Since 1991, and the advent of the era of economic reform there has been considerable debate about the impact of these policies on the poor. The statistics on poverty show some significant decline in poverty in the pre-reform period; the headcount ratios in both rural and urban areas fell continuously and consistently from 1973-74 (national headcount ratio 54 per cent) to 1987-88 (headcount 37 per cent), and after a slight rise then fell to about35 per cent in 1990.
After 1991, poverty in rural areas rose again to around 44 per cent, with only a slight rise in urban areas, and though there has been some fall during the 1990s, the fall has only been pronounced in urban areas. As more than 80 per cent of the poor five in rural areas it would seem that the liberalization and reform process has had no significant impact on reducing poverty, in fact it suggests quite the reverse.
Although most recent survey evidence suggests a substantial reduction in poverty in rural as well as urban areas. The statistical evidence on changes in inequality is quite sparse, but the Lorenz ratios calculated from consumption distributions by the Planning Commission for rural and urban areas are suggestive of a marginal increase in disparities. The reform process has hardly touched agriculture.
Until recently tariff and quota restrictions on agriculture were slow to decline (relative to manufacturing) and there have been few labour market reforms and there have been continuing restrictions on domestic trade in agricultural goods. Given the high sensitivity of poverty ratios to agricultural prices, the government is very cautious in this front. All these factors contribute to growing gaps and disparities between different socio-economic groups in India.