The Tendulkar Committee has pitched for a policy position that is stranded between the harsh realities of poverty and a fiscally conservative neo-liberal framework.
The debate on the extent of poverty in India has been a matter of global interest in the recent years. The primary reason for the global interest in the debate is that the levels of poverty in India and China have come to exert significant influence over the trends in world poverty itself.
Within India too, there has been growing contestation around poverty estimates, particularly in the period of economic reforms. First, there are persistent disagreements among economists on whether the rate of poverty decline after economic reforms was slower than in the preceding period. Secondly, the shift to targeted, rather than universal, welfare schemes has witnessed the use of poverty estimates to decide on the number of households eligible to access these schemes. The report of the Expert Group on the estimation of poverty, chaired by Suresh Tendulkar, is the latest input to the “Great Indian Poverty Debate.”
In India, poverty is presently estimated by fixing a poverty line based on a differentiated calorie-norm. A task force of the Planning Commission in 1979 defined the poverty line as that per capita expenditure at which the average per capita per day calorie intake was 2400 calories in rural areas and 2100 calories in urban areas. Average per capita expenditures incurred by that population group in each State which consumed these quantities of calories, as per the 1973-74 survey of NSSO, were used as the poverty lines.
Based on the observed consumer behaviour in 1973-74, the poverty lines arrived at were Rs. 49.09 per capita per month in rural areas and Rs. 56.64 per capita per month in urban areas. These poverty lines were updated for the following years by simply accounting for changes in consumer price indices. Thus, the all-India poverty lines updated for 2004-05 were Rs. 356.30 in rural areas and Rs. 538.60 in urban areas, per capita per month. The shares of population below these poverty lines (the head count ratios; HCR) were estimated to be 28.7 per cent in rural areas and 25.9 per cent in urban areas.
These estimates of poverty threw up a number of controversies. First, it was argued that the poverty lines were extremely low in levels. An amount of Rs. 356.30 per month per person amounted to just Rs. 11.90 per day in rural areas, which was at best a destitute income. The fact that about one-fourth of India’s population did not incur even this level of expenditure was in itself instructive.
Secondly, the NSSO estimates were at great variance with the estimates of nutritional outcomes that other surveys like the National Family Health Survey (NFHS) provided. For instance, according to the NFHS-3, the share of underweight children (under 3 years) in rural India was 44 per cent in 2005-06.
Thirdly, there were major methodological problems in the choice of consumer price indices, continuously re-weighted keeping the 1973-74 consumption basket unchanged, to update the poverty lines over time. One striking absurdity that resulted was that in some States, urban poverty rates were estimated to be higher than the rural poverty rates.
The Tendulkar Committee has reviewed the present methodology for measuring poverty and suggested drastic changes for the future. It has recommended the abandoning of the calorie-norm for estimating the poverty line. Instead, the committee has recommended a new method where the present all-India urban povertyline is taken as the basis for estimating every other poverty line in the country. With the urban poverty line as the basis, the parity levels at the State-level for rural and urban areas are to be separately estimated using a typical purchasing power parity (PPP) method. Thus, the new State-level rural and urban poverty lines are to be at those levels at which the average national urban consumption levels can be attained.
The suggestion to use the all-India urban poverty line is justified on the basis of two independent validating reasons. First, the urban population that corresponded in 2004-05 to the poverty line expenditure consumed 1776 calories per capita per day, which was close to the calorie norm of 1800 calories per capita per day suggested for India by the Food and Agriculture Organisation (FAO). Secondly, the actual levels of urban per capita expenditure in 2004-05 were also sufficient to meet a defined “normative level of expenditure on education and health services.” It is thus postulated that the new poverty lines, fortuitously, meet not just food requirements, but also those of education and health that are important basic needs.
Using the above method, the new poverty lines for 2004-05 have been re-estimated by the committee as Rs. 446.68 for rural areas and Rs. 578.80 for urban areas (per capita per month). Further, the new HCRs for 2004-05 are estimated as 41.8 per cent in rural areas and 25.7 per cent in urban areas. These new estimates represent a significant upward revision of poverty in the rural areas, and a small downward revision of poverty in the urban areas. As per the new method, the total number of poor people in India has risen from about 403 million in 1993-94 to about 407 million in 2004-05.
Indeed, the new poverty estimates appear more realistic than the existing estimates. It is certain that the Tendulkar report would reopen the debate on the impact of reforms on poverty. At the same time, the new estimates would also help States expand their BPL coverage in the public distribution system (PDS) using food grains from the Central quota itself. On that count, the report is likely to be welcomed by State governments.
However, the report is unlikely to stem the deep dissatisfaction around the use of poverty estimates to “fix” eligibility in the access to welfare schemes. In important programmes like the PDS, the system of targeting remains firmly in place. As a result, large sections that require welfare assistance are likely to remain excluded from these programmes even if the new poverty estimates are considered.
Take an illustration: in per capita daily terms, the rural poverty line has been raised from Rs. 12 to Rs. 15 — a meagre upward revision. In the urban areas, the increase is from Rs 18 to Rs 19 per day. It is most revealing that even such a small upward revision of the poverty line could net in more than 100 million new persons as “poor.” In other words, poverty estimates are extremely sensitive to even minor changes in the poverty line.
Juxtapose this with the fact that 77 per cent of India’s population lived at an average monthly per capita consumption expenditure (MPCE) of Rs. 16 per day in 2004-05. If the average expenditure of 77 per cent of the population was Rs. 16 per day, there is likely to be a sizeable section of the population above the new poverty line of Rs. 15 per day in rural areas and Rs. 19 per day in urban areas. In a targeted system of welfare provision, these vulnerable sections of the population would remain excluded.
Errors of “wrong exclusion” in targeted programmes in India are due to the separation of the processes of (a) the estimation of the number of poor and (b) the identification of the poor. It is for the absence of a reliable and feasible method of combining estimation and identification that political and social movements have been demanding the universalisation of welfare schemes like the PDS. It is, thus, essential that sample-based poverty estimates from the NSS are not mechanically linked to the eligibility to access welfare programmes. In a country with such mass poverty as India, universalisation remains the most efficient tool for ensuring livelihood security.
A final issue with the report, of much long-term consequence, relates to the wisdom of abandoning the calorie norm. It is indeed true that the levels of calorie intakes are not well correlated with nutritional outcomes. However, abandoning the calorie norm altogether and taking solace from the fortuitous fact that calorie intakes appear adequate at the new poverty lines is an arbitrary proposition. It is unclear whether there is any basis, theoretical or empirical, for this relationship to hold true across time.
In sum, the Tendulkar Committee has pitched for a policy position that is stranded between the harsh realities of poverty in India and the fiscal conservativeness of a neo-liberal framework. The real challenge lies in preserving the positives from the report, and strongly persisting with the demand for a universal social security system.
(R. Ramakumar is Assistant Professor, Tata Institute of Social Sciences, Mumbai.)
Keywords: social evil, hunger, Suresh Tendulkar, PDS, Below Poverty Line
Ramkumar analyze historically of calculating the Poverty Line in INDIA. This article gives the various dimension of calculating poverty and its methodological problems. NSSO and National Family Health Survey (NFHS) are provided different statics. The Tendulkar Committee has reviewed the rural poverty line has been raised from Rs. 12 to Rs. 15 and the urban areas, the increase is from Rs 18 to Rs 19 per day. Through this rising, Tendulkar Committee made 100 million NEW Poor. It is shocking news 100 more million people are going to label as “POOR”. If India continues the neo-liberal framework what is the future of poor? Are poor will remove form our country?
Dr. Ram Kumar has rightly pointed out about the dilemma of Policy makers post Tendulkar committee recommendations. Critical point is how good and effective is governmental mechanism to adapt new measures out of different schools of thought about great India Poverty estimations. Amid the riches, poor population finding it difficult to meet both ends.
It is interesting to see how growing India accommodates changes. Moreover pending Right to Food security Bill and Government's renewed interest in PDS system may compel them to go for Rs. 446.68 for rural areas and Rs. 578.80 for urban areas (per Capita per month). Even these minor changes in poverty estimation will lead to upward revision in actual poverty estimates, well it is debatable but with ever expanding and volatile Inflation and CPI, I think government should protect BPL as well as the large chunk of population lingering at the Margins of BPL.
Apt solution would be to get Pan India uniform PDS system with accelerated delivery mechanism at grass roots. Finally it is time to set our goal beyond Poverty projections and estimations(Much to the concern of western world)
We just need a socialistic approach to economy (not necessarily communism) that balances our rich cultures and religions. I dont want to see India become the next China where there is more than enough wealth for everybody but no freedom to use it. Its pointless the way I see it.
Poverty in India is only increasing. In the past one year it must have galloped due to unprecedented inflation though officially it is below 5% or so. There is no point in making a survey and generate a controvercy on percentage of poor. Our socialist policies have failed like in most of the countries. Disparity between the poor and the rich is increasing by the day. Drastic and immediate action is required on corruption. The government should think of faster and efficient way of development. Abandoning socialism is the first priority.
Fabulousy written. The Hindu is clearly way better than the TOI or for that matter any other news paper in Indian Media.
I am very happy to see the new beta online site and wish well for the paper.
Regards,
-Ravi
Raise the legal age of marriage to 25 for men and 21 for women and enforce it. Stop pandering and offering free stuff to people. 50 years of socialism has created a society where people shun responsibility in favor of government taking care of them.
Interesting. It would be nice to see the result of actions of this report at least an year later. Hope this small step is followed by a strong task force and a great social revolution !!
No matter what parameters are used to determine who is technically poor or not, the fact we are up against is that we have a LOT of poor people, without a doubt. Creating opportunity for growth should be the government's only duty, not micromanaging who gets each grain of rice from the public distribution system. Karunanidhi's Re.1/kg of rice scheme has only frauds collecting huge quantities of this rice, polishing it and profiting from it by selling at higher prices. Nobody in India asked for silly schemes like this. But we're breeding incompetence and laziness by thoughtless schemes instead of growing industry and agriculture to absorb the manpower we have.
I come from a fishing village, in my village most of the people are not educated. They are still under the shackles of poor education and health care but certainly they get food to eat because until last decade fishing used to be a stable occupation. But the present situation among fishing communities is precarious mainly because the occupation is deteriorating and low education is forcing them to take up menial jobs in Urban areas. They will end up in shanty places such as slums in urban India. India if really wants to include its millions of people who are suffering from abject poverty (poor nutrition, education and health care) need to do something (reforms) fundamentally in basic education and creating employment for the masses. Apparent disparage of India's urban elite is to ignore the existence of such people in India which is obviously frustrating. I certainly something changes for the good of all.
It is a rational concept. Having said that, one of the reasons for poverty is exploitation. Let us adopt Social Security and Health Security and remove the concept of subsidy which ends up as black money. Unfortunately all politicians are silent about Social security and unemployment wages.We have the money to do that but not the will because of obvious reasons.
Today we have more than 60% of Mumbai in slums. By this estimate most of them will not be termed as poor. So there has to be other policy measures take care of such anomalies. The question is whether the report is objective in its ideals or driven partly by business interests and intend to exploit.
United States still follows an obsolete method, even though in 1995 National Academy of Sciences (NAS) recommended a newer approach to measure poverty like combining Cost of Food, Clothing and Shelter (PPS derivative) based on post tax data. Obviously more people will fall under this. The issue is, how do we protect and shield this class from material hardships in a market driven system? One option is to improve earnings as well as spending opportunities for middle class. In India, they must seriously consider the abolition of PDS and replace it with food coupons that could facilitate private small business participation which can provide much better quality with open market competition. I am not sure that how much Tendulkar committee had the opportunity to look into social aspects like caste based system, vote bank politics, rural-urban migration etc., 'exploiting forces' that keep these set of people to live under poverty FOREVER!!! They definitely need help and they are not getting it in rural areas that too around 37% is very scary!!! FYI, recent World Bank report on Chinese poverty noted that China could pull more than half a billion from poverty between 1981 to 2004. A smaller group of non-profits/NGOs could be engaged to track and improve this set of class in our society rather a universal social security system!!!
The experts may debate the method to be adopted to draw the so-called "poverty line" in the income-calorie intake space, but the fact remains that the prosperity that is claimed to have been brought about by the post-socialist liberalised economic policies of the government has not touched a large section of the population. As a matter of fact the rise in the rate of inflation in the last two years has put even the middle class in dire straits. The demography of India is such that the thrust to alleviate poverty has to start from rural areas where 70% of the population lives. In a country where even the communists think that only converting agricultural land to industrial areas and building industrial complexes can effectively fight rural poverty, one cannot expect the Congress-led governments to consider boosting agricultural production as the way to increase the income of 70% of our population. If the all too important GDP growth can be ensured by tax concessions to cash cows like the IT industry, managing low value of Rupee against Dollar and putting large disposable incomes into 20% of Indian pockets which will in turn help more cars, real estate etc to sell, why bother about agriculture? And that seems to be the government's logic. It is time that politicians started to worry about peoples' problems and left numbers like the GDP, WPI, inflation rate etc to theoreticians and financial news channels.
A very alarming article, a country so indigent! how can we say India is transforming to a world power. The government should abandon complacency and start the welfare scheme consciously by making PDS universal, afterall everybody have right to food. The article also tells us how disproportionately wealth is distributed in India
Despite years of proclaimed growth by our Governments, present and past, the reality is that poverty remains to be a big thorn and doesn't seem to be disappearing any time soon. Before jumping into deal with our poverty, it's paramount that enough data is gathered and updated digitally. Linking the poverty-line with one of many Price Indices is just absurd. There has to be a clear and long term forward-thinking approach to estimate before we have a go at eradicating it. Personally, I don't trust any of the Retail Price Index or the Consumer Price Index, as these are some of the tools used by Governments all over the world to manipulate various statistics. Hope the well-intended recommendations of the Committee gets implemented and our country can show that we are actively taking steps to eradicating our poverty.
People in planning seem to bias and fudge sensitive socioeconomic parameters. Mr.Ramakumar has rightly viewed that the poverty lines are arbitrary. The suggested poverty line at Rs. 578.80 is just ridiculous and inappropriate, even a road side beggar may be having a higher income. In fact it may be appropriate to have several income lines and their relative distribution to reflect societal status. How China etc., monitors similar indices might have added value.
The issue is corruption , if this ogre was to be tackled everything else will follow, till then all schemes and plans will remain just worthless paper.
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