Not such a straight poverty line

There is absolutely no methodological relationship between the Tendulkar poverty line and the one dollar poverty line.

Updated - December 04, 2021 11:10 pm IST

Published - August 12, 2013 12:10 am IST

Mihir Shah has defended the poverty line recommended by the Suresh Tendulkar Committee in 2009 in his article in The Hindu (editorial page, “ >Understanding the Poverty Line ”, August 5, 2013). Mr. Shah makes two claims. First, he argues that “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.” Here, he tells readers not to get agitated by the level of the poverty line, as India is only following the global practice. Second, he assures that “there is no value judgment being made about the adequacy of this amount of money for any meaningful purpose.” Mr. Shah assures readers that the purpose of the poverty line is purely academic and has nothing to do with people’s hunger or malnourishment.

In making these two claims, among others, he derides the “great shrillness” around the poverty line debate. He tells us that “understanding and wisdom have flowed in an inverse proportion,” and that commentators “have shown complete lack of understanding.” As a result, Mr. Shah says that we have a “ridiculous tragedy of errors on all sides”!

Both the claims of Mr. Shah are completely wrong. What are the facts?

Fact 1:

There is absolutely no methodological relationship between the Tendulkar poverty line and the one dollar poverty line. The new method suggested by Tendulkar was the following: we take the all-India urban poverty line as the basis for estimating every other poverty line. This urban poverty line continues to be estimated by: (a) the same old calorie norm; (b) updating Rs.56.64 (i.e., the per capita per month expenditure at 1973-74 prices, “adequate” to buy 2,100 calories per day) for inflation; and (c) with no regard for temporal changes in the consumption basket. From this national urban poverty line, we try to estimate what it takes for people in urban and rural areas of different States to afford the same level of consumption. A PPP method is used for this estimation. This was Tendulkar’s recommended method, which has nothing to do with anything global.

In other words, the Tendulkar poverty line has nothing to do with the World Bank’s $1 or $1.25 poverty line. Even Tendulkar did not make such a claim. There is only one sentence in the whole of the Tendulkar committee report that refers to anything in dollar terms. That sentence in page 8 of the report is as follows: “the new poverty line happens to be close to, but less than, the 2005 PPP $1.25 per day poverty norm.” Mr. Shah appears to be making a virtue out of this passing statement in his urge to dismiss the national outrage over the poverty line.

Fact 2:

Though Mr. Shah denies any value judgement on the “adequacy” of the poverty line, Tendulkar himself was rather enthusiastic about its “adequacy.” Tendulkar’s “value judgement” would have been all too evident if Mr. Shah had taken time to read the report carefully. In page 2 of the report, Tendulkar claimed that with respect to “nutritional, educational and health outcomes,…[the] actual private expenditures reported by households near the new poverty lines…were found to be adequate.” Tendulkar expanded on this statement in the interviews that he gave soon after. On food expenditures, he said: “while fixing the poverty line…, we have ensured that the normative food expenditure as per the malnutrition outcomes estimated by National Family Health Survey are alleviated” (interview, The Economic Times, May 25, 2010). Further, “for most of the states, the reported food expenditure near the poverty lines […] is at least 95% of the corresponding state-specific normative levels.” In other words, Tendulkar’s claim was that his poverty line expenditures, which are being made fun of today, were “adequate” to cover all the food expenses required to alleviate malnutrition (for a sharp critique of this claim, see Madhura Swaminathan, The Hindu, editorial page, “A methodology deeply flawed”, February 5, 2010).

Tendulkar went on to claim that his poverty line was adequate not just to cover normative food intakes, but also the “private expenditure on education and health.” He noted that to ensure “minimum health,” his poverty line covered “both the curative expenditure as well as the hospitalisation expenditure incurred by households to meet the contingencies of illness and hospitalisation.” Yet, Mr. Shah would insist of no value judgement anywhere about the adequacy of Tendulkar’s poverty line.

Finally, none of Mr. Shah’s confidence is reflected in the decision of the government to appoint a new technical group under C. Rangarajan to re-examine the poverty line methodology. In the order concerned (dated March 22, 2012), the government noted that it “respects and is fully conscious of the sensitivities of the people” on the issue of poverty estimates (a far cry from Mr. Shah’s derisive tone). The group is supposed to “revise/revisit the methodology for estimating poverty in a manner which is consistent with the current realities.” If this is not an implicit rejection of Tendulkar’s poverty lines, what else is it? What was the need to appoint a new committee, if the government was convinced that the Tendulkar poverty lines had only academic value?

(R. Ramakumar is associate professor, Tata Institute of Social Sciences, Mumbai.)

Mihir Shah responds:

Anyone reading my piece would immediately recognise that it was neither a defence nor critique of the Tendulkar approach to poverty. There is a vast literature on that subject to which I make no reference whatsoever. Academic squabbling on the poverty line was not the point of my article.

Contrary to what Mr. Ramakumar alleges, I am deeply empathetic to the recent public outcry following the poverty estimates. As I said in my piece, “political leaders have at times spoken in a manner deeply hurtful to the aam aadmi” and I referred to “understandable public anger, much exacerbated by insensitive suggestions by some members of the ruling party that even less could be enough”.

My aim was to directly speak to this sense of public outrage. And to clear any misgivings that may have been created by the very nature of the debate in recent weeks. My entire life has been spent living and working with the most deprived people of this country in its remote, backward, tribal areas. As I understand it, the concern of the aam aadmi is that the poverty line is a dangerous means of exclusion. If they even slightly cross the line, they will be deprived of benefits of government programmes. Before UPA II this was indeed the case. That is why much of my piece was devoted to highlighting the historic decision of this government to break the link between entitlements and the poverty line and move towards a multidimensional approach to poverty. I also provided several examples of the very positive impact this would have on the people of this country.

(Mihir Shah is Member, Planning Commission.)

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