Rural Poverty, Agricultural Production, and Prices: A Reexamination

In his insightful but unfinished work, Dharm Narain drew attention to the behavior of prices as one of the important factors determining the extent of poverty in rural India. His empirical investigations, summarized in Gunvant Detail contribution 10 this volume (chap 1), provide strong prima facie evidence of such influence. Dhram Narain found that rural poverty is not only inversely related to the level of output per head of the rural population, as established in Ahluwalia (1978a), but also positively related to the level of prices. What is equally interesting is that he found that when account is taken of the effect of variations in both output per head and prices, the underlying time trend in rural poverty, is negative, a very different conclusion from mine — I reported no underlying trends— and the very opposite of that of Griffin and Ghose (1979) and Saith (1981), who assert a rising underlying trend.