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HindustanTimes Sun,31 Aug 2014

Counting India's poor and how

Hindustan Times  New Delhi, October 05, 2011
First Published: 23:29 IST(5/10/2011) | Last Updated: 12:22 IST(19/10/2011)

India has struggled for more than three decades to put a figure to the number of poor in the country. A look at some of the fundamental questions around the debate.

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Do we know the percentage of poor in India?
Not really. But there are estimates. The latest one in 2009 comes from a panel headed by economist Suresh Tendulkar – he died in June this year – that put 37.2% of Indians below the poverty line. It concluded that 41.8% of people in rural areas and 25.7% of people in urban areas were below the poverty line.

When was the first time that India came up with a poverty estimate?
The first poverty line estimate came up in 1979. It counted consumption of less than 2400 calories/day in rural areas and 2100 kcal in urban areas as the benchmark. On the basis of a 1973-74 sample survey, it was estimated that a person spent Rs. 49 every month in rural and Rs. 57 in urban areas on goods & services to consume this benchmark calorie intake. People with lower expenditure than this were treated to be below poverty line.

What was the percentage of poor?
At 54.9%, more than half of India was below the red line in 1973. The population under poverty line declined to 51.3% in 1978, 44.5% in 1983, 38.9% in 1987 and 36% in 1993. In 2004-05, the population under poverty line came further down to 25.7%.

So why did the Tendulkar committee come into the picture?
The government appointed the panel in face of mounting criticism that the planning commission estimates were moving the poor out of their poverty on paper only. For one, it was believed the price indices used to update the consumption figures – and hence the percentage of poor – moved slower than the real prices. Also, the government was still counting consumption of commodities fixed three decades earlier.

What did the Tendulkar panel do?
The Tendulkar panel essentially changed the goal post. It moved on the premise that people didn’t just have to spend on food but also other services such as health, education, durable goods and entertainment.

Also, it took into account that the consumption pattern of these items had changed over the last three decades. For instance, even the poor were spending more on health in 2010 than they spent in the 1970s.

But Tendulkar also reduced the calorie intake requirement, going by the new Food and Agricultural Organisation standard that pegged the required calorie intake at 1700 kcal.

How did it conclude that 37.2% of the population – not 27.5% - was under the poverty line?
It looked up the National Sample Survey Organisation report of 2004-05 that revealed how much people across categories were spending on various items.
It is estimated that a person – in 2004-05 – needed to spend Rs. 10 in rural and Rs. 12 in urban areas to achieve the new benchmark calorie intake. Once inflation is taken into account, this required spending on food goes up to Rs. 16 for rural and Rs. 18 for urban areas.

The minimum daily expenditure required for a person was fixed at Rs. 32 in urban and Rs. 26 in rural areas after combining the money to be spent on food and non-food items. It concluded that 37.2% of Indians could not afford this daily expenditure.

But how do you identify the poor to extend benefits to them?
It is tricky. This would be done on the basis of the Socio Economic Census that started this June, the third to identify the poor since 1992.
Learning from previous exercises when similar census had thrown up exaggerated figures, the government has introduced a concept of automatic inclusion to make sure the most deprived sections of the society such as destitutes, primitive tribal groups, scavengers and the homeless make it to the poverty list.

Text: Aloke Tikku


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