Box 12.6 India: poverty reduction from broad-based agriculture growth In rural India, the percentage of the population living below the poverty line fluctuated between 50 and 65 percent prior to the mid-1960s but then declined steadily to about one-third by 1993. Much of this decline has been attributed to broad-based growth in agriculture and associated reductions in food prices. Yield-enhancing public investments in infrastructure, services, and institutions supporting agriculture have had a large, albeit mostly indirect, impact on poverty (see figure. 
The highest payoffs to public investments in terms of poverty reduction were achieved through rural roads, followed by agricultural research, education, rural and community development, and then soil and water conservation investment. Source: Fan, Hazell, and Thorat 2000; Ravallion and Datt 1998 |
Conditions Influencing Poverty Impact of Agriculture Interventions Poverty dimensions. The causes of poverty are multidimensional and typically interrelated. In general, poverty relates to inadequate assets (human, natural, physical, financial, and social), the returns to these assets, lack of political power, and vulnerability to shocks. The 2000-01 World Development Report outlined a three-pronged framework for action to reduce poverty: (1) promoting opportunity by stimulating economic growth, making markets work better for poor people, and building their assets; (2) facilitating the empowerment of poor people by making state and social institutions more responsive to them; and (3) enhancing security, by lowering the risk from events such as bad weather and natural disasters and reducing poor people’s vulnerability to risks. Broad-based agricultural growth. Broad-based agricultural growth can be expected to have the greatest impact on poverty where a large number of poor people depend on agriculture, the agroecological base allows significant potential for productivity growth, most land is controlled by small- and medium-scale farmers, farmers have (or potentially have) access to markets, and governance structures are sensitive to the needs of the poor. The strength of the link between agricultural growth and poverty is, however, conditioned by agroecological conditions, the structure of farm types and markets, level of technology use, access to assets, infrastructure, markets, and institutions, and other factors. Therefore, for any specific situation, an analysis of the potential for agricultural growth to contribute to poverty reduction must start with a review and assessment of the broader sectoral context for investment. Quite different agricultural investment priorities and strategies may emerge between and within countries depending on the local context (Byerlee and Alex 2002). Nonetheless, in many developing countries the high dependence by the poorest of the poor on agriculture necessitates that agricultural development be central to poverty reduction (figure 12.2).     
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