Caste, Ethnicity and Poverty in Rural India

This paper analyzes the determinants of rural poverty in India, contrasting the situation of scheduled caste (SC) and scheduled tribe (ST) households with the non-scheduled population. The incidence of poverty in SC and ST households is significantly higher than among non-scheduled households. Using a probit decomposition analysis, we break down the difference in poverty incidence between the scheduled castes and tribes and the non-scheduled households into the proportion explained by the differences in characteristics and the proportion explained by the differences in probit coefficients. We find that for SC households, differences in characteristics explain the gap in poverty rates more than differences in coefficients; while for ST households, it is the converse. It is striking that differences in educational attainment explain approximately one quarter of the poverty rate gap for both social groups. Occupational structure is very influential in determining the poverty rate gap for both SC and ST, as are differences in returns to individual occupations.