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Truth, tale and statistics: poverty data sparks debate

Just how many people has the government lifted out of poverty? The answer to that question is critical in a year of elections but clouded by controversy over how the all-important "poverty line" has been fixed. Gaurav Choudhury analyses.
Hindustan Times | By Gaurav Choudhury, New Delhi
UPDATED ON JUL 25, 2013 08:10 AM IST

Just how many people has the government lifted out of poverty? The answer to that question is critical in a year of elections but clouded by controversy over how the all-important "poverty line" has been fixed.

Critics feel the line -- a level of income level below which families are considered poor -- was set too low, allowing the government to show that millions moved out of poverty on its watch, a handy claim to make with state and national polls looming.

The Planning Commission estimates that the number of poor in the country has gone down from nearly 37 % of the population in 2004-05-the year the ruling UPA came to power -- to 21.9% in 2011-12. In other words, an additional 137 million people in India now earn more than the threshold Rs 27.2 a day in rural areas and Rs 33.3 in cities.

A poverty line at this level implies a monthly income of Rs 5,000 for a family of five in urban areas, but even those earning substantially more consider themselves short of money.

"Kya bachta hai? (What's left?)" grumbles Bhavni Devi, a roadside cigarette vendor in Delhi's Connaught Place who earns about Rs 15,000 a month.

India follows the Tendulkar Committee's formula, which calculates poverty based on monthly spending on food, education, health, electricity and transport.

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 poverty numbers may have been more.

A leading development economist, who did not wish to be identified, termed the Tendulkar committee poverty basket as inadequate and based on "circular arguments" for which no explanation has been provided in the report.

"The Tendulkar poverty basket expects a person to spend one rupee per day on health - barely enough to buy an aspirin," he said.

After all, according to the World Bank, India accounts for 33% of the world's poor defined as those earning less $1.25 a day. There are 400 million such people in India, the World Bank said in a report "The state of the poor: Where are the Poor and Where are the Poorest," released in April this year.

Critics point out that it is difficult to argue that at a family earning Rs 5,000 is poor and one with an income of Rs 5,200 is not.

Former chief statistician of India Pronab Sen said that it is absolutely necessary to keep the definition of poverty line constant. "Once you have accepted the definition of the poverty line, you have to stick to it. Any poverty line cannot keep on changing. It should be adjusted only for inflation," Sen said.

One the primary uses of the poverty estimates is to provide subsidised entitlements to the poor and this has added to the current debate.

"This controversy did not exist earlier. The poverty line should be used purely as monitoring device to gauge how the incomes of a group of people have changed over time," said Sen.

Who's poor and what it means

There are also concerns about inequitable growth.

"Social schemes, such as NREGA have helped make people's lives better. But is this fast enough and deep enough? Poverty is not just economic disadvantage but social disadvantage. My feeling is improvement for SCs/STs and Muslims have been much slower," said Harsh Mander, a social activist.

But, taken at face value, there still appears to be plenty to cheer in the numbers.

"If accurate, the poverty numbers demonstrate the role of public support programmes like PDS and NREGA, along with growth, in contributing to the reduction. For instance, Odisha which has a good PDS and has delinked the coverage of the PDS from the Planning Commission's poverty estimates, is one of the states that has seen the highest poverty reduction in this period," said Reetika Khera, assistant professor of economics at IIT Delhi.

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