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Stop the dribble game

india Updated: Oct 05, 2011 21:53 IST
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Some time ago, Reserve Bank of India governor Duvvuri Subbarao expressed grave doubts regarding the reliability of basic statistics in India for real time policy formulation. The frequent adjustments to advance GDP growth estimates, the counter-intuitive trends and volatility in industrial production indices, and headline inflation data exemplified his concerns. The recent controversy over the official estimates of the poverty line also, in a way, indicates the problematic nature of identifying beneficiaries of welfare programmes.

The public outrage over the paltry Rs 26 and Rs 32 per capita limit in estimating those living in poverty in rural and urban India respectively has put the UPA government on the defensive. Henceforth, such estimates won't be used to impose any ceiling on the number of households who need food and other welfare measures.

The controversy was, no doubt, triggered over the appropriateness of the poverty benchmark. If a Rs 32 per capita limit is admittedly "very low" in times of high inflation, the World Bank's global poverty line of $1.25 fares even worse. At purchasing power parity rates of Rs 19 to $1, this works out to Rs 24 per capita. But raising it to R100 per capita makes no real difference either, as it is difficult to make both ends meet on this pittance.

The controversy brings the curtains down on a lot of academic work on poverty. Since the 1960s, a full-fledged industry thrived in churning out headcount measures of the poor. The best brains devoted their energies to put out their own estimates using different poverty lines and price indices. Interestingly, the same data supported radically different estimates - from showing that 37% of the country's population is poor to declaring the whole country a republic of hunger.

The government could pride itself that a dramatic reduction occurred on the poverty front, especially in rural India, after two decades of reform. In 1993-94, the share of India's rural population living in poverty was 37%, which declined to 28% in 2004-05, according to the Planning Commission. The Tendulkar Committee's numbers are significantly higher and show a more gradual decline over this period.

But in a trice, all this number-crunching expertise was found wanting when it came to figuring out eligibility norms for the government's food and other welfare programmes. The decades-old research on measures of poverty was only 'estimational' rather than 'identificatory' in nature. It's fine to say that 370 million people live in poverty. But who are they? So when the Supreme Court asked for norms, the commission only updated the Tendulkar Committee's poverty line estimates with the latest price indices.

What is the way forward? Certainly no more studies to estimate those in poverty. The priority must be to universalise access to welfare measures like in the case of the national rural employment guarantee programme - anyone who wants 100 days of work joins the scheme. The same should be the case for those who go hungry to benefit from the forthcoming food security legislation. The country is producing adequate foodgrains to meet the requirement.

There will be attempts to restrict the numbers of beneficiaries due to fiscal considerations. But targeting the benefits to only those below the poverty line as per the government's numbers has run its course to help with real-time policy formulation on food security and other welfare schemes.

N Chandra Mohan is an economic and business commentator based in Delhi

The views expressed by the author are personal