JOIN USPoverty eradication has been an important objective of most five year plans in India and still poverty of the masses continue to be an important economic challenge facing successive governments.
Whether poverty has declined in India remains a controversial issue. Expert committees differ in their understanding and estimation of poverty line, a critical threshold of income, consumption, or, more generally, access to goods and services below which individuals are declared to be poor.
Recently the Rangarajan committee raised the daily per capita expenditure to Rs 32 from Rs 27 for the rural poor and to Rs 47 from Rs 33 for the urban poor, thus raising the poverty line based on the average monthly per capita expenditure to Rs 972 in rural India and Rs 1,407 in urban India. If the recommendations of the Rangarajan committee on poverty are accepted by the government the number of India's poor may rise by 100 million.
In its July 23, 2013 report the Planning Commission had claimed that poverty has declined in India by 15.3 per cent during the seven year period from 2004-06 to 2011-12. According to the commission's estimates, based on the Suresh Tendulkar Committee formula, poverty ratio has declined to 21.9 per cent in 2011-12 from 37.2 per cent in 2004-05. This ratio has been worked out based on a controversial per capita daily consumption of Rs 33.30 in cities and Rs 27.2 in rural areas.
Varied definitions
Definitions of poverty lines vary among nations. Indian poverty lines have traditionally been drawn by using estimates of expenditures necessary to guarantee a minimum consumption of calories.
The expert group headed by Prof Suresh Tendulkar estimated poverty based on private household consumption of Indian households as collected by the National Sample Survey Organisation. It is important to note that Prof Tendulkar moved away from anchoring the poverty lines to a calorie intake norm.
The poverty line fixed by the Tendulkar Committee is criticised on the ground that it underestimates the scale of population that needs special assistance. The Planning Commission was trying to obfuscate data so as to justify the exclusion of a large number of the poor and deny them the benefits of anti-poverty and welfare schemes. Using a poverty threshold is problematic because having an income marginally above it is not substantially different from having an income marginally below it. The same low income affects people in different ways. A poverty threshold relies on a quantitative or purely number based measure of income.
If the health status and educational attainments of the population are to be used, quantification of them will 2013 report the Planning Commission had claimed that poverty has declined be a complex task. Again in-kind transfers and freebies are not included in the conventional calculation of poverty line.
The official poverty measurement counts only monetary income. It does not consider anti-poverty programmes such as food coupons and mid-day meal schemes for schoolchildren. So despite everything these programmes do to relieve poverty, they are not counted as income when we measure poverty rate. Besides calculating the poverty line the same throughout India regardless of the cost of living in different states or urban centres may not provide a correct picture of poverty.
Current global research suggests that on average families need an income about twice the official threshold level just to afford basic expenses. Estimates of the number of poor people should be reworked by taking into account their deprivations and living conditions, such as access to basic services, shelter, public health and education. Improved measures are critical to better identify struggling families and to design pro-poor public policies.
The present methodology for determining poverty based on consumption expenditure is certainly flawed, and leads to underreporting of the actual number facing acute deprivation. It was hoped that Rangarajan Committee’s methodology would reflect current spending patterns and geographic differences in cost of living. The recent re-fixing and raising of poverty line is significant as most social sector programmes are directed towards those below it.