Stark reality

Underestimating poverty

In a significant move, the supreme court has questioned the very basis of counting the poor in the country. Realising that the poverty line is a gross underestimation, the supreme court has done what economists had failed to see all these years.

By deliberately keeping the poverty line low, economists and planners had actually betrayed the poor. These faulty poverty estimates became the foundation of the entire development strategies and programmes. No wonder, 64 years after Independence, poverty continues to be robustly sustainable, and is in reality increasing in a geometric proportion.

Now take a look. Planning Commission had worked out poverty at 27.5 per cent in 2004-05. An expert group set up by the Planning Commission again to review the methodology for poverty estimates for the same year (2004-05) upped it to 37.2 per cent. If we go by the international poverty norms of people living on less than $ 1.25 per day than over 456 million Indians live in poverty.

The National Advisory Council simply pegs poverty at 50 per cent. As if this is not enough, we now have the new Multi-dimensional Poverty Index (MPI) developed by the Oxford Poverty and Human Development Initiative for the United Nations Development Programme (UNDP) which pegs poverty in India at 55 per cent. It has added another 10 indicators, including child mortality, school enrolment, drinking water, and sanitation.

Before you get lost, let me decipher the criteria that are used to first gauge the prevailing level of food insecurity and hunger. Previously poverty estimates were done using the calorie norms provided by the Indian Council for Medical Research. Accordingly, 2,400 kcal in rural areas and 2,100 kcal in urban areas formed the basis of the poverty estimates. I don’t know why the UN Food and Agricultural Organisation (FAO) uses lower per capita calories consumption estimates of 1,770 kcal, which actually is an incorrect estimate.

By keeping the food consumption norms low, the FAO succeeds in deliberately hiding its own inefficiencies in reducing global hunger. Current estimate of global poverty by the FAO at 925 million therefore is a gross underestimation. A realistic poverty estimate for India alone would be around what the FAO projects as global poverty.

In India, what the supreme court finds it astonishing is that as per the National Sample Survey Organisation (NSSO) 2004-05 report those spending less than Rs 12 a day in rural areas and those spending less than Rs 17 a day in the urban areas, were categorised as poor. This is what has baffled the supreme court. After all, how can the planners be blind to the ground realities? How can they presume that someone can survive with such a paltry amount?

Poverty criteria

Later, a panel headed by Suresh Tendulkar, formerly chairman of prime minister’s Economic Advisory Council, reworked the formula by adding certain more items like food, sanitation and education to the poverty criteria. It however used lower calorie consumption norms of 1,999 kcal for rural areas and 1,776 for urban areas, which would perpetually keep the population food insecure. By lowering food expenditure and adding some new items to the daily expenditure list for the poor, it based its calculations on estimates of Rs 15 for the rural areas and Rs 19 for the urban centres.

It makes me wonder as to why economists fail to realise that the indicators adopted for measuring poverty are inadequate, and did not reflect the prevailing realities. I don’t know why they feel that by hiding the number of poor they are doing a service to the nation. That is why the supreme court had to step in.

What makes all these poverty estimates look unrealistic is the 2007 Arjun Sengupta committee report (officially the report of the National Commission on Enterprise in Unorganised Sector), which had estimated that 77 per cent of the population or 836 million people were unable to spend more than Rs 20 (less than 50 US cents) a day. This is more or less a correct reflection of the extent of prevailing poverty, and therefore needs to be accepted as the new poverty line.

The recommendation of the Tendulkar committee, which estimates 37.2 per cent of the population living below the poverty line, is actually a reflection of acute hunger that prevails. Knowing that Rs 19 a day cannot feed a human being in urban centres, the Tendulkar committee estimate should constitute the food insecurity line. It means 37.2 per cent of the population is food insecure and need emergency food aid programmes to meet the challenges of hunger.

In other words, India’s existing poverty line is actually a euphemism for severe food insecurity. I only hope the supreme court directs the government to draw two estimates — a poverty line at 77 per cent of the population as suggested by the Arjun Sengupta Committee, and a food insecurity line at 37.2 per cent, which comprises people who constitute the existing percentage of people living below poverty.

For the poor it doesn’t make a difference. They know poverty is their destiny. They are born in poverty and they die in poverty. Rest all is statistical jugglery.

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