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Prepared by Jahangir Aziz.
See Ravallion and Datt (1996) for a review of India’s poverty experience since the 1950s and the related literature.
In India, the rural poverty line is based on a nutritional norm of 2,400 calories per day, and is defined as the level of average per capita total expenditure at which this norm can be typically attained. The Planning Commission determined this line at Rs 49 per capita monthly expenditure at October 1973-June 1974 all-India rural prices. For the urban area, the poverty line is computed at Rs 57 per month reflecting a nutritional norm of 2,100 calories.
The headcount ratio of Assam is used as a proxy for Sikkim, Arunachal Pradesh, Meghalaya, Mizoram, Manipur, Nagaland, and Tripura; that of Tamil Nadu for Pondicherry, and Andaman and Nicobar Islands; Kerala’s headcount ratio proxies for Lakshdweep’s; the poverty line of Maharashtra is used to estimate the headcount ratio of Goa, which in turn is used as a proxy to measure poverty in Dadra and Nagar Haveli; and the headcount ratio of Punjab is used to proxy Chandigarh’s.
For a formal derivation of the estimator and its statistical properties see Pagan and Ullah (1999).
For these exercises, the interval [0,6] was divided into equally spaced 100 sub-intervals.
It is relatively straightforward to check the robustness of the shape of the estimated kernels by weighting each state’s headcount ratio by the state’s share in total population. However, it is not clear how one would interpret such distributions, since they would be estimating the frequency of how rural population is distributed across the whole country, rather than the incidence of poverty.
For a technical derivation and statistical properties of the Nadaraya-Watson estimator see Pagan and Ullah (1999).
Note, that since Punjab’s 1997 headcount ratio is also stripped of all influence except growth, the conditioned and unconditioned kernels are directly comparable.