in 2004/05, it remained almost stagnant at 77.3 per cent for the state.
Agricultural production fluctuates greatly and the share of agriculture in state income has
declined over the years (Dixit 2009a). This, along with the high and stagnant share of
agriculture in employment, indicates that poverty in the state is concentrated in this sector.
Dixit (2009b) finds that incomes per worker in the agricultural sector have been stagnating.
Calculations from Census data reveal that real incomes (at 1980/81 prices) in the primary
Table 1. The percentage of usually working persons in the principal
and subsidiary status together by industry, Gujarat and India
Survey round
Gujarat rural
1993/94
1999/00
2004/05
Gujarat urban
1993/94
1999/00
2004/05
India rural
1993/94
1999/00
2004/05
India urban
1993/94
1999/00
2004/05

Agriculture

Other industries

78.7
79.8
77.3

21.3
20.2
22.7

8.0
9.4
6.2

92.0
90.6
93.8

78.4
76.3
62.9

21.6
23.7
37.1

12.3
6.6
5.4

87.7
93.4
94.6

Source: NSS published reports, various rounds.

9

. . . [T]he activity status on which a person spent relatively longer time (major time criterion) during the 365
days preceding the date of survey is considered the principal usual activity status of the person.This categorization
would be conceptually similar to the main worker classification by the Census. The corresponding category for
the marginal worker from Census is the subsidiary status classification of the EUS (Himanshu 2007a, 2007b, 3).

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Agrarian Poverty, Nutrition and Economic Class Gujarat 271

sector have actually declined from Rs. 3,872.02 in 1980/81 to Rs. 3,119.15 in 2000/01; that
is, about 19 per cent over 20 years. As compared to this, the incomes in the secondary and
tertiary sector in the state have increased by 172 per cent and 146 per cent, respectively.
The employment picture described above appears to contradict recent data (GoI 2007) that
suggests a declining potential of the agricultural sector to absorb additional workforce (at the
all-India level), indicated by a sharper decline in the growth rate in agricultural employment
than in the overall rate of employment growth. The same report, however, also underlines the
role of the agricultural sector as a fall-back or residual sector for employment. It is only at
higher levels of land ownership (above 1 hectare; see NSSO 2006, Statement 3.6, p. 42) that
self-employment in agriculture becomes the main source of employment.The landless prefer to
find employment as labourers in the non-agricultural sector. Households owning relatively
small amounts of land still have a preference against complete dependence on self-employment
in agriculture. Similarly, the data presented in Table 1 shows employment by principal status
plus secondary status (ps + ss); that is, it includes individuals who list agriculture as a source
of supplementary employment in the absence of adequate employment in the non-agricultural
sector.
Summarizing, the agricultural sector in Gujarat continues to have relevance as a source of
livelihood, but also remains the sector with the maximum concentration of the poor.
The Poverty and Undernourishment Picture
Table 2 indicates that the state has not done as well in rural poverty reduction as it has done
in terms of economic growth. The state started from a lower initial proportion of poor than
the all-India scenario, but the rate of decline in rural poverty in Gujarat slowed down
drastically between 1993/94 and 2004/05 (3.02 percentage points), compared to 6.49 percentage points between 1987/88 and 1993/94. This is also much lower than the all-India
level, where there was a fall of 8.07 percentage points in rural poverty between 1993/94 and
2004/05.

Table 2. The percentage of rural poor in Gujarat and India, various

NSS rounds
NSS round/year

28
32
38
43
50
61

(1973/74)
(1977/78)
(1983)
(1987/78)
(1993/94)
(2004/05)

Percentage rural poor

Gujarat

India

46.35
41.76
29.8
28.67
22.18
19.1

56.44
53.07
45.61
39.06
37.27
28.3

Sources: Gujarat data: poverty estimates, 1977/78 to 1983 from GoI

(1993, tables AIII-4 and AIII-5); for 1987/88 from NSS Report no.
372, based on method followed in Nayyar (1991, 278); for
1993/94 to 2004/05, NSS Reports nos. 401, 453, 454 and 508.
India data: Patnaik (2007, table 2).
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272 Anita Dixit

Table 3. The proportion of the rural population unable to attain 2,400 calories, Gujarat and India
(URP)
Year/round

Gujarat
India

1973/74

1977/78

1983

1987/88

1993/94

1999/00 (URP)

2004/05

n.a.
72

65.19
65.5

77.05
70

82
n.a.

78
74.5

85
74.5

88
87

Sources: Gujarat data: by construction of charts (see Patnaik 2007) based on Sarvekshana, January 1986,
and NSS Reports nos. 319, 353, 372, 374, 401, 405, 453, 454, 471, 508 and 513. India data: Patnaik
(2007, table 2).
n.a., Not available; URP, Uniform Reference Period.

In Table 3, I present the percentage of the population, in Gujarat as well as India, with
expenditure below that required to fulfil the Required Daily Allowance (RDA) of calories.10 In
calculating this population, I have used the method followed by Patnaik (2007).11,12 The
proportion of the population unable to purchase the required calorie allowance has actually
increased more rapidly for Gujarat than for the country as a whole. Over the period from
1977/78 to 2004/05, the percentage of the population unable to purchase 2,400 calories in
rural Gujarat has increased from 65.19 per cent to 88 per cent.
In response to the argument that the RDA itself has declined with change in lifestyles (Pacey
and Payne 1985), or that increased health and hygiene facilities enable better translation of a
given level of calorie intake into well-being (Dubey and Palmer-Jones 2005), I have calculated
the percentage of the population unable to purchase 2,200 calories and also 1,800 calories
10
I agree with a referees comment that There is no reason to believe that the proportion of the population
below the expenditure level at which (on the basis of the relationship between average calorie consumption in
each expenditure size-class and the average expenditure level in each expenditure-size class) the calorie norm is
observed to be met is also the proportion of the population below the calorie norm. It is possible that individuals
with expenditure levels that enable them to meet a particular calorie intake level may not actually reach that calorie
intake level. But, certainly, they cannot attain a calorie intake level above that which their MPCE level allows them.
Therefore, the relationship between average calorie intake and average MPCE size-class may be taken to indicate
an upper bound above which calorie intake by individuals in that MPCE size-class cannot move.
11
Patnaik (2007) has detailed a method to assess the percentage of the population with an intake of less than the
minimum calorie norms, which is repeated in summary form here for the sake of clarity. We start from the
Monthly Per Capita Expenditure (MPCE) distributions of rural and urban population provided in the various NSS
Reports on Consumption Expenditure. The cumulative frequency distribution of population can be presented in
the form of an ogive indicating the percentage of the population below specified MPCE levels.The NSS Reports
on Nutritional Intake give us the average daily calorie intake for each MPCE group. We can therefore plot the
average daily calorie intake against the average MPCE of each MPCE group drawn from the NSS Consumption
Expenditure Reports. We then have two diagrams, one indicating the percentage of the population below the
specified MPCE levels and the other indicating the relation between MPCE and calorie intake. Each of these
diagrams is prepared separately for the rural and the urban sectors, thus giving a set of four diagrams for each NSS
round. It then becomes possible, for each year, to find the MPCE corresponding to the RDA (2,400 calories in
case of rural areas and 2,100 calories in case of urban areas). From the ogive, we estimate the percentage of the
population below this minimum MPCE; that is, the percentage not availing themselves of the required daily
allowance of calories.
12
It is essential to note here that Patnaik (2007) has calculated poverty by defining the poverty line in every year
as the level of consumption expenditure in that year by which the calorific norm is realized. In keeping with Reddy
(2007), I do not attempt to privilege the direct method of poverty estimation (Patnaik 2007) over the indirect one
here. This paper does not deal with the issues surrounding the estimation of poverty at all whether via the
nutritional norm or otherwise; I have treated poverty and calorific undernutrition separately. I am simply borrowing
the method used by Patnaik (2007) to calculate the proportion of the population unable to attain the calorific minimum.

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Agrarian Poverty, Nutrition and Economic Class Gujarat 273

Table 4. The percentage of the rural population below different calorie norms, Gujarat
Below calorie norm

2,200 cal
1,800 cal

1977/78

1983

1987/88

1993/94

1999/00 (URP)

2004/05

60.5
24

57
34

73
38.5

63
34.5

76.5
33

78
47

Source: See Table 3.

(Table 4). The percentage of the population unable to purchase 1,800 calories increased
between 1977/78 and 2004/05, from 24 to 47 per cent, i.e. there has been almost a doubling
in percentage terms. In the last 11 years, i.e. between 1993/94 and 2004/05 there was an
increase in the percentage of the population unable to purchase even 1,800 calories in the rural
sector, from 34.5 to 47 per cent (i.e. 12.5 percentage points). Thus, not only has poverty
increased in rural areas, but the poor population is now more concentrated in the lower calorie
purchase classes.
Therefore, the estimation of the proportion of households unable to purchase the minimum
calories has increased substantially. Despite being one of the fastest-growing states in the
country, Gujarat has made slow progress in rural poverty alleviation, and growth has made no
dent at all in the capacity of households to purchase adequate calorific nutrition in the state.
In fact, in Gujarat, unlike at the all-India level, economic growth is negatively correlated with a
decline in calorific undernutrition (Dixit 2010). The state is a case of capitalist growth creating
poverty, as detailed in Harriss-White (2006).

CLASS ANALYSIS AND POVERTY IN TWO DISTRICTS OF GUJARAT

In view of the various controversies in poverty estimation, I will show that class analysis, which
takes into account the relationship between well-being and asset ownership, is a better indicator
of rural poverty than the distribution of land alone.
In the previous sections, I have established a background of Gujarat as a state with high
growth but poor performance in the alleviation of poverty and calorific undernourishment. In
this section, I proceed to apply the results of class analysis in estimating poverty and well-being,
through a survey of 179 rural households in two districts of Gujarat. Since this is a study of
poverty and food insecurity in terms of agrarian class analysis, it was important to select districts
that fulfilled two criteria: (i) a high proportion of population living in poverty or high intra-state
inequality levels reflecting pockets of poverty within the state or poor performance in terms of
the Human Development Index (HDI); and (ii) a large rural/agricultural population.
The districts selected for the study were Banaskantha and Dangs. Dangs is the poorest district
in the state,13 with 86.89 per cent of the total rural households below the poverty line,
compared to the state-level average of 40.39 per cent. In the case of Banaskantha, the
proportion of poverty is somewhat lower than the state average 33.98 per cent of rural
households exist below the poverty line. However, intra-district inequality in Banaskantha is
13
The identification of the poor districts was based on the BPL survey of 2000. While the BPL methodology
remains controversial, it is still the accepted official method for identifying the poor in the state; therefore this
method was used for selection.

2012 Blackwell Publishing Ltd

274 Anita Dixit

high (on the index of structural inequality in the HDM-2 measure used in the Gujarat Human
Development Report 2004, Banaskantha and Dangs have values of over 0.7). Moreover, the two
districts are ranked twenty-third and twenty-fourth out of the twenty-five districts of Gujarat
according to the Gujarat Human Development Report 2004.
Second, both districts have predominantly rural and agricultural populations. Banaskantha
has an 89.81 per cent rural population, while for Dangs this figure is 88.96 per cent. Both of
these figures are higher than the state average of 65.51 per cent (Census 2001).Taking rural and
urban sectors together, the percentage of total workers in the agricultural sector is 66.47 per
cent in Banaskantha and 86.04 per cent in Dangs, while the state average is 52.05 per cent.14
These districts were therefore selected purposively as representing an agrarian economy.Within
each district, two villages were selected on the basis distance from district headquarters (as a
measure of economic development).15,16 A stratified random sample was selected on the basis of
land ownership, including both landless and land-owning households. With reference to the
class structure detailed earlier, our sample has no landlord household.
A key issue in estimation of the labour exploitation criterion is the calculation of labour
days. In an agrarian economy, with several complicated systems of labour hiring and various
agricultural operations, the values of labour hired in and out required detailed calculation. The
survey questionnaire listed each agricultural operation, for which data was collected on the
number of individuals hired, the number of days for which they worked and the daily wage
paid, in cash and kind. There were also cases of long-term labour hiring (farm servants) who
were paid wages on an annual basis. Labour hired in (Hi) was calculated by multiplying the
number of daily wage workers with the number of days worked (in all farming operations), and
adding the labour days of long-term workers (the number of servants multiplied by 365 days
of the year).17 Similarly, labour hired out (Ho) was calculated by adding the number of days of
paid agricultural work of all the members of the household. Family labour (F) is, of course, the
sum of the number of days that members of the household work on their own land this is
also calculated by adding across all categories of agricultural operations.18
Next, the total number (hired in plus family labour) of labour days worked per hectare of
operated area is calculated. Dividing this by the operated area gives the value of labour days per
unit of operated area (the operated area was calculated in hectares).The labour days worked on
land leased in (Li) is the product of per unit labour days and the number of hectares leased in.
14
The reason why these figures appear different from those in Table 1 is that they are for all workers (from rural
and urban sectors combined, as against only rural workers in Table 1). Moreover, the data in Table 1 is from the
NSS (2004/05), while the ones here are from Census 2001.
15
In Banaskantha, one village from a prosperous taluka (sub-district) and one from a poor taluka were selected.
Dangs district consists of a single taluka; therefore, two villages were selected on the basis of the distances from the
district headquarters. The average population per village in Gujarat is 1,709 (as per Census 2001). Therefore,
villages with populations ranging between 1,000 and 2,000 persons were selected.
16
I acknowledge that distance from district headquarters is not a sufficient basis for determining economic
development. It is entirely possible that a village located at a greater distance from the district headquarters, if well
connected by road and equipped with adequate infrastructure (electricity, schools, water supply etc.), may be more
economically developed than a nearby village without these facilities. Other factors such as income or a proxy
thereof could also be considered parameters of economic development. None of these, however, can by itself be
considered an indicator of economic development. Distance from district headquarters is therefore used as a proxy,
since there is likely to be a substantial spillover effect of urban proximity on infrastructure, as well as employment
and income levels.
17
The very few days of leave given to long-term workers were not taken into account, since they differed by
household and village; in any event, there were only thirteen cases of employment of long-term farm workers.
18
I agree with one of the referees that the calculation of labour days hired in and out is fraught with difficulty.
The data was collected at a single point, which might have involved some unreliability of memory. However, I have
attempted to minimize this by calculating labour days as well as wages by each agricultural operation. This would
also take care of fluctuations in wage rates during the agricultural year.

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Agrarian Poverty, Nutrition and Economic Class Gujarat 275

Similarly, labour days worked on land leased out is calculated by multiplying the labour days per
hectare by the number of hectares leased out.
I have next cross-classified the households by land ownership and economic class (see
Tables 5 and 6). As the data shows, while there is some relationship between land ownership and
economic class, most of the size groups contain households that fall into almost all of the
economic classes. In fact, a few households do not own any land at all, but fall into the peasant
classes through leasing in of land. The modal size group is 1.02.5 hectares, while the modal
economic class is that of the small peasants. More than half of the sample that is, 104
households falls into this class, and another thirty-six households are middle peasants,
Table 5. A cross-classification of the sample households by economic class, land ownership and area
operated
Economic class

Landless labourer
Poor peasant
Small peasant
Middle peasant
Rich peasant
All

Land ownership (hectares)

0

Up to 0.5

0.51.0

1.02.5

2.55.0

510

10 and above

All

9
5
6

0
0
7
2
0
9

0
1
11
1
1
14

0
4
30
22
5
61

0
2
19
4
5
30

0
4
16
6
2
28

0
0
15
1
0
16

9
16
104
36
14
179

1
21

Economic class

Landless labourer
Poor peasant
Small peasant
Middle peasant
Rich peasant
All

Operated area (hectares)

0

Up to 0.5

0.51.0

1.02.5

2.55.0

510

10 and above

All

9
0
0
0
0
9

0
3
16
6
1
26

0
1
17
4
0
22

0
10
33
18
11
72

0
2
25
4
0
31

0
0
9
4
2
15

0
0
4
0
0
4

9
16
104
36
14
179

Source: Primary survey data.

Table 6. The average area of holdings by economic class and operated area
Economic class

Landless labourer
Poor peasant
Small peasant
Middle peasant
Rich peasant

Area operated (hectares) per holding

0.0

Up to 0.5

0.51.0

1.02.5

2.55.0

510

10 and above

All

0.00
0.00
0.00
0.00
0.00

0.00
0.22
0.34
0.36
0.21

0.00
0.61
0.70
0.70
0.00

0.00
1.72
1.53
1.67
1.47

0.00
2.83
3.62
4.08
0.00

0.00
0.00
6.64
8.48
7.49

0.00
0.00
12.98
0.00
0.00

0.00
1.50
2.58
2.37
2.32

Source: Primary survey data.

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276 Anita Dixit

indicating that family labour is an important source of agricultural income in these areas.
Similarly, classifying households by class and operated area (defined as area owned plus area
leased in minus area leased out), I find some, but not complete, overlap. For example, the size
group of up to 0.5 hectares contains households of almost every economic class (except,
obviously, landless labourers). The same applies to the other size groups as well. In order to
statistically test the extent of association between land ownership and class status, I use
correlation analysis. The value of Spearmans rho (two-tailed) between Land Ownership
Category and Economic Class is found to be 0.192, which is significant at the 5 per cent level
(but not at the 1 per cent level). Thus, as expected, there is a relationship between the two
criteria for classification, but that relationship is not highly significant.
The distribution of non-land assets therefore appears to play a critical role in determining
the class location of individuals. I have classified non-land assets into various the following
groups: (a) livestock; (b) tractors, wells and tubewells; (c) other farm machinery; and (d)
implements, buildings (e.g. sheds) and vehicles. Tractors, tubewells and wells and other farm
machinery are modern assets, while livestock and implements (such as ploughs, sickles, baskets
etc.) and vehicles (apart from tractors mainly handcarts and bullock-carts) are traditional ones.
It is found that the labour-hiring classes own a larger proportion of modern assets, while the
labour hiring out classes own a larger proportion of the traditional assets. Table 7 indicates that
while landless labourers and poor peasants own only livestock and implements, rich peasants
own a substantial amount of modern assets.That there is a close relation between class location
and the ownership of these non-land assets becomes clear from the monotonically increasing
value of agricultural assets as I move up the class hierarchy. This is in contrast to the
non-monotonic relation between economic class and operated area (see Table 7). 19

Table 7. The average value and percentage of various asset groups by economic class
Class

Landless labourer
Poor peasant
Small peasant
Middle peasant
Rich peasant
All

Livestock

Tractors, wells
and/or tubewells

Other farm
machinery

Implements, buildings
and/or vehicles

All

1,719.09
(56.20)
18,426.66
(74.45)
23,304.46
(79.21)
40,552.22
(70.81)
57,392.85
(63.23)
27,704.18
(74.43)

0
(0)
0
(0)
9,669.90
(6.72)
14,194.44
(10.16)
48,928.57
(18.03)
12,245.81
(7.32)

0
(0)
0
(0)
0
(0)
0
(0)
7,142.85
(1.34)
558.65
(0.10)

297.72
(43.79)
2,303.33
(25.54)
4,016.04
(14.05)
15,751.02
(19.02)
17,124.42
(17.37)
7,029.36
(18.12)

2,016.81
(100)
20,730.00
(100)
36,990.41
(100)
70,497.69
(100)
13,0588.71
(100)
47,538.02
(100)

Source: Primary survey data.

Figures in parentheses are percentages of the total value of all agricultural assets.
19
A monotonic relation is smooth; that is, where one variable keeps moving in the same direction (either
increasing or decreasing) in response to a change in the other at every point. A non-monotonic relation is one
where variable x may increase with an increase in variable y over a certain range, and decrease for another range.
A monotonic relation is therefore a smooth one, whereas a non-monotonic relation is a fluctuating one.

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Agrarian Poverty, Nutrition and Economic Class Gujarat 277

I now analyse the distribution of total income of the household, from all agricultural and
non-agricultural sources, by comparing it with the poverty lines.The poverty line effectively used
for rural poverty estimates in Gujarat was that of a monthly per capita expenditure (MPCE) of Rs.
254 in rural areas.20 It should be noted that this level of expenditure defining the poverty line,
which is itself lower than the estimate of the poverty line through the Expert Group
methodology, has been kept constant at the state level from 1998. It has not taken into account
the rise in the Consumer Price Index for Agricultural Labourers (CPIAL) that is reflected in the
official poverty-line estimates of the Planning Commission. Between 1999/00 and 2004/05, the
increase in the CPIAL was somewhat less than 11 per cent. If this method is used, and I increase
the poverty-line MPCE of Rs. 254 even by 10 per cent to take into account inflation between
1998 and 2004/05 (the present survey was conducted between January and April 2006, and the
data pertains to the calendar year 2005), the poverty-line MPCE would increase to Rs. 279.40.
The estimated caloric requirement for estimation of the poverty line is 2,400 calories in
rural areas. The MPCE required to meet a calorie requirement of even 2,000 calories at
2004/05 prices is Rs. 515, while that required for the 1,800-calorie norm is Rs. 342 (Patnaik
2007). From this, the annual incomes required would be as follows: (i) Rs. 3,352.8 for the
expenditure-based poverty line; (ii) Rs. 4,104 for an expenditure level adequate for an 1,800calorie intake; and (iii) Rs. 6,180 to reach an intake of 2,000 calories. The class-wise situation
for these three levels of monthly expenditure is presented in Table 8.
All the landless labourer households are below the income levels required to attain calorie
intakes of 1,800 and 2,000 calories, and also below the expenditure-based poverty line. Half of
the poor peasant households and a similar proportion of small peasant households are poor as
measured by the expenditure-based poverty line. Measured by calorie intake norms, the
percentages of poor move up over all the classes, and with the 2,000-calorie norm, three-quarters
of all poor and small peasant households fall below the poverty line. Even from among the rich
peasant households, there is a considerable proportion that falls below the poverty line.This goes
to show the low absolute levels of wealth or economic status in poor regions of the state.
Table 8. The class-wise percentage below various expenditure levels
Economic class

Percentage with annual income up to

Expenditure-based
PL = Rs. 3,353

1,800 cal = Rs. 4,104

2,000 cal = Rs. 6,180

100.0
50.0
50.96
41.7
28.6

100.0
62.5
56.7
50.0
35.7

100.0
75.0
73.0
61.1
42.9

Landless labourer
Poor peasant
Small peasant
Middle peasant
Rich peasant
Source: Primary survey data.

20
The poverty line for Gujarat calculated on the basis of the Expert Group methodology for the 55th NSS
Round (1999/00) for rural areas was Rs. 318.94, and that for the 61st Round was Rs. 353.93. However, the state
government in its estimates of rural poverty, as on 1 April 2000, based on the BPL census conducted in 1998, has
used Rs. 254 as the poverty line for rural areas. The BPL census conducted in 2002/03 was based on the proxy
means test with the thirteen criteria listed above. The estimated district-wise poverty figures based on these
thirteen criteria for 2002/03, as well as the BPL add-on list of 2007, are available at http://ses2002.guj.nic.in/
BPLNewList.aspx. However, the income level for the poverty line has not been changed.

2012 Blackwell Publishing Ltd

278 Anita Dixit

As a counterpoint, I present the classification of percentage of poor by land ownership in
Table 9. As expected, a large percentage of the landless households fall below the poverty line.
There is a broadly negative relationship between land ownership and the percentage of poor.
However, it is not a completely monotonic relationship. To examine the extent of the
relationship, I tested Spearmans rank correlation coefficient (rho) for (i) economic class and
poverty and (ii) land ownership and poverty. The results are presented in Table 10, and indicate
that the values of the coefficient are higher (and statistically significant at the 1 per cent level)
when economic class rather than amount of land owned is correlated with poverty. Thus, class
location appears a better predictor of poverty status than land-ownership per se, suggesting that
the distribution of non-land assets plays an important role in determining whether a household
escapes poverty.
A recent study (Rakshit 2011) has found a somewhat different relationship between the
land-criterion and the E-criterion. The author, similarly to us, finds little relation between size
and class groups, but finds a positive relationship between class and productivity, as well as
between farm size and productivity (indicating increasing returns to scale in technology). The
present study, on the other hand, finds a closer relation of poverty to class rather than land
ownership. As explained earlier, the determinants of class, apart from land, include non-land
assets and technology. This paper suggests that assets and technology act largely independently of
land size to determine rural incomes.
Table 9. A classification of the percentage below various expenditure levels by land owned
Area owned (hectares)

0
Up to 0.5
0.51.0
1.02.5
2.55.0
510
10 and above

Percentage with annual income up to

Expenditure-based
PL = Rs. 3,353

1,800 cal
PL = Rs. 4,104

2,000 cal
PL = Rs. 6,180

85.7
44.4
42.9
44.3
46.7
60.7
25.0

85.7
55.6
57.1
50.8
53.3
67.9
31.3

85.7
77.8
71.4
63.9
66.7
85.7
50.0

Source: Primary survey data.

Table 10. Correlation results for land ownership category, economic class and expenditure levels
Poverty measures

Expenditure-based PL
1,800 cal
2,000 cal
Source: Primary survey data.
** Significant at the 1 per cent level.
2012 Blackwell Publishing Ltd

Correlation coefficients
Land ownership category

Economic class

-0.141
-0.135
-0.071

-0.209**
-0.201**
-0.227**

Agrarian Poverty, Nutrition and Economic Class Gujarat 279

CONCLUSION
The controversial issue of defining poverty has resulted in the emergence of many indicators,
income-based and otherwise. Parameters for measuring poverty have become increasingly
complex as well as arbitrary, but none of them has recognized the important relationship
between class location and poverty.
Gujarat is one of the foremost states of India in terms of growth, based on privately owned
industry and an export orientation.The performance in rural poverty reduction, however, leaves
much to be desired. The policies of free market industrialization that improved the growth
performance of the state have had hardly any impact upon rural poverty. As the other indicator
of this decline in well-being, the proportion of population whose intake of calories is less than
the RDA has increased much more in the case of Gujarat than at the all-India level.
In order to support the state-level findings on calorific nutrition and poverty, I selected two
poor districts to survey. I find that: (1) a larger proportion of the sample is poor than that indicated
by the official poverty figures; (2) the proportion of the calorifically undernourished population
(even at the 1,800-calorie level) is higher than poverty measured by the official method; (3) relative levels of poverty (and calorific undernourishment) depend on the distribution of wealth as
expressed by economic class; and (4) in such poor regions, absolute levels of wealth are so low as
to push significant numbers from even the wealthiest agrarian households below the poverty line.
Roemer (1988) theorizes that economic class is determined by the initial distribution of
wealth, and that exploitation is relevant to economic analysis not in itself but as being related to
class (and, more fundamentally, wealth). Land ownership has been used in the official sources as
a shorthand or proxy for distribution of wealth; I find that it has a partial, but not highly
significant, relationship with class. Other components of wealth (non-land assets) hold equal, if
not more, importance in the sample villages.
Dixit (2009b) has shown that economic diversification has occurred in the sample villages
through education or ownership of non-farm assets, or through lack of agricultural assets.
Ownership of land has not been the means of moving out of poverty.This situation of income
stagnation detailed in Dixit (2009b) seems to be borne out in the primary survey of the poor
agrarian economy studied in this paper. Absolute levels of income and wealth are low, and large
proportions of the surveyed households face nutritional deficiency.
This paper brings forth the urgent need for policy intervention at two levels. First, the
agrarian economy of the state, which is still the mainstay of three-quarters of its population,
needs to be revived. Land is not the most important or sole asset determining rural poverty.
Provision of subsidized credit and inputs to poor peasants, and provision of non-agricultural
assets at reduced rates to landless households, has been rolled back; these policies have to be
re-established. The focus must shift to public provisioning of subsidized non-land assets such as
irrigation and power at differential rates, focused on resource-poor regions and households.
Thus there is need for massive doses of public expenditure either to support the agrarian
economy through provision of non-land assets or to create new non-agricultural assets.
Second, there is a need to recognize the importance of distribution in all discussions on
poverty. The focus, especially in Gujarat, must shift from mere creation of wealth through
economic growth, to equitable distribution of the resources and assets created.
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