The Government-constituted expert group’s report on methodology for estimating India’s teeming poor has implicitly sullied UPA’s claims on inclusive growth, poverty eradication and food security.
Even as the government is dragging its feet over the report as well as over the proposed Right to Food Law, bone-chilling news about hunger and poverty continues to come from the countryside. The Times of India reported on December 19 that malnutrition and the resulting complications led to the death of five members of a Vanvasi family in Orissa.
The other day Prime Minister Dr. Manmohan Singh stated: “More recently some economists have argued that the poverty line itself should be raised. If this is done, the percentage of population in poverty is obviously higher. But this does not mean that the percentage below the poverty line is not declining. If we apply the new poverty line to past data it will show the same decline in poverty.”
He made this observation at the annual conference of Indian Economic Association on December 27, without referring to the expert group’s report.
Dr. Singh said: “At this stage, I should emphasise that all the discussion on trends in poverty is based on the NSS survey data and the latest large sample estimate of the NSS is available only for 2004-05. We do not as yet have the next large sample estimate for 2009-10, which should be available a year from now. Since the period of rapid growth of the economy was largely after 2004-05, we will have to wait for a year or two to know its impact on poverty.”
The Prime Minister obviously wants inflation and natural calamities-raved poor to wait for next Lok Sabha elections before UPA does something concrete to protect the right of the poor to live with dignity.
UPA had set up the expert group on poverty in December 2005 under the chairmanship of renowned economist Professor Suresh D Tendulkar following stringent criticism from various quarters that the official definition of poverty line was outdated and grossly under-estimated the number of poor people. It does not take into account the nutritional requirements, leave aside other basic needs.
The poverty line as defined is measured in monetary terms for the minimum food intake required by a person. The intake norms are 2400 calories per capita per day for rural areas and 2100 calories for urban areas. The Government assigns monetary value to these survival diets. Thus, the monthly expenditure for this food intake is Rs 356.3/month in rural areas and Rs 538.6/month in urban areas at 2004-05 prices.
A person who cannot afford to spend this monthly expenditure is considered below the poverty line (BPL).
In its report submitted on December 10, 2009, the expert group has revised the rural poverty line at Rs 446.68 and urban poverty line at Rs 578.8 at 2004-05 prices.
Using the revised norms, which are modest by any standard of living with dignity, the report has estimated the persons living below poverty line at 37.2 per cent of the total population for 2004-05, as compared to 28 per cent for the same year mentioned in the XIth Five Year Plan (2007-12) document.
This revision of poverty line is too modest. It does not reflect the gravity of poverty grinding more than half the population. They say that UPA should straightaway accept the World Bank’s revised definition of poverty line of $ 1.25/day/per capita (Rs 58.13 at current exchange rate) for global comparison.
For 30 days or a month, this daily sustenance income aggregates to Rs 1743.9, which is more than three times the revised urban poverty line reckoned by the expert group.
Globalisation is not about subjecting domestic economy to rigors of import competition and hot money inflows. It is also about all aspects of economy.
According to the World Bank, “To assess global poverty on comparable terms, we use 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 (purchasing power parity) prices. India, on the other hand, measures its poverty according to its own national poverty line which, in 2005 PPP, translates to $ 1.02 per day. As the two poverty lines are pegged at different levels, the number of people living below them is also different.”
The Bank’s website says: “The number of poor below $ 1.25 a day has increased from 421 million in 1981 to 456 million in 2005. This is the biggest challenge facing India today.”
Another World Bank document put the percentage of Indian population living on less than $1.25/day at 41.6 per cent in 2005.
The expert group said it took “a conscious decision to move away from anchoring the poverty lines to a calorie intake norm in view of the fact that calorie consumption calculated by converting the consumed quantities in the last 30 days as collected by NSS (National Sample Survey) has not been found to be well correlated with the nutritional outcomes observed from other specialized surveys”.
The group noted that the rural and urban poverty lines were originally formulated at 1973-74 market prices and later adjusted over the years. The basket of goods consumed by the public was kept unchanged. They do not reflect the changing consumption pattern, changing human requirements and socio-economic dynamics.
They were prepared on the assumption that the cost of basic social services of health and education would be borne by the governments.
The group has made four departures from the existing concept of poverty line. First, it has moved away from calorie anchor. The revised concept, however, tests for the adequacy of actual food expenditure near the poverty line to ensure certain aggregate nutritional outcomes.
Second, it has dispensed with the differentiation between the rural and the urban population and recommended a uniform poverty line basket (PLB) based on the latest available observed household consumption data.
Third, the group has proposed a price adjustment procedure that is predominantly based in the same data set that underlies the poverty estimation. It thus corrects for the problems associated with externally generated and population-segment-specific price indices with out-dated price and weight base used so far in the official poverty estimation.
Fourth, it has incorporated an explicit provision in price indices for private expenditure on health and education which has been rising over time and test for their adequacy to ensure certain desirable educational and health outcomes.
Prior to the submission of report by the expert group, the Law Commission lambasted the Government for its failure to ensure the Constitution-enshrined human right to lead a dignified life.
It succinctly drove home this right in its report titled Need for ameliorating the lot of the have-nots—Supreme Court’s Judgments.
The report, which was issued in April 2009, described the concept of Indian citizen’s fundamental right to live in dignity, free from want. The right includes right to be free from hunger, right to safe drinking water, right to live in adequate housing, right to work and receive wages that contribute to an adequate standard of living, right to education, etc.
It said: “In spite of the constitutional safeguards and State legislative intervention in favour of the poor and the needy, their socio-economic condition is deteriorating. Social and economic equality still remains a mirage for them.”
There is nothing in public domain to suggest that the Government is showing the political will to define poverty on the basis of Law Commission report. The Government has also not worked out the cost implications of the expert group’s recommended definition of poverty line for various anti-poverty programmes.
A World Bank study on poverty released in June 2009 also found fault with the Government’s concept of poverty line.
According to the study, “Local people’s definitions of what it means to be poor differ substantially from the definitions used by government officials. The income levels underlying official poverty lines tend to underestimate poverty as it is perceived at the community level.”
The field study is based on intensive interaction by researchers at 30,000 villages in 300 cities across four states.
As put by the study, “Poor people said, quite clearly and repeatedly, that the income deemed sufficient according to official lines is inadequate to meet their basic needs or preserve their dignity. By contrast, community poverty lines usually tend to represent a dividing line between those who have adequate income, land, and housing to live with dignity—although they may still be vulnerable—and those who do not.”
The official data on poverty does not capture poverty dynamics characterised by number of people who again fall below the poverty line due to inflation, natural calamities, family health problems, etc.
A study issued by Asian Development Bank in May 2008 showed that 10 per cent increase in food prices creates an additional 2.3 million poor people in the Philippines. It proposed an alternative price index for the poor that takes into account the consumption pattern of the poor.
UPA Government has no such idea even as wholesale price index-derived annual rate of food inflation is running close to 20 per cent, which is the highest during the last 10 years.
It must shed this static approach towards measuring poverty.
As put by an ADB Policy Brief titled Conceptualizing and Measuring Poverty as Vulnerability: Does It Make a Difference?: “One needs to focus not just on statics but also on dynamics, i.e., on movements in and out of poverty. In this dynamic view, poverty is not just seen as a form of deprivation but also as a form of vulnerability, where vulnerability refers to the risk of future poverty. The poor are not simply those with lower income and consumption but, more often than not, also face a more constrained and difficult environment within which choices are made.”
UPA must shed its political and bureaucratic inertia over estimating poverty and launching multi-faced initiatives including population control to eradicate poverty.
It should ring in 2010 with this World Bank observation: “Poverty is hunger. Poverty is lack of shelter. Poverty is being sick and not being able to see a doctor. Poverty is not having access to school and not knowing how to read. Poverty is not having a job, is fear for the future, living one day at a time. Poverty is losing a child to illness brought about by unclean water. Poverty is powerlessness, lack of representation and freedom. Poverty has many faces….”