Vulnerability, Shocks and Persistence of Poverty - Estimates for Semi-Arid Rural South India

This paper focuses on vulnerability of rural households to poverty when a negative crop shock occurs based on the ICRISAT panel data in India during 1975-84. Of particular concern is the possibility of some sections experiencing long spells of poverty as a consequence of such shocks. Using alternative specifications that take into account both direct and indirect effects of crop shocks, an assessment of vulnerability of different groups (e.g. caste affiliations) of households and policy simulations on land and non-land asset transfers are carried out. A reorientation of anti-poverty strategy is necessary to avoid welfare losses from the crop shocks.