The Impact of Trade Liberalization on Household Welfare and Poverty in India

Basanta K. Pradhan and Amarendra Sahoo

Working Papers MPIA from PEP-MPIA

Abstract: A 28-sector, 3-factor and 9-household group Computable General Equilibrium (CGE) model for India is constructed to analyze the impacts of Tariffs and Non-tariff Barriers (NTBs) on the welfare and poverty of socio-economic household groups. A general cut in tariffs leads to a decrease in overall welfare and reduction in poverty, which urban households are in a relatively better position to address. The choice of a fiscal compensatory mechanism with indirect tax on domestic consumption does not substantially change the pattern of impact except that it increases overall poverty in the economy. On the other hand, quota reductions on agriculture and food products result in a gain in welfare and a bigger reduction of poverty, with rural households doing better than urban households.

Keywords: Computable general equilibrium (CGE) model; microsimulations; International trade; poverty; India (search for similar items in EconPapers)
JEL-codes: D33 D58 E27 F13 F14 I32 O15 O53 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-cmp, nep-cwa, nep-dev and nep-int
References: View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:lvl:mpiacr:2006-01

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