National poverty line will stand at a per capita expenditure of around Rs. 50 per day in rural areas and Rs. 62 in urban areas
While the Opposition pillories the Planning Commission for using a formal definition of poverty that ensures the percentage of people below the poverty line is lower than what it ought to be, the government has begun moving to a broader and more realistic de facto definition that will include roughly 65 per cent of the population. This notional poverty line will stand at a per capita expenditure of around Rs. 50 per day in rural areas and Rs 62 in urban areas.
As first reported by The Hindu, the Planning Commission has revised the official poverty headcount ratio down from 37 per cent of the total population in 2004-5 to 22 per cent of the population in 2011-12.
These poverty rates come from applying the Suresh Tendulkar committee’s methodology for estimating poverty to draw a poverty line, and using the National Sample Survey Organisation’s consumption expenditure data for 2011-12 to see what proportion of the population falls below these lines.
While Planning Commission-derived poverty lines and estimates have been all-important in the past because they are used to draw up BPL lists and allot entitlements, their inappropriateness today is demonstrated by the fact that the government itself is now moving away from using these numbers altogether. Following the Union Cabinet’s clearing of the National Food Security Ordinance, the Planning Commission has estimated that subsidised foodgrain entitlements will cover 67 per cent of the population. Simultaneously, economists advising the Ministry of Rural Development have told The Hindu that the exclusion criteria to be derived from the ongoing Socio-Economic and Caste Census are likely to leave out the top 35 per cent of the population while the bottom 65 per cent will be considered BPL.
“This is a step away from the narrow definition of poverty we have been using, where the line is really what I call a ‘kutta-billi’ line; only cats and dogs can survive on it,” said N.C. Saxena, member of the National Advisory Council, who headed a Planning Commission panel on poverty that recommended automatic inclusion and exclusion criteria. Rural Development Minister Jairam Ramesh said last year that the government was moving towards universalising its social protection schemes, and the Public Distribution System and pensions remained the only schemes that still relied on BPL criteria, Mr. Saxena added. A World Bank study of India’s social protection schemes had shown that universal schemes were far better at actually reaching the poor than those targeted at the poor.
By covering 67 per cent of the population, the government is in effect drawing the poverty line 85 per cent higher than what it is currently drawn at, Planning Commission member Saumitra Chaudhuri told The Hindu. By 2011-12 consumption expenditures, this works out to roughly Rs.1,506 monthly per capita expenditure — or Rs. 50 per day — for rural areas, and Rs. 1,850 per month — or Rs. 62 per day — for urban areas. While India’s poverty line has usually corresponded with the World Bank’s definition of extreme poverty, which is $1.25 (in Purchasing Power Parity terms) per person per day, the new notional poverty line would correspond more closely with the Bank’s definition of moderate poverty. The $2 line corresponded with Rs. 45 per day in rural India and Rs. 57 per day in urban India in 2011-12, Bank representatives said on Wednesday.
“It’s important to remember that those who aren’t poor in our country can still be very disadvantaged,” Mr. Saxena said. The Hindu’s analysis of the new NSSO consumption expenditure data shows that 90 per cent of rural Indians spend less than Rs. 70 per day, while 90 per cent of urban Indians spend less than Rs. 154 per day.