The way a country draws its poverty line depends on how it intends to help those found living below it. If the State takes it upon itself to buy food in the market, store it in its granaries, and deliver the requisite calories every day to the hungry, it can set up an absolute poverty line. If on the other hand, the State hands the poor money to buy food from the market, the poverty line will need to be more dynamic to adjust for rising prices. India is in the process of transiting from the first approach to the second and the recently raised decibels over how we count our poor show up the anxiety on both sides. The Planning Commission, using methods originally devised in the 1970s, estimates a village worker earning less than Rs26 a day (Rs32 in a town) is living in abject poverty. These figures have raised eyebrows in court and stirred outrage among the nation's increasingly vocal drawing room liberals.
Montek Singh Ahluwalia, the government's chief planner, has stuck to his guns. He argues this is the hopeless core of Indian poverty. The numbers have been drawn up on the premise that people earning less than Rs26 a day are spending all of it on food - they can't buy medicines and send their children to school. With entitlements for universal health and education in the government's welfare pipeline, Mr Ahluwalia wants cheap food - another entitlement in the making - to reach these 400 million people first. Prodded by a council that advises UPA chairperson Sonia Gandhi on social conscience, Mr Ahluwalia is ready to include another 100 million people in this list. Widening the list further carries a risk. Entitlements can easily become meaningless if they are spread too thin. There is only so much food, or money for schools, and India's experience shows narrowly targeted welfare works better.
Mr Ahluwalia is sitting in the centre of a perpetual storm over the beneficiaries of India's emerging social security system. Shiploads of money is involved, hence turfs are fiercely guarded over who gets to identify the needy. Vote banks also get delineated in socio-economic censuses. State governments, which stand to gain both economically and politically by over-reporting their poor, are reluctant to leave the count to the Centre. On the other hand, fiscal pressure heightens central government's incentive to understate the incidence of poverty countrywide. However, universal entitlements and income transfers address both the free rider problem and exclusion in welfare delivery. To make serious gains in poverty alleviation, we first need a fair count of our poor.