Who are the poor?

Planning Commission's poverty estimates do not reflect ground reality

Published: Monday 26 September 2011

India's poverty line finally makes headlines. Do a rapid archival search of newspapers, at least of the past 20 years, and one finds that the poverty line never made it to the front pages. In post television boom, it never featured on prime time. But the past one week has been exceptional.  “Rs. 25/person/day” replaced the other recent magic figure, “Rs. 1,76,000 crore”—the value of the 2G spectrum scandal. A powerful contrast that drew anger and awe. It is understandable.

What has been missed in the current debate is the fact that this is not the proposed or real poverty line of the country. For the record, the official poverty line for rural areas is Rs 12/day/person—one quarter of a US dollar. It is Rs 18/day/person for urban areas. India has more than 300 million people under this poverty line. Going by surveys, at least half of them sustain themselves on Rs 8/day/person. And a large chunk of them have been poor in their life time. 

What is debated is the estimated poverty line for rural areas at June 2011 price level. And this is not the applied one.  The trigger for the anger is the Planning Commission's endorsement of this poverty line as 'adequate' for covering food, education and health expenditures. The current poverty line does not include the latter two.

Indicators have changed

India's poverty line is fiercely contested. The current one was defined in 1973-1974 as the expenditure needed to consume 2,400 calories a day in rural areas and 2,100 calories a day in urban India. Since then, the government has just updated the monetary value based on price indices. The update doesn't account for food habit changes. "The estimate does not reflect the ground reality. The methodology of gathering data on consumption patterns must also be changed," says NC Saxena, a member of the National Advisory Council.

One problem is that the government doesn't take note of the changing prices of different constituents of the food basket. While at 1973-1974 prices, the official poverty line corresponded to a intake standard of 2,400 and 2,100 calories, this was not the case in subsequent periods, leading to a wide divergence between expenditure- and calorie-based poverty rates. One reason for this was a switch from cereals, combined with a switch from food to non-food items. Another reason was more restricted access to common resources for the deprived. "Poverty estimates are a starvation line estimate," says Biraj Patnaik, the principal advisor to the food commissioners of the Supreme Court that has been hearing the Right to Food case.

This price-calorie change means that an average person just above the poverty line falls short of the calorific norm by about 22 per cent in rural India and 9 per cent in urban India. If this reality had been factored in poverty estimates would have been much higher, even leaving out the government's failure to factor in non-food expenditure.

The calorie measure, too, is contested. The Indian Council for Medical Research says a person doing heavy manual work should consume at least 3,800 calories a day. Delhi-based Centre for Policy Alternatives says the poverty line should be pegged at a per capita monthly expenditure of Rs. 840. Only 10 per cent of people can manage this.

“The government should answer why the numbers of poor in the country are on the rise,” says Saxena. The absolute number of poor in the country has gone up. "The government's estimate for poverty in 1972-1973 was benchmarked at Rs1.50 per day. It translates into Rs 32 per day today. There is nothing new with this estimate," he says. "The government should, instead, be concerned that poverty has increased in India. The number of people below poverty line has gone up from 320 million in 1947 to 400 million now," says Saxena.

Identifying the poor is vital for directing development programmes. There are three estimates available now. The Planning Commission's estimate is 328 million,
N C Saxena puts the number of rural poor at 413 million (based on his estimate for the ministry of rural development), and the Tendulkar Committee put it at 436 million.

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