This paper was prepared for the international workshop "Understanding and addressing spatial poverty traps: an international workshop".

Spatial inequality is one of the important features of poverty in India. Not only that there are significant inter-regional variations, but a large number of spatial poverty traps are either remote, low potential or marginal, less favoured or weakly integrated. In fact, these characteristics often overlay each other. The multiple and mutually reinforcing disadvantages or deprivation faced by most people in these areas lead to poverty and the reproduction of that poverty. This is manifested by the persistently high poverty incidence in these regions both in absolute and comparative levels.

Poor natural resource endowments and poor access to natural resources is one of the most important drivers and maintainers of poverty and is linked to its long duration and its multi-dimensional characteristics. Despite marginal improvements, poor people in spatial poverty traps find it more difficult to exit poverty. Within the rural economies of such areas the poor agronomic potential links with the limited opportunities for livelihood diversification. This is compounded by weak infrastructure and remoteness and by social or political marginalisation.

Within rural areas, poverty is concentrated in 5 out of the 17 major (undivided) states (Bihar, Orissa, Uttar Pradesh, Madhya Pradesh, and Maharashtra). These five account for nearly two thirds of poor people in the country. The seven poorest regions (those with a very high proportion of very poor people) are found in the same five states. At a more disaggregated level, 51 out of the 52 most deprived districts (based on human development index) belong to four out the five states; the exception is Maharashtra, which is replaced by Rajasthan.

To a large extent these areas, located mainly in India’s central-eastern regions, are characterised by forest dominated economies where people have limited entitlements to the relatively rich natural resources. Residents tend to belong to socially marginalised communities such as scheduled tribes and castes. The areas tend to experience low level of industrial growth and market development and have lower levels of attainment in terms of health and education and higher population growth. Above all these areas tend to have feudal characteristics. However, this kind of spatial concentration of poverty is also found within states like Maharashtra and Gujarat that are highly industrialised and economically developed. In addition, there are exceptions to this broad brush pattern with instances of forest economies especially in the North-Eastern states where poverty is not so widespread or acute. This may be linked to the relative absence of social stratification.

Strangely, the incidence of poverty is generally lower in areas of low agronomic potential such as the dry land regions located in large parts of India’s western-southern regions. Historically, these regions have been prone to transient poverty linked to drought. But, poverty is likely to become more long lasting as ground water irrigation and out-migration are likely to fail. This is linked to growing urban poverty in some of the regions, where rural poverty is low. Viewing poverty incidence, severity and chronicity dynamically, it appears that many of India’s dry land regions are likely to fall into a deep spiral of chronic poverty.

Another important category are those areas caught in extended socio-political conflicts. These make it almost impossible to trigger the processes of economic growth and/or the formation of human capital. There are conflict-affected pockets in many states, such as Assam, Bihar, Manipur, Jammu and Kashmir, parts of Andhra Pradesh and now even Orissa.

Obviously there is no strictly uniform pattern nor are there uniquely distinct situations. However, the generalisability of the pattern reduces as one moves from macro to micro contexts, and both have an important bearing on how policies actually unfold in specific contexts.

State policies in India have a long history of addressing the issue of developing `backward areas’, defined by using multiple categorisations. These policies have, at best, achieved only limited success. Two main reasons emerge: First, the central focus of policy has been to `mainstream’ these areas into the larger processes of economic development rather than seeking to address the very root cause of poverty and its reproduction. Second, most policy is confined to sanctioning financial allocation for the `backward areas’ and do not tackle the governance or institutional challenges of implementation. Most funds for the development of backward areas come from the Central Government. While this helps ensure funds continue to flow despite the poverty of the state, national level decision-making around the budget bypasses critical processes of contestations and negotiations at the state level.

Recent initiatives by the Planning Commission of India which give special priorities to the most backward and also conflict afflicted districts in the country appears to suffer from the same weaknesses. This suggests a need to re-examine the process of policy formulation for economic development at both the national and the local level. There is certainly a need to move away from planning only at the national level. The conditions in particular areas must contribute to policy design, particularly for agriculture and human capital formation. Bearing this in mind, this paper addresses following three objectives:

1. To identify areas with high incidence of long duration poverty and examine the important features of such areas (states and regions).
2. To discuss how multiple disadvantages drive chronic poverty (severe, long duration, and multidimensional) especially in forest based economies in India. This is demonstrated through a case study of Orissa which compares regions (north and south), and also districts within southern region in the state.
3. To reflect on alternative policy approaches and identify a more effective policy framework for ameliorating chronic poverty in spatial poverty traps.

The analysis draws upon the various studies, including an overview of chronic poverty in remote rural areas, carried out by the Chronic Poverty Research Centre in India.