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Indian poverty estimates zoom
overnight from 27.5 % to 37.2%
WSN Network
 NEW DELHI:
Indian media is so busy covering film starlets and silly inanities
of the politicians that a dramatic change in poverty estimates has
remained virtualky unnoticed. With a change in the manner and norms
as per which "poor" are defined, the new official poverty estimates
that are being considered more reliable have shown that the estimate
of poverty in India for 2004-05 has risen to 37.2%, from the earlier
official estimate of 27.5%.
The Expert Group
to Review the Methodology for Estimation of Poverty under the
chairpersonship of Suresh Tendulkar, which was constituted by the
Planning Commission in 1995, has revised the figures that make
India's poor a much larger proportion. In rural India, the poverty
estimates have zoomed to 41.8% from 28.3%.
The basis of the
changes have not been made very clear and rfesearch analysts are
grappling with the problem but it is shocking that the media has
paid scant attention. Part of the problem may lie in how the expert
group worded its decision, but the main problem is that the press
did not care to find out the relevant details;
nor did the
Planning Commission come out with any statement in clarification.
It is clear that
the Expert Group has decided to move away from basing poverty
estimates on nutritional norms as measured by calorie intake to some
broader measure of consumption of goods and services. While most
have seen this as a positive step that takes poverty measurement in
India
away from an undue emphasis so far on calories, or even recognition
that the poor in India now care about more than bare food needs,
there is a lingering doubt that divorcing poverty measurement from
nutrition may rob it of an essential normative basis.
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The new
definition of poverty may help
Punjab
since the state often lost out on loans, grants and other packages
and funds meant for poverty alleviation as the standard of living in Punjab
was much higher than some other states. |
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Indeed, the
question which skeletal press reports have left hanging is: if
calorie intake is no longer the norm, what is? It is therefore
necessary to first clarify that what the Planning
Commission-appointed group has done is to redefine the norm on which
future poverty measurement is to be based. This is to be the
standard of living that defines the current (officially accepted)
cut-off between being poor or non-poor in urban
India,
taking into account the consumption of all goods and services.
It has gone in
for purchasing power parities (PPP) to define the all India poverty
line across states and across rural and urban areas of each state.
All this is because the existing official poverty lines have been
criticised so far on normative grounds in terms of their inability
to preserve the original calorie norms and also on technical grounds
of the quality of cost of living adjustments across states and over
time. In light of these criticisms, the Expert Group has suggested
four major changes in the way poverty is estimated. First, on
normative issues it has decided to move away from anchoring the
poverty lines in calorie norms as was done
previously.
Second, for both spatial as well as inter-temporal estimates, the
group has decided to use prices obtained from the NSS consumption
expenditure surveys itself for as many items as possible and
supplementing it with other indices only in case such price data is
not available therein. Third, there should be only one reference
poverty line and all other poverty lines should be obtained by a PPP
cost of living adjustment of this line. Fourth, and perhaps the most
important, the methodology proposed incorporates more items (taking
into account the current consumption pattern) and also includes
education and health in the price indices. This was necessary and a
welcome change considering the fact that education and health now
form an important item of consumption of the poor.
The new
definition may help Punjab since the state often lost out on loans,
grants and other packages and funds meant for poverty alleviation as
the standard of living in
Punjab
was much higher than some other states.
However, the
Expert Group has not dealt with the fact that a very large number of
people cluster around the poverty line consumption in both rural and
urban areas so that small changes in income can push many from above
poverty to below poverty. This was the basic message from the Arjun
Sengupta Committee’s estimate of 77% population being poor and
vulnerable, defined with a minimal poverty line of Rs 20. The main
message of all this is that even though a certain number is
necessary to gauge the magnitude of poverty in the country, this
cannot easily be used as cut-offs for targeting poverty alleviation
or other programmes.
23
December 2009
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