Comedy of Indian Poverty Line!
In June 2011, the Indian Planning Commission stated in the Supreme Court of India that the poverty line for the urban area is Rs 32 per day and Rs 26 per day in the rural area. But in March 2012, it lowered it to Rs 28.65 for the urban area and Rs 22.42for the rural area. Then after Rangarajan committee, it became Rs 47 a day for urban areas and Rs 33 a day for rural areas. One can, of course, justify every change!
India’s poverty line is abysmally low when compared with other poor countries: Rs 860 (now Rs 1407) per month in an urban area and Rs 673 (now Rs 972) per month in the rural area. For instance, South Africa has three poverty lines — food, middle and upper — and all three were higher than that of India. Converting in Indian rupees, the food poverty line was Rs. 1,841 per capita per month in 2010, the middle poverty line was at Rs.2,445 and upper poverty line at Rs. 3,484.
Even Rwanda appears better in the poverty number game. Using the national consumption survey of 2011 at the prices of October 2011, the rural poverty line in Rwanda in Indian currency was estimated to be about Rs. 892 per month, somewhat larger than Rs. 860 per person in urban India. But food prices in Rwanda are lower than in India.
Where to Draw the Poverty Line
“Poverty is easy to spot, but hard to define.”
Whoever said this must have struggled hard to define poverty, which is very true.
There are different ways to look at poverty. Traditionally, poverty has been seen as just a lack of enough income. You guess some minimum income number based on your wisdom, knowledge or expert status – and make it the poverty threshold. People below this line are poor, else they are non-poor (of course, you won’t call them rich!).
India’s First Poverty Line
In 1962, independent India made its first attempt to define poverty line. A Working Group of eminent Indian economists and social thinkers along with 1958 – Nutrition Advisory Committee of Indian Council of Medical Research (ICMR) recommended a national minimum for a rural Indian as Rs 20 per month at 1960-61 prices and for an urban Indian as Rs.25 per month; ensuring energy requirements for an active and healthy life. This did not include expenditures on health and education. It was clearly a subsistence poverty line because people are battling hunger and getting enough food was the foremost priority.
Indian Poverty Line Is Often Called Starvation Line!
A more systematic poverty line philosophy was recommended by an expert group called the Alagh Committee in 1979. It said that people consuming less than 2100 calories in the urban areas or less than 2400 calories in the rural areas are poor. Why discriminate? Because rural people do more physical work so they needed more calories – as per its logic. So, food consumption became the prime criterion for India’s poverty line determination. Needless to say, it was more like a starvation line or under-nutrition line.
This methodology was improvised by the Expert Group (Lakdawala) in 1993 and then by another Expert Group (Tendulkar) in 2009. The improvisations led to a firmer reliance on the NSSO’s sample surveys on consumption expenditure by households, a much better method to adjust for inter-state and inter-region differences in price changes over time, and the use of the better recall period introduced in the National Sample Survey Organization (NSSO) surveys.
The Suresh Tendulkar Committee (in 2009) recommended to broad base the poverty line idea on the line of the basic needs approach and added other essentials of life like education, health and transport into the food consumption model. It also recommended a new method of updating the poverty lines, adjusting for changes in the prices and patterns of consumption looking at the consumption of people living close to the poverty line.
This method made some people happy because of it somewhat broad-based the calculations but was still far too inadequate. Many critics still wanted to call it a “starvation line’ instead of the poverty line. The most important input for poverty measurements come from the consumer expenditure NSSO surveys which on a large sample is done every five years.
Using the Tendulkar method, the poverty line was fixed at daily per capita spending of Rs 28.65 for the urban areas and Rs 22.42 for the rural areas. [Then, 1 USD was around Rs 63; now it is around Rs 66]. Based on a survey of 2011-12, 269 million people (22%) are reported to live below the poverty line – the net result of 25.7% rural and 13.7% urban poverty. Of the 269 million poor, 216.5 million live in rural India. This unprecedented fall from 407 million (37%) estimated for 2004-05 to 22% poverty was widely ridiculed and criticized. So, a new expert group (Rangarajan committee) was set up to revisit the poverty line philosophy.
Setting up such a committee is the standard trick to delay and divert public attention. By the time the committee gives its findings or recommendations, public debate has already subsided and people have already forgotten the issue. So, what did the new expert group decide on poverty level?
It said that those spending Rs 47 in towns and cities and Rs 32 a day in rural areas should not be considered poor. For 2011-12, the Rangarajan committee estimated 29.5% poverty that made 363 million Indians poor.
Some time ago in 2017, the World Bank recently counted 12.4 percent poverty in India on its yardstick of $1.90 a day. It expects that the new survey results would bring it down to a single-digit percentage.
Ground realities remain the same, you can choose any poverty line, and hence which headcount, that serves your purpose! See, how conveniently poverty rate can be manipulated. In fact, you can wipe out all poverty by simply setting the poverty line at Zero; why bother about experts and their fancy statistical analysis!
A rich man is nothing but a poor man with money.
– W.C. Fields
The trouble with being poor is that it takes up all your time.
– Willem de Kooning
The poor are poor because the rich are rich.
In a country well governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be ashamed of.