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HindustanTimes Fri,18 Apr 2014

How does one define poverty line in India?

Chetan Chauhan & Gaurav Choudhury, Hindustan Times   October 06, 2011
First Published: 23:07 IST(6/10/2011) | Last Updated: 00:12 IST(7/10/2011)

The Planning Commission's new official poverty line — remarkably low at Rs. 32 — could have moved millions out of poverty: on paper. The Commission is busy quibbling about the details of defining a poverty line amid a welter of protests from social activists who are accusing it of abdicating its responsibility. The million dollar question, or, if you will, the Rs. 32 question, is: How does one define the poverty line in India, in which old yardsticks may not hold good, either in terms of the food that money can buy or in terms of defining who the poor are.

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Do these statistics accurately measure what poverty is, and what is the next step in poverty reduction for middle-income countries like India?

Poverty line: More than a number
One the primary uses of the poverty estimates is to provide subsidised entitlements to the poor.
And by keeping the poverty line low, is the government denying that India continues to remain a very poor country despite being the world's second fastest growing major economy?

It is difficult to argue that at a family of five members with an income of Rs. 4,800 is poor and another one with an income of Rs. 5,000 is not.

“In reality if the first family lives near the place of work and the second one far from it, the second may be poorer than the first one. Even with a calorie intake norm, it would be difficult to make individual comparison,” said Kirit Parikh chairman, Integrated Research and Action for Development and former plan panel member.
Had the government gone by 1979 poverty estimation methodology based on expenditure for buying food worth 2,400 calories in rural areas and 2,100 calories in urban areas, the present poverty line figure would had been R36 for rural areas and R60 for urban areas.
And, it would have meant that more than 50% of Indians were poor as against the present Pan Panel figure of 37.5 %.
“The poverty has to be measured on nutrition,” said National Advisory Council member NC Saxena, whose recommendation that 50 % of Indians should be declared poor was not accepted by the government. 

Why Rs. 32 poverty line
The Planning Commission accepted the Suresh Tendulkar Committee’s recommendation of calculating poverty. That went by the Food and Agriculture Organisation (FAO) norm that 1,700 calories were enough for one to sustain.

The committee's findings when indexed with inflation for June 2011 showed abysmally low monthly per capita spending on food of 18 for urban areas and R16 for rural areas.
Add the daily expenditure on non-food items were added to this, the poverty line stands at R32 for urban and R26 for rural areas respectively. 
“It (poverty line) has been worked on the premise that per head energy and protein intake was falling, which is not true,” said Utsa Patnaik, former professor of economics at the JNU.

“We went by the globally acceptable FAO norms and surveys showing falling intake of cereals,” Abhijit Sen, a member of the Tendulkar Committee, explained.

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