How Many Indians Are Poor?

by SANTOSH KUMAR MOHA PATRA

After more than six decades of independence, India is still groping in the dark in search of a realistic definition of what constitutes poverty and how many Indians are actually poor? Successive governments have tweaked the definition of poverty and fiddled with numbers to suit the political dispensation. The poverty data released by the Planning Commission recently, based on the 66th round of the National Sample Survey (2009-10) figures on household consumer expenditure survey, showed that poverty had significantly declined between 2004-05 and 2009-10. The tragedy is that this decline is based on a poverty line that is even lower than the earlier Rs 32-per-day mark that had triggered an outrage when the government submitted it to the Supreme Court. It may be noted that last year the government was subjected to derision because of an affi-davit filed in the Supreme Court suggesting that a measly per capita daily expenditure of Rs 32 (Rs 965 per capita per month) in the urban areas or Rs 26 (Rs 781 per capita per month) in the rural areas in 2010-11 would serve as the benchmark to define those who would be treated as being below or above the poverty line.

An individual above a monthly consumption of Rs 859.60 in the urban and Rs 672.80 in the rural areas is not considered poor, as per the recent contentious declaration of the Planning Commission. Accordingly, the Planning Commission further reduced the poverty line to Rs 28.65 per capita daily consumption in cities and Rs 22.42 in the rural areas, scaling down India’s poverty ratio. According to this estimation, the all India head count ratio (HCR) has declined by 7.3 percentage points from 37.2 per cent in 2004-05 to 29.8 per cent in 2009-10, with rural poverty declining by eight percentage points from 41.8 per cent to 33.8 per cent and urban poverty declining by 4.8 percentage points from 25.7 per cent to 20.9 per cent. The number of poor in India has declined to 35.47 crores in 2009-10 from 40.72 crores in 2004-05. The aforesaid poverty data released by the Planning Commission exposed how unrealistic the ‘poverty lines’ are. This Kafkaesque delusion reflects the insensitivity and non-chalance of the state to the sufferings of the poor who are struggling to make their both ends meet.

After sensing the public hullabaloo among wide sections of the society against the aforesaid definition of the poverty line and the fear of a severe drubbing in the next general elections, the government at the Centre went for a damage-control exercise. Under pressure from the government, the Planning Commission gave the explanation that the people’s right to welfare entitlements and subsidies will be decided on the basis of the findings of the socio-economic and caste census 2011 based on the Saksena and Hashmi Commi-ttees. Prime Minister Manmohan Singh said a fresh group has been set up to devise a new method to assess the number of poor in the country. Singh also favoured a multi-layered approach to assess poverty. This may have given the government of the day a necessary breather, but it needs to be seen if it continues to ignore and remain insensi-tive to the livelihood grievances of the down-trodden and poorer sections of the society who are battling for their survival owing to crippling inflation. The Saksena and Hashmi Committees’ recommendations on deprivation may relate more to non-income indicators. But these will not reveal the real incidence of poverty.

In India, the Planning Commission is estimating the incidence of poverty at the national and State levels (both in the rural and urban areas) since 1979 on the basis of the recommendations of the Task Force (1979) report based on the 28th round of the data of the National Sample Survey (NSS 1973-74) on consumption spending, which in particular observed that the level of total monthly spending per person is to be called the ‘poverty line’. This procedure was subsequently modified by the Lakdawala Commission (1993). Ever since the Task Force defined the poverty line, poverty continued to be defined in terms of per capita monthly expenditure corresponding to per capita per diem intake of 2400 calories in the rural areas and 2100 calories in the urban areas. The rural areas usually have higher kcal requirements because of greater physical activity among the rural residents. This was the somewhat sensible method and included both food and non-food expenditures. The Commission that accepted the expert committee’s nutrition-based definition but applied it only once to the 28th round of the National Sample Survey’s (NSS’) 1973-74 data, obtained the correct monthly rural poverty line of Rs 49 and urban poverty line of Rs 59 at which 2400 or 2100 calories were accessible respectively, and found that 56.4 per cent of the rural population and 49 per cent of the urban population spent less than this, and so were poor.

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ACCORDING to Professor Utsa Patnaik, the Planning Commission’s preposterous estimates of the ‘poverty line’ follow from a mistake in method of changing the definition of the poverty line and delinking it from the nutritional standards. The present Commission also doggedly clings to that mistake despite stringent criticism from many quarters. The Planning Commission estimates the poverty by updating the 1973-74 poverty line of Rs 49 for rural and Rs 59 for urban India by State-specific consumer price indices of agricultural labour households and industrial workers house-hold respectively. The poverty lines obtained in this manner have corresponded to progressively reduced calorie intakes over the years. For example, the official poverty level in rural India was estimated at Rs 356.30 per month and in urban India it was Rs 538.60 per month in 2004-05 which did not capture the change in the actual cost of living or cost of accessing minimum nutrition. As a result of which the poverty ratio was found to be as low as 25.7 per cent in the urban areas and 28.3 per cent in the rural areas and 27.5 per cent for all India.
There was an uproar against this underestimation of poverty. To address the issue, the Tendulkar Committee was set up in 2008 and its recommendations were released in November 2009. Al-though the Tendulkar panel recalibrated the exis-ting urban official poverty line (2004-05) to capture a wider set of deprivations, it ridiculously added only a meagre Rs 30 per month for education, health etc. to the previous amount. Further, it cut the existing calorie limits in the rural and urban areas to a uniform 1800. One of the justifications given for this is the minimum norm recently set by the Food and Agricultural Organisation. But the admirers of the Tendulkar Committee have conveniently forgotten that the FAO had suggested this 1800 calorie norm as a minimum dietary energy requirement (MDER) for light or sedentary activity but this was not to be applied to the manual workers in rural and urban India. The Tendulkar Committee, which got it all wrong, decided to freeze the baseline for urban poverty at its 2004-05 level, namely, Rs 578.80 per capita per month, and in a major departure from conven-tion, the Committee reset the rural poverty line to the level of Rs 446.68 per capita per month—at which rural price, a person could purchase the urban consumption bundle.

As a result, the urban poverty line remaining the same at 25.7 per cent, the rural poverty line went up from 28.3 per cent to 41.8 per cent. Far from fiddling the numbers downward, the new poverty line increased from 27.5 per cent to 37.2 per cent in 2004-05 translating into an additional 100 million. Adjusted for inflation, the Planning Commission announced the urban and rural poverty lines recently thus triggering a nation-wide hullabaloo leading to a controversy. Similarly, the Union Rural Development Ministry had also set up a commission under the chairmanship of N.C. Saksena to examine alternative methods of estimating poverty. The commission reported its findings in late 2009. At the outset, the commission felt that the monetary amounts specified by the Plan-ning Commission for a minimal diet were too low. Instead of Rs 356.30 a month per person in the rural areas, Rs 700 was considered necessary and similarly from Rs 538.80 a month in the urban areas, Rs 1000 was considered necessary to remain above poverty line. The commission recommended that the proportion of the rural population living below the poverty be raised to at least 50 per cent. But even that figure was achieved by lowering the rural kcal requirement to 2100, the same as in the urban areas, and if the 2400 kcal criterion had been kept, the percentage of India’s rural population living in poverty would have risen to about 80 per cent.
The World Bank’s global poverty line is an equally large underestimate as it has used an average of the national poverty lines of the world’s 15 poorest countries to determine the international poverty line at $ 1.25 per day at 2005 PPP which works out to be Rs 21.60 in the urban areas and Rs 14.30 in the rural areas in 2005. The World Bank does not define poverty. It probably only defines the wretchedness of the poor which cannot be a benchmark to define poverty in a self-respecting democracy. Even on the basis of the World Bank’s estimates, a shocking 41.6 per cent of India’s population—or 456 million people—live below the poverty in the same period. All these estimations fall woefully short of the Arjun Sengupta Commission’s estimation that 77 per cent of Indians are subsisting on less than Rs 20 a day. India‘s abysmal position—67 out of 87 countries—in the Global Hunger Index and awful status—134th out of 187 countries—in the UN‘s Human Development Index with concomitant much higher rate of maternal mortality and infant mortality justify the high incidence of poverty in India as claimed by many: perhaps 75 per cent, as per Professor Utsa Patnaik.

All those measures are taken to measure only the starvation line, not poverty line. The poverty estimates not only give an idea of the magnitude of the problem, but they can also be used to evaluate the success and/or failure of alternative economic policies for poverty alleviation. If the poverty estimates are not measured properly, every planning is doomed to fail. The first thing to note is that poverty is a relative concept. In the West, even those living in poverty can live in well-constructed dwellings, with heating, clean running water, indoor toilet facilities, access to health care, and a vehicle as well. Such luxuries, to use a common Indian expression, are but a “distant dream” for India’s poor. No matter how developed a country is, there are always going to be poor people. But, poverty cannot be measured just on the basis of income and calorie intake. It has to be also measured in terms of access to land, credit, nutrition, health, longevity, literacy, education, safe drinking water, sanitation and other infra-structural facilities. It is also about participation in the decision-making process and the right to live decently and with dignity, the opportunity for capacity building, access to amenities and even to work.

The author is an Odisha-based financial columnist/analyst. His e-mail is: skmohapatra67@gmail.com

REFERENCES

 

1. Alternative Economic Survey, India, 2006-07.

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