Poverty in Nepal : a rural-urban perspective of Rupandehi district

Abstract

This study intends to examine rural urban poverty. Poverty line for both the rural and urban areas is set in terms of expenditure. Annual per capita expenditure of Rs. 8990.47 per person is set for the rural and Rs. 9585.94 for urban areas for the year 2007. These poverty line expenditure figures are calculated by upgrading the Nepal Living Standard Survey (NLSS) figures by the change in consumer price index. It attempts to analyze the incidence, depth and severity of poverty in rural and urban areas. The rural area is represented by Hati Bangai Village Development Committee (VDC) and urban is represented by Siddharthanagar Municipality of Rupandehi District. Similarly, the study analyses the distribution of poor as well as total population in terms of various aspects of household characteristics. Furthermore, expenditure elasticity on food and non-food of poor and non- poor groups is estimated. The poverty headcount rate, poverty gap and squared poverty gap are higher in rural compared to urban area. The overall poverty headcount figure in the study area is nearer to national poverty figure mentioned in NLSS 2003/04. By caste/ethnic groups, non-dalit has lower incidence of poverty both in rural and urban areas as compared to dalit. Further, the poverty gap and squared poverty gap are higher among dalit compared to non- dalit in rural as well as urban areas. The incidence of poverty among illiterate household heads is higher both in rural and urban areas. Similarly, poverty gap and squared poverty gap are also higher among illiterate compared to literate in rural area. Squared poverty gap is the same among literate and illiterate household heads in urban area. The incidence of poverty is inversely related with the level of the education. Household heads having education above SLC have no poverty in urban area. Regarding poverty by occupation, higher incidence of poverty is found in those household heads whose major occupation is agriculture compared to those who are engaged in non-agriculture both in rural and urban areas. Poverty gap and squared poverty gap are also found in the same direction in rural area. Such figures are just opposite to what is found for urban area. Households engaged in agriculture and wage earning occupations are more poverty- ridden than those engaged in business and service in both rural and urban areas. The family size and the incidence of poverty are positively co-related. The higher the family size, the higher is the incidence of poverty in both rural and urban areas. Family size having less than five members has very low incidence of poverty both in rural and urban areas although it is more than four times lower in urban compared to rural area. The poverty gap and squared poverty gap both are higher among large family size compared to small family size both in rural and urban areas. By the type of house, household heads having Pakki house have lower incidence of poverty than those having non-Pakki house both in rural and urban areas. Although poverty gap and squared poverty gap are higher among those having Pakki house compared to non-Pakki house in rural area. But in case of urban area, the figures are just opposite. Livestock rearing is an integral part of farming in rural areas of Nepal. Although there are farmers who raise livestock even in urban area but they are very few. Among the total sampled households 25.60 percent have livestock in rural area and 13.83 percent in urban area. Regarding poverty and livestock, the incidence of poverty is higher among those households who do not have livestock in rural area. This indicates that livestock provides extra income which contributes to poverty reduction especially in rural area. But in urban area the case is just opposite. Contrary to the widely held view, the landless have lower incidence of poverty compared to landowning households in aggregate. The disaggregated data show that large landholders have lower incidence of poverty compared to landless and small holders. This indicates that marginal land holders have higher incidence of poverty compared to landless and big holders. The incidence of poverty of those groups who refused to respond to their loan status is higher than those taking credit and not taking credit. Between taking credit and not taking credit groups, the higher incidence of poverty is found among those who have credit both in rural and urban areas. Out of the total population, 18.35 percent people have borrowed credit and 26.46 percent have not borrowed credit in rural area. In case of urban, 21.13 percent have borrowed credit and 24.75 percent have not borrowed credit. And the remaining is counted as non-response group. By source of credit, the incidence of poverty is higher among those households who have borrowed loan from informal sources as against those who take loan from formal institutional source in rural and urban areas. Contrary to the theoretical conception of negative relation between land ownership and poverty, the findings of the study show higher poverty rate among those possessing land as compared to landless. This may be due to the earning wage income as labourers. Further, the Gini coefficients are almost the same for the rural area (0.36) and the urban area (0.37). Expenditure elasticity shows that expenditure on food is higher for the poor than for the non-poor.