Unreal estimate

The Planning Commission’s publication of the poverty line figures has revived the debate about the definition of poverty. It had last September told the Supreme Court that  an income of Rs 32 per day is the benchmark for not being considered poor. Based on the National Sample Survey data and updating the Suresh Tendulkar recommendation, the commission fixed the poverty line for the year 2009-10 at Rs 22.43 per day for rural areas and Rs 28.65 per day for urban areas. This is wrong and unrealistic because a large number of people who earn a higher income are also poor.  But, the figures are  useful  in  tracking the course of reduction of poverty  rather than as measurements of poverty. Without agreeing with the correctness of the commission’s poverty  line, it is possible to find a fall in the incidence of poverty from 2004-2005 to 2009-10.

What the figures show is that  the number of the poor, as measured by the same indicator of poverty, saw a decline of  over 7 per cent from 37.2 per cent to 29.8 per cent in those five years.  This meant an annual decline of 1.5 percentage points against the 11th Plan target of 2 per cent. While this is certainly inadequate,  it also showed an  improvement in income of people at the lowest economic level over a  fixed period. If the absolute number of the poor fell  by 52.5 million this is the first time  so many people saw such a rise in their incomes over a period.  The consistent economic growth of about 9 per cent during that period was the main reason.  Welfare programmes like the NREGS which created incomes  may also have  helped.

A disquieting feature is that the performance was very uneven across the country.  States  like Orissa saw a decline of 10 percentage points and others like Maharashtra and Tamil Nadu did well. But the North-East and states like UP and Bihar fared badly.  Economic growth in itself does not guarantee reduction in poverty. Bihar’s economy grew by 10 per cent  but the absolute number of poor people actually increased there. Only better distribution of wealth, efficient targeting of welfare measures, industrialisation,  fall in population growth  and more effective implementation of inclusive policies can make growth more real to the poor.  The commission actually lowered the bar to show some progress, but that should not lead us to overlook the need for better work on the ground.