Land redistribution to accelerate poverty reduction

Growth reduces poverty but the amount of poverty reduction per unit growth also matters. The percentage reduction in poverty with 1% increase in growth rate (mean income) is called growth elasticity of poverty.

I blogged earlier (here and here) on the differences in growth elasticity of poverty between India and China, and lessons from Chinese experience.

In short, poverty reduction per unit growth is higher in China than in India. The evidence as of now suggests that initial inequalities determine the poverty reduction potential of growth. China bridged initial inequalities by strictly pursuing land redistribution policy that accelerated its poverty reduction.

So, the lesson from Chinese experience is that we need to bridge initial inequalities to increase the poverty reduction potential of growth.

In Indian context, the high growth states like Maharastra have low-growth elasticity of poverty reduction. On the contrary, states like West Bengal have highest growth elasticity of poverty reduction but unfortunately it has low growth rates.

If the mechanism of initial land inequalities hurting poverty reduction potential is true, we should observe that the states that actively bridged these gaps should have high growth elasticity of poverty.

IndiaSpend has a good story on land redistribution in India that collated good data. It notes that land redistribution in West Bengal till now constitutes 52.4% of total land redistributed in India. Not surprisingly, West Bengal also has the highest growth elasticity of poverty reduction among all other states. It thus supports the hypothesis that reducing initial equalities through land redistribution enhances poverty reduction, as is observed in China.

Overall, the land redistribution scenario, as per land redistribution act is disappointing. IndiaSpend notes that 101.4 million (10 crore) rural households don't own any land even today, a significant section of them being SCs and STs. Remember that total households in India would be around 25 crore and total rural households around 20 crore.

The IndiaSpend report notes judicial delays as one of the important reasons. Some states have set up land tribunals to fasten the process. Without having to mention, it needs political will. Considering that land redistribution is also electorally attractive, it's surprising that no party has pursued this except communists.


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