A panel tasked with devising ways to reduce poverty has backed the controversial `Tendulkar poverty line’, which categorised people earning less than Rs. 33 a day as poor, on the ground that the line is primarily meant to be an indicator for tracking progress in combating extreme poverty. The line is not meant to help identify those to whom government benefits need to be distributed, it said. The report of the Niti Aayog’s Task Force on Eliminating Poverty, which was leaked on Friday, argues that the poverty line is not the basis of identification of the poor in India. Instead, it is the BPL Census on the basis of which state governments identify the poor. The latest of these is the Socio-Economic Caste Census 2011.
Since what represents a basic necessity would vary from person-to-person, the report contends, the final decision will have to give adequate attention to the fact that the objective behind a poverty line is to track progress in combating extreme poverty and not identification of the poor for the purposes of distributing government benefits.
“The main criticism of the Tendulkar poverty line has been that it is too low…if we set the poverty line at too high a level, we would be tracking how many people, who had already achieved a certain level of comfort, have been made yet further comfortable…it will tell us little about what is happening to households in abject poverty,” according to the report.
It makes sense to set the poverty line at a level that allows households to get two square meals a day and other basic necessities of life. “It is the households below this bare subsistence level whose welfare should concern us the most and whose progress we must monitor.”
A Committee chaired by former Chairman of the Prime Minister’s Economic Advisory Council and the National Statistical Commission, the late Suresh Tendulkar, computed poverty lines for 2004-05 at a level that was equivalent, in purchasing power parity (PPP) terms, to one U.S. dollar per person per day, which was the internationally accepted poverty line at that time.
The PPP model refers to a method used to work out the money that would be needed to purchase the same goods and services in two places. Across countries, this is used to calculate an implicit foreign exchange rate, the PPP rate, at which a given amount of money has the same purchasing power in different countries.
Mr. Tendulkar, computed poverty lines for 2004-05 at a level that was equivalent, in PPP terms to Rs 33 per day.
Based on the Tendulkar panel norms, the Planning Commission had announced that in absolute terms the number of poor stood reduced from 40.7 crore to 35.5 crore during the period 2004-05 to 2009-10 and and 26.9 crore in 2011-12.
Following criticism of these estimates, the UPA Government had in May 2012 set up the five-member expert group, headed by the then Chairman of the Prime Minister’s Economic Advisory Council C. Rangarajan, to revisit the way poverty is estimated.
In the report Dr. Rangarajan submitted to the Union Planning Minister Rao Inderjit Singh in July 2014, it was suggested that persons spending below Rs 47 a day in cities and and Rs 32 in villages be considered poor.
The report has also recommended sweeping changes to the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) for allowing use of the programme’s funds to pay for labour on private farms. Another of its suggestion for eliminating poverty within 5-7 years is modest cash transfers to the poorest five families in every village to be identified by Gram Panchayats: “During peak season, farmers may be permitted to hire MGNREGA workers by paying 75% of the wages with the balance paid by MGNREGA funds”.
It has also said that the Aadhaar accounts will give government an “excellent” database to assess the total volume of benefits accruing to each household, “which can pave the way for replacing myriad schemes with consolidated cash transfers, except where there are compelling reasons to continue with in-kind transfers.”
An official source told reporters that the Aayog will seek the views of states on the suggestions in the report after which the Task Force’s final recommendations will be submitted to Prime Minister.
