Saturday, March 24, 2012

Garibi nahin garib hatao — new poverty estimate

What has been amazing about the poverty line estimates is the politics around it and the pace with which the governments have shown reduction in poverty.
The poverty line had been a political tool to claim that the government schemes have been effective, shocking claim when official figures show that less than 50 % of actual beneficaries receive the benefit from the government schemes.

The biggest problem with the poverty line has been that it does not reflect the true picture of the well-being of Indians. The problem is not with the Planning Commission, which releases the poverty line figures, but with the survey on which they depend to come out with abysmally low figures.

The National Sample Survey Office’s consumer expenditure survey fails to capture how people are spending. In a country where poulty items consumption is on the rise, the NSS in 2009-10 estimated that a cost of a kg of mutton in Delhi was Rs 100 and a dozen of eggs was Rs 15. Its high dependance on cost of cereals, whose consumption is falling, adds to the flaw.

In today’s India it believes impossible for anyone to survive for Rs 28 in urban areas and Rs 22 in rural areas, the new poverty line. Even plan panel deputy chairperson Montek Singh Ahluwalia agrees that the poverty line is low but he his claim that even though this low poverty line helps in measuring the impact of social sector schemes on well being of people.
It is true because the planning commission compared the present NSSO figures with the similar flawed survey of 2004-05. So, it one has to believe that the number of people below the poverty line had fallen but how much can be debated.

Historically, the poverty line in India had been low. Here, is poverty line from before independence till 2009-10.
First poverty line was fixed in 1867-68 of Rs 16 per head in rural areas and Rs 35 in urban for a year.
Second came in 1939 with Rs 15 and Rs 20 per capita expenditure per month for rural and urban areas respectively.

After Independence, first poverty line was fixed in 1962 based on prices of 1960-61: It was Rs 20 per capita per month for rural areas and Rs 25 for urban areas.
First calorie based (2,400 calories per capita) poverty line came out in 1973-74. It was Rs 49.63 per capita per month for rural areas and Rs 56.76 per capita per month for urban areas. 321 million or 54.1 percent of Indians were poor.

1997-98: poverty line of Rs 56.84 per capita per month for rural areas and Rs 70.33 for urban areas was fixed. 329 million or 51.3 % of Indians were poor.
1983: Poverty line of per capita of Rs 89.5 for a month in rural areas and Rs 115.65 for urban areas was fixed. 323 million or 44.5 % of Indians were poor.
1993-1994: Poverty line of per capita Rs 205.84 for a month in rural areas and Rs 281.35 for urban areas was fixed: 320 million or 36 % of Indians were poor.
2004-05: Poverty line of per capita Rs 356 for a month rural areas and Rs 538 in urban areas was fixed: 301 million or 27.5 % of Indians were poor.

The government changed the methodology from calorie based to include expenditure on sanitation, education and health in the Tendulkar Methodology.
2004-05: Poverty line of Rs 446 in rural areas and Rs 578 in urban areas was fixed: 407 million or 37.2 percent of Indians were poor.

2009-10: Poverty line of Rs 672 in rural areas and Rs 859 in urban areas was fixed: 354 million or 29.8 % of Indians were poor.
From this it is evident that India had a low poverty line but what had hit the popular perception that the new poverty line fails to encompass the inflation in the last few years. On account of this, it helped the plan panel to claim reduction in poverty line of 7.4 % in a period of five years between 2009-10, which to many does not appear to be correct.

The public perception that the government with a stroke of a pen had turned over 5 crore Indians into rich was confirmed when the government scrapped its own methodology and Prime Minister came on record to claim that methodology was 30 year-old. But, what he failed to tell was that the government in 2005 had asked Suresh Tendulkar to recommend a new methodology to estimate poverty to canvass the presennt ground realities.

Tendulkar submitted his report in 2007 and the government accepted his recommendations in 2009.
The data released on March 19 was the first official poverty estimate based on Tendulkar committee and it did not last more than four days.

Both UPA and NDA has used the poverty line to claim that its programmes had worked and that of others have not. The NDA government in 1997-98 claimed a huge reduction in poverty to claim the number of poor have gone down since they came power. When UPA came back to power in 2004, it was quick to say that poverty had increased during the NDA regime and accused the NDA of changing methodology to show reduction in numbers.

Economists and political masters in Delhi believe that such claims have impact on people during elections. But, the results of 2004 elections showed that it fails to work as people see the ground realities rather than statistical jugglery of the government.

To me, instead of poverty line, the government should come out with well-being index of all the Indians indicating their income, expenditure and assets. This will truely reflect the number of deprived in India.
The government should depend on the Census data rather than that of the national sample survey, which provides the government of the day scope to manipulate the data.
Lets see the new technical group constituted to review the poverty methodologies comes out with something different which can end controversy over India’s poverty line.

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