Saturday, January 23, 2010

Definition of Poverty: Absence Of A Uniform Statistical Measure

By Ashwani Mahajan

THE government has frequently been providing differing figures about the extent of poverty in India. And this makes it difficult to gauge the extent or even the approximate figure. Periodic changes in the definition of the poverty line make the issue even more complicated. It is obvious that in the absence of a uniform statistical measure of poverty, alleviation programmes cannot be meaningful.
The government adopts various measures to reduce poverty. Kerosene, cheaper grain and other food items are made available through the Public Distribution System. The rural and urban employment programmes and free medical facilities are among the other programmes that have been taken up. The government’s proposed food security legislation is also on the same lines. People below the poverty line would have the right to draw food at subsidised prices.
Ironically enough, the government is yet to identify those living below the poverty line. The report of the Saxena Committee, constituted by the union ministry of rural development, is particularly shocking. In fact, 49.1 per cent of the population, according to this report, exists below the poverty line. An estimated 23 per cent of the poor do not have a ration card, let alone the BPL card. The report has revealed that 17.4 per cent of the cards are held by the rich. The committee has recommended that the government should undertake a national survey to identify the poor.
Poverty Line Baskets
Last December, Prof SD Tendulkar, the former chief economic adviser to the Prime Minister, submitted the report of the expert group to review the Methodology for Estimation of Poverty. The report noted that the existing all-India rural and urban official poverty lines were originally defined in terms of the per capita total consumer expenditure at 1973-74 market prices. It was adjusted over time in keeping with the price fluctuations. But the 1973-74 baseline continued to be the reference points for poverty line baskets (PLB) of goods and services. These all-India rural and urban PLBs were anchored in the per capita calorie norms of 2400 (rural) and 2100 (urban) per day. However, they covered the consumption of all goods and services incorporated in the rural and urban poverty line baskets.
According to Prof Tendulkar’s findings, in 2004-05, 37 per cent of the country’s population was living below the poverty line. This figure is significantly higher than the figure released by the Planning Commission, according to which 27.5 per cent are below the poverty line. Prof Tendulkar’s figure of headcount is higher because of the larger basket of consumption, which includes expenditure on education and health by the poor.
Earlier studies on redefining poverty have also taken note of these variables and have suggested suitable modifications in the definition of the poverty line. Prof Tendulkar’s report is significant as it gives official sanction to the same. He has recommended that the Planning Commission and the National Sample Survey Organisation (NSSO) make suitable changes in their approach in defining the poverty line.
The NSSO, which conducts a sample survey of consumer spending, estimated that the people living the below poverty line constituted only 28.3 per cent of the population in 2004-05. In contrast to this figure, the Arjun Sen Gupta Committee, formed by the government for the unorganised sector, stated that more than 77 per cent of the people are forced to live on Rs 20 or less per day. This is insufficient even for the minimum requirement of a person’s food, health, shelter and clothing. Clearly, more than 77 per cent of the people cannot meet their basic needs. But the government always tries to underestimate the BPL figure. This is only to convey the impression that the number of the poor is constantly declining.
According to official statistics in 1973-74, 320 million or 55 per cent of the population was living below the poverty line. Going by the 2004 projection, it declined to 28 per cent. The task of defining poverty and the poverty line rests with the government economists. Logically, such a definition must identify the rural poor. And the official definition has been widely criticised in the past.
The problem arose in 1993-94 and 1990-2000. The consumer expenditure data, used by the government to estimate poverty, indicated a fewer number of people below the poverty line. And without any significant improvement in the condition of the poor. Critics say that the figures used by the government showed that poverty declined overnight. If the calorie-based definition is truly implemented, then 80 per cent of the rural and 50 per cent of the urban population would be found consuming less than 2400 and 2100 calories respectively. This implies that the government always tries to underestimate the number of the country’s poor. And this is done by juggling the data.
Pangs of hunger
According to the UN, 220 million people in India suffer the pangs of hunger. The problem is prevalent in all age groups... from infants to the old. Food production has been declining, food imports are rising and food insecurity deepening. Whereas the per capita availability of foodgrain was 190 kg per person per annum in 1979-80, it declined to only 186 kg in 2004-05. Since 2004-05, the rising prices of food have made matters worse.
According to the Food and Agriculture Organisation, about 100 million people have already moved to the category of “hungry” all over the world from 2004-05 to 2007-08. Prof Tendulkar’s expert group has rightly recommended that definition of the poverty line be changed and a new methodology be adopted incorporating changes in the price index. The consumption base also needs to be expanded by including the expenditure on health and education.
The definition of poverty will then not be perfect, but it would be a forward progression from a mere starvation line to a better defined poverty line. Thus far, the government’s policies have been based on ill-defined parameters. Second, it will be forced to spend more money on welfare. In the long run, Prof Tendulkar’s report will set a benchmark in determining the methodology for the assessment of poverty.

The writer is Associate Professor, PGDAV College, New Delhi

Source: The Statesman, 22 January 2010

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