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India's poverty story
Publication Date : 23-08-2013
India's GDP growth has plummeted to a decade’s low in the last fiscal. In terms of the world index, India was ranked at number 168, according to the CIA World Fact Book. Signs of recovery are not visible. Rather, macro-economic fundamentals are extremely weak. Inflation, fiscal deficit, and current account deficit are the major areas of concern.
The rupee has weakened considerably against the dollar, and this poses a headache to importers. The scenario is reminiscent of pre-reform 1991.
The polity is fractured and bleeding. Divisive forces have resumed their activities ever since the announcement of a separate state of Telangana. The coalition partners are divided, there have been serial scams, and the leadership issue in the post-election United Progressive has resulted in a deficit in governance.
Opinion polls conducted recently by the national television channels have made the Congress jittery about its prospects in the next Lok Sabha (Lower House) election.
Amidst this gloomy scenario comes the announcement of the Planning Commission on the number of people living below the poverty line. The estimates show that the poverty ratio has fallen from 37 per cent in 2004-05 to 22 per cent in 2011-12.
This has raised 138 million people above extreme poverty. In 2012, there were 269.3 million people (rural: 216.5; urban: 52.8) living below the poverty line, out of a total population of 1.2 billion.
This further illustrates a significant decrease from nearly two decades ago. In 1994, there were 403.7 million people or 45.3 per cent of the population in poverty. The commission’s figures suggest that the annual rate of decline in the poverty count accelerated to 2.18 per cent for 2004-05 and 2011-12 from an annual drop of 0.74 per cent between 1993-94 and 2004-2005.
The Planning Commission’s findings are based on the methodology recommended in 2005 by a panel of experts headed by the economist, the late Suresh Tendulkar. The methodology defines poverty in terms of consumption or spending power of an individual during a certain period. Only those spending up to 27 rupees a day in rural areas and 33 rupees in urban areas would be counted as living in poverty.
Thus, for a family of five, the all-India poverty level in terms of consumption expenditure would amount to about 4,080 rupees (US$63) in rural areas and 5,000 rupees per month in urban areas.
The Tendulkar calibration is roughly equal to the World Bank’s poverty line, which is based on the purchasing power parity (PPP) for $1.25.
The PPP compares the amount of currency needed to buy the same item in different countries. The yardstick is used by the UN and in over 180 countries.
The extent of decline--from 37 per cent to 22 per cent over the past seven years--has ignited debate throughout the country. There is no denying that the Planning Commission’s poverty line has been set at an absurdly low level which conceals the true scale of poverty in India.
The spending has been calculated at a level that is much too low.
Considering the cost of food, rent and essential commodities, it is impossible to make even the bare purchase of food. The average cost of one kg of rice sold through PDS at subsidised rates is currently around 18 rupees.
NC Saxena, who monitors the food programme on behalf of the Supreme Court, feels that the estimates of numbers living in poverty are meaningless in the present economic situation. He concedes that consumption among the weakest sections of society has increased significantly over the past decade.
This may be music to the ears of the mandarins of the Planning Commission. With the Congress-led UPA government in deep trouble, one wonders if Yojana Bhavan is engaged in a rescue act. This can be a convenient propaganda plank for the government in the next general election. Besides, more people in the poverty bracket would mean a larger financial burden on the government which it may not be in a position to bear. A lower poverty line allows the government to target welfare policies for the perceived benefit of the weakest sections. The timing of the announcement is bound to raise eyebrows.
The Planning Commission’s statement says that the data from the 68th round of the National Sample Survey (2011-12) of household consumer expenditure is now available. But the government could have waited for the recommendations of another panel headed by C Rangarajan, Economic Advisor to the prime minister.
The panel was set up in June 2012 to review the methodology used for estimating poverty after widespread criticism over how the poverty line had been set by the government on the basis of the recommendations of the Tendulkar committee. Here again, the political calculation carried weight since the Rangarajan committee’s report is expected only by July 2014.
Did the commission want to keep the number of poor artificially low? If so, why?
The answer has to be found in the ethos of our politicians and their chosen planners. They do not like to be reminded about the ground realities. They are more interested in India’s new-found place in the comity of nations and refuse to accept inconvenient truths.
Besides, we have learnt to live with racism of a peculiarly inverted kind. Even if it is true that India is still mired in poverty, the so-called “patriots” are against a public discourse on the subject. They are against what they call “India bashing”. It bears recall that even Satyajit Ray was not spared on the floor of Parliament for his all-time classic, Pather Panchali, because of its portrayal of poverty. Hygienic sanitation facilities do not exist in large parts of rural India.
The UN estimates that 5,00,000 Indians die every year for lack of clean water. Beyond definitions and calibration of poverty lies the fact of the matter--little or nothing has been done to alleviate poverty.
The writer is a former Joint Secretary, Government of West Bengal.