Fresh row over the poverty line

The poverty line continues to be a conundrum. The fixing of the poverty line at Rs 47 for urban areas and Rs. 32 in rural areas per capita per day by the latest Rangarajan committee report, based on a person or family’s spending per day (called ‘consumption expenditure’) has again drawn vociferous criticism.

All these years, this all important line has not been fixed in a rational manner, rendering all poverty alleviation plans go awry as they would be based on false numbers of the poor, perpetuating a smug sense of achievement in the government while denying benefits to crores of deserving people.

Above all, while indulging in arcane number-crunching, experts have looked down on the common sense views on what constitutes poverty. If planning has to do justice to the poor, the new government has to take a re-look, on a priority basis, at the way this line is fixed.

Till recently, the poverty line was defined as that level of expenditure per capita per month, on all goods and services, of which the food component provided an energy intake of 2,400 calories per capita in rural areas and 2,100 calories in urban areas. The expenditure required on non-food items for a decent life was never factored in realistically while fixing the poverty line.

The Rangarajan committee has recognised that mere calories do not ensure nutrition outcomes and has added proteins and fats to the food basket.  But this still does not include fruits, vegetables and dairy products which are the costlier but nutritive items.

On non-food items, the committee has factored in ‘expenditure’ on clothing, rent, transport and education.  This is pegged at Rs 407 in urban areas.  Residents of Bangalore will see the fallacy in this figure since a monthly bus pass alone costs Rs 1,000 per person, leave alone rent and the other items.

Surprisingly, expenditures on health, fuel, drinking water, sanitation, social security, communications and information which are considered necessary for a decent life, have not been itemised by the Rangarajan committee. But there is a general rubric of “other non-food expenses” which presumably is supposed to cover all these.

But experts have been seriously questioning the use of ‘consumption expenditure’ as the basis for fixing the poverty line for long.  They opine that it is based on the assumption that what these households actually spend on non-food items meets the non-food basic needs of health, education, housing, etc., for which “there are overwhelming prima facie grounds for rejection.” (Saith).

After spending on food, these households may not have enough money to send children to school or they may overlook health needs. Health expenditure could have been met by pledging children, selling off assets or getting into debt.  Expenditure cannot be used as a ‘proxy’ for the fulfilment of basic needs, experts say. The Rangarajan committee tries to resolve some of these problems by more number-crunching which experts again dismiss as arbitrary.

Measuring deprivations

The United Nations recognising that poverty is not just about income or consumption expenditures, has come up with the Multi-Dimensional Index (MPI) for measuring poverty which measures multiple deprivations.  A family is considered deprived, for instance, if no household member has completed five years of schooling, a child in the family has died, is malnourished or is not attending school; the household has no electricity, no access to safe drinking water or sanitation; has a dirt or dung floor; cooks with dung or charcoal, etc. 

A person is considered poor if they are deprived in at least 33.33 per cent of these weighted indicators. But the Rangarajan committee has brushed aside this commonsense focus on deprivations - and also the criticisms of consumption expenditure-based poverty lines - by saying that deployment of criteria other than consumption expenditure “raises problems regarding measurement and aggregation”.

The new poverty lines as per the Rangarajan committee are Rs 4,860 per month in rural areas and Rs 7,035 in urban areas for a family of five at 2011-12 prices.   But while these figures are higher than existing poverty lines, they are still far from the figure of a monthly minimum of Rs 9,337 for a family of four at 2009 prices arrived at by the Sixth Pay Commission, which calculated the cost of fulfilling basic needs holistically.  This figure would be definitely higher than Rs 10,000 at 2011 prices.

It cannot be said that the poverty lines are only of statistical value and are not linked to entitlement programmes. They are definitely linked to the cap on sate poverty levels fixed by the Planning Commission which determines the quantum of resources allocated to the states for entitlement programmes, such as the PDS.   When will we have more realistic poverty lines?