'Inequality has gone up, notwithstanding dip in poverty'

Montek Singh says he is willing to revise poverty estimates on the basis of expert opinion

Updated - November 16, 2021 11:25 pm IST

Published - March 21, 2012 02:41 am IST - NEW DELHI:

NEW DELHI, 20/03/2012: Montek Singh Ahluwalia, Deputy Chairman Planning Commission addressing the media on poverty estimates emerging from the latest NSS Household Consumer Expenditure Survey for 2009-10 , in New Delhi, on March 20,  2012.  Photo: V. Sudershan

NEW DELHI, 20/03/2012: Montek Singh Ahluwalia, Deputy Chairman Planning Commission addressing the media on poverty estimates emerging from the latest NSS Household Consumer Expenditure Survey for 2009-10 , in New Delhi, on March 20, 2012. Photo: V. Sudershan

Though the incidence of poverty has come down over five years from 2004-05 to 2009-10, it is a startling fact that inequality has increased, with fewer people controlling income.

Union Planning Commission Deputy Chairman Montek Singh Ahluwalia admitted on Tuesday that income distribution was not at the desired level and inequality increased in both rural and urban areas.

He denied any political motive behind the release of the data when Parliament was in session, or with an eye on the 2014 Lok Sabha polls or changing the number of beneficiaries of the proposed food security legislation.

Admitting that the poverty line fixed by the Tendulkar Committee was criticised on the ground that it underestimated the scale of population that needed special assistance, Mr. Ahluwalia said he was willing to revise it on the basis of expert opinion.

Under the Gini Coefficient used, there was a marginal increase in inequality in rural areas from 0.27 per cent during 2004-05 to 0.28 per cent during 2009-10. This meant money was concentrated in a fewer hands. In urban areas, where money had already been with fewer people, the situation deteriorated more sharply, from 0.35 to 0.37.

As per the index ranged on a scale from zero to 1, the ideal situation is zero, indicating perfect equality. But 1 means maximal inequality (all wealth cornered by one person).

Inequality rose sharply in rural areas of even a well-off State like Punjab (0.26 to 0.29), Kerala (0.29 to 0.35), Bihar (0.19 to 0.22) and Madhya Pradesh (0.24 to 0.28) and Assam (0.18 to 0.22). There was no change in Odisha, Gujarat, Karnataka, Tamil Nadu and Uttar Pradesh.

Inequality came down in the rural areas of Goa, Delhi, Maharashtra, West Bengal, Haryana and Chhattisgarh.

Unlike the mixed trend in rural areas, the picture in the urban areas was more horrific. Except in Chhattisgarh, Goa and Tamil Nadu, inequality rose in all other States: Andhra Pradesh, Assam, Bihar, Delhi, Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Uttar Pradesh and West Bengal.

Inequality rose rather sharply in urban Kerala (0.35 to 0.40), Uttar Pradesh (0.34 to 0.40), Himachal Pradesh (0.26 to 0.35), Odisha (0.33 to 0.38), Punjab (0.32 to 0.36), Delhi (0.32 to 0.35) and Jammu and Kashmir (0.24 to 0.31).

Mr. Ahluwalia said the data did not reveal the causes for the increase; it would have to be studied separately. Nor would it be proper to say that the government programmes had failed because the conditions had to be studied. But he admitted to the need for tweaking the programmes and working out ways of reversing the trend.

He pointed out that inequality had risen more sharply in Brazil and China.

As for the impact of the current poverty estimates on deciding the beneficiaries of government programmes, he said the objective was not to influence the number of beneficiaries to be covered by the proposed legislation for food entitlement.

Stressing that the government did not limit the numbers to the below poverty line (BPL) and pegged it at 46 per cent of the priority sector, Mr. Ahluwalia stressed the need to appreciate the progress made. But it was very unlikely that the government would change the number in the wake of the new poverty estimates based on the Tendulkar Committee's recommendations.

Asked why the Planning Commission sought to divide poverty into various categories, including religion, Mr. Ahluwalia explained that it was for a better understanding of the impact of government programmes on each group.

Holding 2009 as a drought year, which normally tends to increase poverty, the Planning Commission has called for another larger survey for 2011-12. Half the data has been collected, and the task will be completed by June and the report released next year.

The Planning Commission has projected the cut-off poverty line on a monthly expenditure of Rs.760 in rural areas, against Rs.672.8 estimated in the 2009-10 survey. On a daily basis, this will mean an expenditure of Rs. 25.33 against Rs. 22.42. And in urban areas, it is Rs. 968.5 in 2011-12 as against Rs. 859.6, which means a per-day expense of Rs. 32.25 will keep one out of the BPL list against the current Rs.28.6.

Mr. Ahluwalia said the figures were almost the same as Rs. 32 and Rs. 26 furnished in the Planning Commission's affidavit filed in the Supreme Court on the beneficiaries under the food entitlement legislation.

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