CHAPTER I I I

THE CONCEPTS, VARIABLES AND THE METHODOLOGY

In
some

empirical research,

essential

it is a convention to set

out

details about the concepts and the variables

also about the methodology used,

since a well devised

as

framework

of research usually succeeds in avoiding bias, limiting the scope

for subjective conjectures and ambiguities, and putting things in
a clear perspective.
is

made

to

In tune with the usual practice, an attempt

straighten

out these

preliminaries

so

that

the

Subsequent analysis lends itself to a proper. appreciation.

Concepts and Definitions

We
concepts

describe below,

used

in

in reasonable detail,

the study and

the

procedures

the various
followed

for

computing the variables used.

The
household.
preferred

are

but

as

the

unit

of

a composite unit of employment and

generally for the family as a whole;

elderly

analysis

it constitutes not only a composite

In typical rural households in India,

system

basic

household

because

consumption,
well.

basic unit of analysis for the present study is

has

been

unit

of

income

as

economic decisions

there is generally

no

of decision- making at individual level,

although

some

members do wield more importance in such

matters.

The

objective is essentially to increase the feeding

of the household as a whole.

capacity

77
The Household

The
defined

as

normally

term 'household' as used in the present

study

the unit in which all the members of the family

living together and sharing their meals from

kitchen.

Any

person,

sharing

his

the

principal meals

is
are
same

with

the

household for more than six months during the reference year

has

been considered as a member of the household.

be the head of the household,

a relation,

Such a person may

a protege of the head

or a guest. Temporary guests have not been included.

girls,

whose

'Muklawa'

in Punjab and 'Gauna' in Bihar did

take

place have been treated as

only

those

minimum
their

households

The married

household

members 1 .

have been taken into account

not

Further,
where

the

number of members in the family was two irrespective

age

or

households,

sex.

per

capita

Due

to

size

variations

of

estimates have been derived

different
to

comparability across categories of households in a given

across households in different areas.

of

ensure
area or

Age of the members refers

to the number of completed years preceding the date of inquiry.

Earner
An
to

contribution

household income through his I her earning from farm and I or

non-farm
1.

earner is defined as one who makes a

employment.

While

the

labour

contributed

by

the

The terms like 'Muklawa' in Punjab or 'Gauna' in Bihar have

the same meaning. They imply a type of post marriage social
agreement by which girls
married at a very young age
because of prevalence of child marriage are required to stay
with their parents till they attain the age of puberty,
understand the post- marriage sexual relations and become
capable of managing their household affairs individually.

78
students has been included in the total mandays of employment
a particular operation,

in

wherever reported, they were not treated

as earners since their involvement was only marginal and confined

to twoor three points of time in
labour was,
In

fact,

the year.

The return to their

however, duly included in the total family earnings.

wage payment accrued to the whole family team of which

they were marginal partners.

Human Labour

Human labour is measured in terms of adult man-days

work.

An adult manday consists of 8 work-hours.

of

Labour quality

differentials manifest themselves between regions, age, sex, etc.

and

the

ideal

attributes

situation would be to take

cognizance

while working out earning differentials.

of

such

Unluckily,

we could not rigorously invoke such measures since any attempt to

standardize labour units on the above counts would almost
be

based

on guess and varying interpretations.

always

The aspect

of

quality differentials could not, therefore, be pursued in detail.

To arrive at standard mandays of human labour,
labour

days

woman-day

have

female and child

been converted into manday units

taking

equal to 0.75 man-day and one child-day equal

to

one
0~5

man-day 2
2.

This is a very common practice and has been widely in use.

For exampleJ see G.K. Chadha ( 1979); "Production Gains Q.!
New Agricultural Technology", Publication Bureau, Panjab
University, Chandigarh, pp. 29-30; and R.K. Sharma (1983);
"Impact of New Technology on Income Distribution Among
Cultivating Households in Rural Haryana: ~Regional Study",
Ph.D.
Dissertation
(Unpublished),
Jawaharlal
Nehru
University, New Delhi, p. 160.

79
Total Yearly Employment I Earnings

The

total yearly employment and earnings,

the present study,

non-farm.
three

consist of two components,

Each

viz.

The

three

split

sub-components

include wage employment,

in

on-farm and

of these two components is further

sub-components.

employment

as used

of

non-wage (self)

into

on-farm

employment

and dairying and poultry; while rural wage employment, urban wage
employment

and

others including self employment are

sub-components
employment
accruing

of

has

non-farm

employment.

Earning

been obtained by a dividing the

from

particular source with the

employment in that source.

the
per

total

total

three
day

of

earnings

mandays

of

A brief description of each of these

items is given below:

On-farm Wage Employment/Earnings

Wage
constituent

employment/earnings

of

contributed

the total on-farm

by

is

dominant

most

It

is

either

as

employment/earnings.

members

household

the

while

working

attached farm servants for their respective employers or on daily

basis

in

on-farm

transplanation,

activities

weeding,

such

harvesting

as
and

ploughing,
thre~hing

sowing
and

and
other

agricultural operations such as manuring, watering, etc.

The

earnings accruing from such sources of

employment

consist of cash and kind wages (including those from wage-receipt

land and other perquisites such as meals, tea, clothes, footwear,

80
etc.)

earned by all the working members on attached as

daily basis during the reference year.

component

well

as

The interest on the cash

of wages which is usually paid at the beginning of the

year to the attached farm servants in Punjab has been included in

wage earnings.
using

the

farm

prevailing
money

The kind wages have been converted into cash

harvest

prices

of

the

relevant

commodities

in the sample villages in the two study

equivalent of other perquisites,

wherever

by

areas.

The

reported,

has

also been duly accounted for.

The

concept

preceding paragraph,

of wage receipt land,

mentioned

is applicable to Bihar only.

in

the

In Bihar, the

dominant mode of wage payment to the attached farm servants is in

the form of a tiny,
income

derived

rent free, piece of land.

from

the

cultivation of such a

essentially a wage-earning in kind.

this

income with other

earlier.
obtained

Net
by

Conceptually, net
tiny

constituents of

wage

income,

reported

income from this type of crop husbandry has

deducting

the

cost of

fertilizers,

standard

inputs

on

seeds,

maintenance

of

farm implements from the gross value

that of by-products).

is

We have, therefore, clubbed

expenditure

(including

plot

irrigation,

been

such

repair
of

as
and

output

Home produced inputs such

as

seeds, manures, etc. have been evaluated at the prices prevailing

in the villages at the time of their actual usage.

81

(ii) On-Farm Non-Wage Employment/Earnings

This
leased-in

sub-component includes employment on

land

and

wheat and paddy,

owned-land,

mandays spent on gathering the

etc.

remains

of

The same procedure has been followed for

arriving at net income from owned-land and leased-in land, as for

the

cultivation of wage-receipt land except that

element

of cost,

namely paid-out rent,

an

additional

has now to be accounted

for while arriving at net income from crop husbandry.

(iii) Dairying and Poultry

Another
and

important segment of total on-farm

earnings comes from dairying and poultry

employment

activities.

This

includes mandays of employment in the rearing and maintenance

all

variety

of

cattle and poultry.

The cattle

stock

of

mainly

consists of milch, draught, youngstock, sheep/goat, hen, etc.

It

needs

of

to

be

clarified that income from this

head

is

net

intermediate inputs such as green fodder, dry fodder, expenditure

on medicine,
gone

into

etc.
the

information

No costs could be computed for family labour

rearing of dairying and poultry

on

this

account

could

not

be

since

concrete

conveyed

by

the

respondent households.
Non-Farm Employment/Earnings

All
reported

avenues

earlier

under

of employment/earnings other
the three

on-farm

treated items of non-farm employment/earnings.

than

sub-components
Such

those
are

employment

82

avenues

are open to rural labour households mostly through

employment

although

in

same

cases,

self-employment

wage

is

also

availed of.
The
both
of

wage

employment on such activities

in the rural as well as urban areas.

these

households

is

Some working members

are engaged as wage-earners in

their village as construction workers, carpenters,

While

some

others

get

wage-employment

as

nearby

With the basic objective of

impact of growing rural-urban linkages,

the

arising

stratified

under

from

such activities have

two

heads,

Employment.

While

viz,

be~n

around

industrial

porters in the grain market,

town.

or

watch-men~etc.

construction workers,
urban

available

etc.,

or

in the

studying

the

employment/earnings

Rural Wage Employment and

and

studied

Urban

Wage

earnings from such activities are mostly

in

cash, 'other perquisites' wherever reported, have also been taken

into account.
Others (including Self Employment)

This

includes

mandays

of

employment/earnings

contributed by the following categories of economic enterprises:

(i)

artisans

and craftsman such as blacksmith and

weaver,

etc.,
(ii)

service
dyer,

personnel such as
washerman,

sweet

barber,
maker,

cobbler,
cartage,

sweeper,
and

other

83
traditional

services such as dancer,

loudspeaker

and

bandmaster, etc.,
(i i i )

self employed tradesman such as rope making,

enterprises,
puller,

spinning,

petty

butcher,

shopkeeper,

vegetable selling,

broom

household

fisherman, rickshaw

wood cutting and

selling,

selling,

goldsmith,

engine

repair, cycle repair, and tailoring, etc.

Net Household Income

The
present

study,

concept

of

emanates

net household income as used

mainly from two sources i.e

source and the non-wage source.

income
the
land)
The
from

in
the

The \wage source' of

the
wage

household

covers wage receipts earned by all the earning members of

household in farm (including net earnings from

and non-farm (both in rural and urban
non-wage

of leased - in land,

activities.
net

earnings

cultivation of owned or small pieces

and others including self employment

farm) category of economic enterprises.

household

areas)

source of household income includes

dairying and poultry,

wage-receipt

(non-

The latter source of net

income also includes income received by the

household

on account of transfer payments such as remittances, pensions and

other state assistance in the form of scholarships to its student
members.

Per capita estimates have been derived by dividing the

net household income

with the household size.

84
Consumption Expenditure

In
the

the present study,

sample

namely

households

food-items

cereals

(wheat,

intoxicants
ther

non-food

items.

maize and rice etc.),

sets

of

Expenditure

vegetables and fruits,

items:
made

milk and milk

of

on

products,

salt and spices, and

(including expenditure made in the focal town on petty

refreshments,

consists mainly of two

and

meat fish and eggs,

beverages

the consumption expenditure

pan,
etc.)

khaini,

cigarette,

tobacco, bidi and other

has been covered under

food-items.

On

the

hand, expenditure incurred on fuel and light, clothing and

bedding,

footwear,

education,

conveyance, medicine and health,

consumer durables (consisting of dom.estic

radios/transistors,
fans,

furnitures,

utensils,

watches, bicycles, sewing machines, electric

etc.)

(covering

expenditure

charges,

laundary

and

miscellaneous goods

on cinema and

and

toiletry,

expenditure on non-food items.

other
etc.)

and

services

amusements,
has

been

barber

trated

as

Further, the expenditure made on

marriage and other social ceremonies,

though studied

separately

as well, has been treated as part of the non-food expenditure.

The
households

is

total

consumption

expenditure

made of cash and non-cash (or

of
kind)

the

sample

components.

For cash component, while the sample households have to rely upon
market purchases,

the non-cash component is largely wage receipt

in the form of kind earnings and other perquisites

etc.)

although

home-grown

production

also

makes

(tea,
a

meals,
marginal

8.5
contribution.
valued

The

value

of such non-cash component items

at village level prices.

It is worthwhile

are
out

pointi~g

that 'other perquisites' are consumed only by the working members

at their place of work,
members
money
the

and,

of the household.

as such,

are not shared by

In the present study,

other

however,

the

equivalent of these 'other prequisites' has been added

household expenditure under the relevant commodity

For a more meaningful analysis,

to

heading.

per capita estimates have

been

derived to take note of the variations in household size.

Poverty

One
that

of

the central issues in research on

of defining a poverty line i.e determination of

point for separating the poor from the non-poor.

the

debate

approaches
approach
some

poverty

that
have

defines

has
come

revolved around
into

the

this

limelight.

cut-off

As a result of
issue,
While

the poverty line in terms of income

minimum expenditure level required

is

to purchase a

two
the

main
first

level

or

socially

accepted minimum bundle of goods 3 ; the other proceeds in terms of

nutritional norms such as the intake of calories

3.

and proteins to

For example, see B.S. Minhas, (1970); "Rural Poverty, Land

Redistribution and Development Strategy : Facts and Policy",
Indian Economic Review, Vol. V (New Series), April, pp. 97128.
This approach of defining poverty line was suggested
in 1962 by a distinguished working group appointed by the
Planning Commission for the said purpose.

86
4
in the working condition .

keep a person fit

While adhering to either of these two approaches,

off

points

for estimating the incidence of

poverty

fact

points

that

if

are essentially arbitrary in nature due

two or more such points are used

poverty from the same data,

in

have

been

Almost all such

variously suggested by a number of researchers.

cut-off

cut-

for

to

the

estimating

these may reveal glaring differences

the extent of povety and may pose challenges of far

reaching

consequences for the policy makers.

Out of the various cut-off points available for poverty
those

measurement,
scrutiny
few

suggested

by Bardhan are based

on

careful

of expenditure data for various parts of India,

points

of time.

For the head-count

method

of

for

measuring

poverty,

Bardhans norms have been very extensively made use of.

We

borrow Bardhans norms 5 .

also

monthly

expenditure

of

Rs.

Accordingly,

15.00 at 1960-61

per

all-India

capita
rural

prices has been taken as the cut-off point for the present study.
Further,

while taking note of inter-state and rural-urban

differentials,

the

price

equivalents of Rs.15.00 at all - India rural

4.

Various estimates for minimum nutritional requirement have

been suggested by different authorities such as the Indian
Council of Medical Research (ICMR), Second Pay Commission
for Central Government Employees (1957-59) and FAO Rome
etc. Broadly speaking, these estimates have varied between
2100 to 2400 calories per person per day.

5.

Pranab K. Bardhan,
(1973); "On the Incidence of Poverty in
Rural India of the Sixties", Economic and Political Weekly,
Vol. VIII, Nos. 4-6, Annual Number, February, pp. 245-254.

87
prices

for

Rs.15.90

rural

and

Punjab

and Bihar have

Rs.15.80 respectively

at

been

worked

out

.
6
pr1ces .

1960-61

at
The

corresponding yearly figures for rural Punjab and rural Bihar are
Rs.190.80 and Rs. 189.60 respectively.
To

arrive

at the cut-off points for the year

study, a suitable price index is needed.

is

Consumer

Price

country,
index

on a regular basis.

numbers

working

Labourers

for various parts of

Moreover,

luckily for us,

1960-61 as their base and

the

is
the

these

problem

of

easily

The average annual figures of Rs. 833.80 and Rs.811.49

finally

worked

out

as the minimum per capita

measuring poverty in rural Punjab and rural Bihar,

The

which

out the 1980-81 norms for poverty measurement is

resolved.
are

have

the

The most suitable index

Index for Agricultural

constructed by the Ministry of Labour,

of

problem

income

for

respectively.

of poverty in the present study is studied

on

the

of

the

income

and

basis of these cut-off points.

Methodological Frame

In .the present study,

employment

pattern

consumption

of

Punjab

Bihar,

and

a comparative analysis

and the corresponding levels of

the non-cultivating rural labour

has

been carried out in

households

terms

of

of

seeking

6.

P.K. Bardhan (1973); Ibid p. 247

7.

We have worked out these annual figures on the basis of

Consumer Price Index for Agricultural Labourers For Punjab
and Bihar. This index is readily available in, "Statistical
Abstract of India for (1980)"
New Series,
No. 25,
Government-of India, ~410.

88
empirical

answers to various hypotheses.

mainly tested by comparing the averages.

values

have

present
for
is

For

such components where the percentage

high

addition

presented

for

most

distance

the mean values,

side

Still further,
of

included

of positive

are comparatively more reliable than

to

in

by side to make the

more

values

those

mean

Further,

have

analysis

the

responses

is low.

percentages

are

purpose, mean

It needs to be mentioned here that mean

values where the percentage of such responses

in

thi~

been estimated for all variables

study.

very

These hypotheses

also

been

meaningful.

to lend statistical concreteness to our findings,

the variables used in the

study,

the

effect

of

from the respective focal towns of Punjab and Bihar

is

worked out through linear statistical relations such as;

'

y.

Where 'Y .1
1

cross-sectionally

o( +

ft D.J

is the value of the

among

the eight sample

i th

variable

observed

v1. ll ages, 'D . 1s

the

distance between the j th village and the focal town,'./.>' measures

the

of the distance,~'is the

effect

intercept

indicating

value of y when the effect of the distance is neutralished

the
or is

zero.
To
diff~rent

study

ii~ms.

the consumption

pattern,

mean

value~

of. consumption expenditure have been. estimated

and compared on per capita basis.

Further, with the objective of

examining a well received proposition in the existing

that

'higher

for

income

households

generally

consume

literature
smaller

proportion of their income than do lower income

have

estimated the average

distanced

households',

pr~nsity to consume between

equally

Further,

we have

pair of Punjab and Bihar villages.

analysed the distribution of consumption expenditure in terms

decile groups formed on the basis of net household income.
percentage
as

share of each such decile group in the total as

individual

Besides,

for

co-efficient

of

Punjab-Bihar

Conventionally,

different

B.

useful

components

been

labour

consumption.
highly

well

to complete the discussion on the consumption

have

be

The

has also been estimated.

elasticities

to

of

commodity expenditure has also been worked out.

8
each commodity group, Gini's Concentration ratio

Further,
pattern

we

for

estimated

households,
for

different

such elasticities are

looking

into

the

expenditure
items.

of

considered

significance

of

of consumption in the family - budgets

of

We are aware of the fact that this measure when translated

into welfare function terms, has been severely objected to
by a large number of welfare economists.
The argument put
forward is that the sensitivity of the Lorenz curve measure
depends
on
the
number
of
people
in-between
the
income/expenditure
levels rather than on the size of
income/expenditure levels.
Despite such limitations,
this
method has been most extensively used owing to the fact that
it has many merits to commend itself over other measures.
For instance, not only unlike most of them it is intutively
a
simple
measure or takes into
account
the
full
distribution, it is also not affected by the static value.
And presumably,
these properties commend the concentration
ratio
method
for
studying
the
income/consumption
expenditure distribution. Consequently, we put our reliance
on this
simple but intutively powerful and widely used
method of Gini concentration ratio.
For further details,
see,
J.N.
Morgan.
(1961);
The
Anatomy of
Income
Distribution, "Restat, (as quoted by Thomas Stark).

90
any

set

ceteris

of households.
paribus

It needs to be pointed out that

consumer

behaviour treat consumption to be a function of income.

In most

studies

behaviour,
the

almost

conducted

theories

so far in the

field

of

consumer

while many non-economic factors have been placed

ceteris

paribus

unimpdrtant

in

framewrok

affecting

possibly

the

commodity in a significant way;

to

all

of

empirical

framework,

in

due

consumption

to
of

their

in
being

particular

efforts have, however, been made

isolate the impact of important economic determinants such as

prices,

income,

assets, etc. on its consumption.

Assuming that

the numerous non-economic factors determining the consumption

a
an

particular commodity are unimportant and individually generate

error term,

which,

in turn,

conforms to some

probability

distribution with zero mean and constant variance, the demand

for

the

ith commodity by the kth household can be

mathematical
0 ik

of

form.

writt~n

in

Qjk

Symbolically,

fl (Yk' pl p2' p3'' ... ' ' ' ' ' ' ' ' .Pn' Rik)

Where 'Yk' stands for the income of the kth household.

~P

1 ,P 2 , P 3 .... Pn' denote the prices of then commodities

Rik is
f1

shows
Again,

P 3 .. Pn

random
the

variable;

and

functional relationship.

if it is assumed that on the one hand,

in the above

model remain constant,

P1 , P ,
2
and on the other,

income tends to vary among households, we may possibly derive the

following

type

level of income:

of relationship between

quantity

consumed

and

91

c1 = f1(Y1l' c2 = f2(Y2l' C3= f3(Y3), ....... ,.Cn= fn(Ynl

Where;
!C 1

is quantity consumed,

Y 1 the level of income and

shows

the functional relationship between the two i.e quantity consumed

(C) and the level of income
The
Values
it
[C

function,

(Y).
as

stated

above,

assumes

different

of quantity consumed depending upon the value of 'Y 1

and

is possible to trace a curve inn-dimensional quantity

space

Engel

This

1' 2'

curve is popularly known as

Curve.
The

following

important

algebraic

forms

of

Engel

functions are available in the existing literature:

Sr.No.

Algebraic Form

Function Type

----------------------------------------------------------------1
2
3
q = ,a + b X

Linear

2
a+
llt X + c X
q =

Quadratic

q = a - b;x

Hyperbolic

q = a + b. log X

Semi-log
Log-inverse

Log

q = a - b. 1/X

Log

q = a + b log X

Log

q = a + b log X

Log q =

Where;
the

'ql

total

c.1/X

a+ b log X-c (log X) 2

Log-log-inverse
Log

Log

linear
quadratic

is expenditure on a particular commodity and

expenditure (both in per capita terms);

intercept term; and rb

'2).1

XI

is

and ~~~ are the regression parameters.

is
the

92
It

is

important

/expenditure elasticities,
tried

by

different

to

note

that

t.o

estimate

a number of Engel functions have been

research

workers.

However,

out

of

the

the relevance of

available formulations for the Engel functions,

specific

income

types for studying specific commodities is governed

several

statistical,

considerations.

economic

and

other

by

theoretical

In this regard, the current evidence highlights

two important points.

In the first ill)tance,

it is obvious that

no unique Engel curve suffices for the complete range of consumer

goods; and, in

th~

second, different mathematical forms give rise

to widely differing estimates of income /expenditure elasticities

or marginal propensity to consume.
functions

has

Likewise,

it

merits

and

its

Each of the available

own merits to commend

has its own share of

On

the contrary,

formulations
others,

we

over

limitations.

demerits of these functional forms

discussed in econometric literature.

them.

itself

relative

extensively

We do not intend to go into

without wishing to lose merits of some

and to get into the statistical problems

take

bold

others.

The
are

Engel

decision to estimate

all

posed
the

by

eight

functional forms mentioned earlier.

Using our sample data,
cities

for

diffe~ent

we have estimated Engel elasti-

commodity groups.

Engel functions have been tried.

In

'regressand'

'regressor'.

Such

and

bivariate

In the estimation of such Engel

functions, per capita commodity expenditure

the

general

:q' has been taken as

per capita total expenditure

per capita formulations,

X'

as is well

as

the

known,

93

imply

as

regards

other

words,

neutrality

consumption.
commodity
total

In

expenditure

the
by

economies
assuming

scale

of
that

per

depends only on the per capita

expenditure ( the well-known homogeneity

in

capita

level

of

hypothesis),

an

attempt has been made to take cognizance of the variations in the

household size.

For estimating the Engel functions, the follow-

ing procedural adjustments have been made.

of

the

wide

Firstly, to take care

intra-group variations in the

total

as

well

as

commodity expenditure (both in per capita terms), the sample have

been

divided into as many as seventeen categories

Appendix Table 3.1,

enditure.

p 338) on the basis of per capita total

As a result of this exercise,

number

of

exp-

we obtained as many as
'X~

seventeen pairs of observations on'q' and

the

(Please see

Secondly, by using

households behind each pair of'q' and 'X' as

the

relevant weights, weighted least square regressions have been run

between'~

and'X'.

Thirdly, and most importantly, it needs to be

Pointed out that with the objective of making the co-efficient of

determination (R 2 ) strictly comparable between one estimated form
and the other,
lines

we transformed the

suggested

by

Box

dependent variable ~q' on the

and Cox 9 while

running

the

weighted

regressions.
As
functions.
9.

said

earlier,

we

have

used

types

of

En~~"..:.'

Amongst these, the final selection has, however, been

G.E.P.
Box
and D.R.Cox (1964),
" An
Analysis
of
Transformation", Journal Q...!_ the Royal Statistical Society,
Series B, pp. 211-243.

94
made

by

striking a balance between

other considerations.

statistical,

In this regard,

economic

the following

and

procedure

has been adopted:A

0

r ad j us t e d c 0 e f f i c i en t

regression

coefficients

have

the

been

functional

main

forms.

dismissed

at

or

q~o.

stastically

correlation

such

for

narrowing

functions

or both are

per cent level

of

of

regression

statistically

confidence

have

A three parametric Engel function

parameter

the explanatory variables,

been

owing
has

having

to

high

also

been

T test and F test have been employed to test the

significance of regression parameter/parameters

and

Functions qualifying

- and F-tests have been further tested for serial

by employing Durbin-Watson statistic 10

10.

choice

which
not

significance

our

for

co-efficient of determination respectively.

T

p r 0 per s i g n s

as also their statistical

non-significant

between

dropped by us.
statistical

or 2 )

straight because the regression equation in such cases

is obviously useless.
one

f de t e r mi n a t i 0 n

criteria
All

parameter/parameters
significant

(R 2 ),

higher value of co-efficient of determination

Even

with

correlation

rigorous

It is worthwhile pointing out that in the present study, D-W

Statistic
short name for Durbin - Watson Statistic)
provided by Theil and Nagar (1961) has been made use of for
te~ting the presence of auto correlation.
The value of of n
and k at 0.05 per cent level of significance have been
computed.
'n' refers to the number of observations and 'k'
the number of explanatory variables excluding the constant.
For
further details,
see Devender B.
Gupta
(1973)
"Consumption Pattern .!.!!_ India: ~ Study Q! Inter-Regional
Variations", Tata McGraw Hills Publishing Co. Ltd. Bombay,
p.20.

95

application

of

the

above

criteria,

we

functional

forms for each commodity group.

selection,

other

considerations

economic theory,

such as.

were

left

with

For making a
their

2-3
final

conforming

to

computational convenience, etc. have been taken

into account.
Finally,
terms

of

we

have looked at the problem of poverty

our income data.

households

below

the

For working out the

poverty line in

discussed earlier in this chapter,

head-count ratio.

terms

proportion

of

income

in
of

norms

we have made use of the usual

Symbolically,
m

p =

Where;

'P'

measures

the

proportion of households

below

poverty line in terms of per capita income formulations,

the

number

'm'

of households below the poverty line and 'n' is

the
is
the

total number of households.

For

obvious

reasons,

the usual head - count

ratio

is

beset with a number of limitations (for details, see chapter VI).

In

order

service
11.

to overcome such limitations,

we

have

the modified version of Sen's 'P' measure

pressed
11

to work

into
out

For further details of Sen's 'P' measure, please see chapter

VI.

the

intensity

of

poverty in the

two

study

Although

areas.

various modifications have been suggested to Sen's original index

by

Sen

himself

disaggregated,
modified

and

others,

household

thanks

to

the

availability
the

- level data with us,

of

following

version (suggested by Sen himself) should serve

us the

best;-

Erit.

. ,, ,./
= ------------
(q + 1) n

i=1

Ci-Y.)
1

(q-i

+ 1)

Where;
'P,s' is Sen's measure of the intensity of poverty,
the

population

arranged

in

size,

'n'

the income of

the

i th

individual

ascending order of magnitude,

'q'

the

number

'Yi'

of

people at or below the poverty line and 'Z' the poverty level 'per
capita income.
We
alternative

have

also looked at the probelm of poverty

manner.

By

taking

into

account

the

in

an

percentage

distribution of the

poor households on the basis of their

per

income,

levels

capita net household

we have compared the poverty

as also the additional income required

poverty line between Punjab and Bihar.

to cross over the