LM: New report shows increase in rural poor: August 21, 2009

Conventionally, poverty in India has been measured through a minimum household consumption level estimated by the National Sample Survey Organisation, part of the Central Statistical Organisation, the apex statistical body. This measure was anchored in the per capita calorie norms of 2,400 (rural) and 2,100 (urban) per day. The existing official poverty line was originally defined in terms of per capita total consumption expenditure at 1973-74 prices; while the original reference basket of goods and services was left unchanged. This is periodically updated by an expert group, using state price indices. However, the calorie count—which measures individual consumption—assumed in the original poverty line in 1973 has not changed.

Now, the expert group has completely reordered these norms by doing away with the upper bound for the calorie count per person, standardized the price indices and at the same time expanded the criteria to include education, health and actual spending on rent and conveyance as part of the individual’s consumption basket.

The committee justified this shift on the grounds that: the consumption basket of the poor was getting upgraded with the rapid economic growth and rising living standards; the crude price adjustment for inflation was leading to implausible results, wherein urban poverty ratio was higher than that of rural areas in some states; the Consumer Price Index for Agricultural Labourers that was used for measuring inflation for the rural population tended to understate the price rise and hence the extent of rural poverty; and the earlier measure of poverty did not cover private expenditure on education and health, which have been increasing over time.

The impact

This fundamental shift in approach, explains an official familiar with the findings, recognizes fundamental changes in the economy and revisits basic assumptions on poverty. In the 1970s, the implicit assumption was that it would be difficult for a BPL person to break free of the shackles of poverty; hence the response of public policy was to prevent starvation. In the new millennium, in a fundamentally transformed economy, by including health and education, the expert group has implicitly asserted that these are requirements for someone to come out of poverty.

According to Harsh Mander, Supreme Court commissioner on the right to food, if Tendulkar has included education, health and actual spending on rent, it’s a very good idea and a reasonable measure of poverty. “Today, a street child can earn up to Rs100 a day. By convention he should be out of poverty, but does he have the shelter and facilities to educate himself and get health benefits?”

Mander also said that expert groups and the government deliberately minimize one’s satisfaction levels so that the quantum of government expenditure on anti-poverty measures is reduced. “Food consumption and per capita income are narrow measures of poverty. It is necessary to improve one’s capabilities in order to move one out of poverty, and education, shelter and good health help doing that.”

He added that even Arjun Sengupta has said over 76% of people in India are poor.

The National Commission for Enterprises in the Unorganized Sector (NCEUS), in a report brought in 2007, said that a majority of the population, 77%, subsists at incomes just above the poverty line, at Rs12 per person per day, and much below the prevailing minimum wages, which range between Rs40 and Rs150 a day across most states. Sengupta was the chairman of the commission.