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A very crooked line

India refuses to apply global standards of calculating poverty.

india Updated: Apr 01, 2012 22:40 IST
Prahlad Shekhawat

It is worrying that the Tendulkar method, chosen by the Planning Commission to calculate the poverty line in its latest figures, underestimates the levels of poverty while overestimating poverty reduction. The figures show that 29.8% or 360 million Indians were poor in 2009-10 as compared to 37.2% or 400 million in 2004-05. A poor person has been defined as one who spends R28 per day in urban areas and R22.5 in rural areas. Biraj Patnaik, the food commissioner appointed by the Supreme Court, has dismissed the estimates as an insult to the poor.

There has been a greater reduction of poverty in states where the rural employment guarantee scheme and the public distribution system are working well. The general rise in wages, particularly in urban areas, tends to be offset by inflation. Those who demand the abolition of social welfare schemes and subsidies because they do not reach the beneficiaries need to reflect on that.

Gujarat is an example of a state with a very high growth trajectory, where an active chief minister has managed economic development in some spheres but has not been able to ensure progress in all-round human development, especially in education, health, living standards, equity, and justice for and rehabilitation of riot victims from the Muslim community. Kerala is quite the opposite, where the excellent human development record is not complemented by good growth.

The World Bank's estimate of poverty in 2007 has been radically revised by the new cost-of-living data which draws the new poverty line at $1.25 at 2005 purchasing power parity. On this basis, a shocking 41.6% of India's population - or 456 million people - live below the poverty line, notes Prof Raghav Gaiha. Even this data is insufficient as it does not adequately cover the rural areas where the majority of the poor live.

India wants to be a globally respected world power but refuses to apply global standards of calculating poverty. Thandika Mkandawire, director of the UN Research Institute for Social Development, noted that the Indian government's claims of poverty reduction are not reliable: "... Indian data is always controversial."

The multidimensional poverty indicators developed by the Oxford Poverty and Human Development Initiative and accepted by the Human Development Report, 2011, are perhaps the most reliable measures developed so far. They include: years of schooling, child enrolment, mortality (any age), nutrition, electricity, sanitation, drinking water, flooring, cooking fuel and asset ownership. The new Inequality Index elaborates the nature of disparities. According to this calculation, the proportion of BPL families in India is 55.4% of the population. These indicators are desirable, having been applied by an independent international agency, and being comprehensive measures that can either form a single index or can be disaggregated into separate dimensions. Policy makers can thus figure which dimension or dimensions is/are most responsible for poverty and deserve special attention.

Montek Singh Ahluwalia, deputy chairman of the Planning Commission, argues that the Tendulkar method was chosen because it has been used for a while now and consistency helps in comparing levels of poverty over a period of time. This is illogical because the poverty line could be revised upwards for earlier surveys to get the consistency.

So why does the Planning Commission and the government hold on to outdated modes of calculation over methods that are more in line with standards provided by the World Bank and United Nations Human Development Reports? It seems the arbitrary poverty line provides an excuse for the government to cap budget allocation for social welfare. It also helps the government to claim that high growth trickles down, resulting in substantial poverty reduction.

The UNDP's research wing has analysed data from over 40 years to show that social and economic development happens due to systematic and effective investments in education, health and equitable living standards. Also after the recent financial crisis in the West, the global economic downturn and growing unemployment and inequities, the fragility of the GDP-led endless growth model has been exposed.

As Amartya Sen has been insisting for a very long time, high economic growth is meaningless as an end in itself and should be a means for achieving goals like education, particularly for girls, health, employment, equity, social justice and inclusive participation. Unfortunately, Sen's wisdom has been consistently denied by his own country, even while global bodies like the UNDP is following his advice.

Prahlad Shekhawat is director, Alternative Development and Research Centre, Jaipur. The views expressed by the author are personal.