Fault lines in the Great Indian Poverty debate

Gaurav Bhattacharya

There has been a long standing debate known as the “Great Indian Poverty” that argues the current methods and estimations used for defining poverty lines in India. This article critics the policy and measures.

At present the National Sample Survey Organisation (NSSSO) in India follows a uniform poverty basket to measure the total Head Count Ratio (HCR) during the surveys. The NSSO is one of the world’s largest household survey programme based on random sampling method pioneered by the works of P.C Mahalonobis and Sen in the 1940s.

Several academics over the years have stated that the poverty estimation methods in India fail to differentiate the real poor from the assumed poor while the numbers depicting reduction in overall poverty are highly overestimated. This particular article highlights the concerns of the major exclusion that the rural poor face due to such faulty estimates. The article also advocates the need of including calorie indicators to measure poverty for the rural poor.

There is significant amount of literature available, including the most recent works of Deaton and Dreze that depict the fact how income poverty is completely different from being calorie poor. Since the earliest times it has been observed in countries like China and The Great Britain that increase in real wages do not always result in better food security for the households. In the rural area’s many primitive households are not included in the official poverty basket due the faulty methods used the sample survey’s, which do not take into account calorie measurements.

There is substantial amount of evidence available to depict that there will be major statistical shift in the number of poor if the poverty methods include the monthly calorie consumptions. It has been previously depicted that the average household per capita consumption units have declined for the rural poor tremendously since the last couple of years. In figures, the average calorie consumption in most of the rural households has declined from 2, 240 calories in 1983 to 2,233 in 1987-88, and 2,047 calories per head in 2004-05 (Rao, 2005, Palmer-Jones 2001, and Sen 2001).

There has been an overall 8.6 % decrease in the per head calorie consumption of rural households while simultaneously the countries producing power grew at large post trade liberalisation is only surprising to observe that the estimated gross domestic product (GDP) in India grew at 3.25 % between the period of 1980-2005 and then 5.4 % from 2000-2005 and recently showing a 7.25 % increase at the same time when the average calorie consumption rates where tremendously falling. This explains the grim picture of how GDP indicators in a country like India is a just a numeric myth and increase in purchasing power do not lead to better food security estimates for the rural poor.

Some of the results on the rural calorie consumption have been highly overestimated because the sample size selected for the study does not include the actual food insecure households that are excluded because of socio-economic and geographical conditions. The NSS surveys are inapt of calculating calorie shortfall and should not be taken as real time estimate methods.

One of the challenging aspect of such a method is that it does not concentrate on the parameters of skipping meal and does not take into account the percentage of households who are procuring the exact amount of ration from the PDS. Additionally, it does not focus on categorising the average monthly purchases made by a household excluding the PDS.

The expert committee group set up under the chairmanship of Mr R. Tendulkar known as the Tendulkar committee, formulated a uniform poverty basket for the rural poor without including parameters that identify households based on per capita grain expenditure. Notably at a state level we observe that only 39.6 % of the total rural households identified as poor using the current estimate are identified as beneficiaries. This also which means that 60.4 % of the rural households are not even included as poor by the Ministry of Rural Development (MoRD). Such a method is categorically non- transparent, cumbersome and in most cases non-verifiable.

The recently revised (C Rangarajan committee) poverty estimates presented to the current government categorise people as poor who spend less than Rs 32 a day in rural areas. This was done after the previous estimate was heavily criticised for having an extremely low poverty line. Unfortunately, such an estimate is heavily inclined towards an income criterion not taking into account the additional monthly purchases exclusive of PDS. There is empirical evidence from many backward states to show that for a household to reach the average calorie mark, the family has to spend additionally borrowing money from informal sources and purchase grains. This is also a result of a dysfunctional PDS in several rural areas. Since the average expenditure on grains is not taken into account in the poverty estimation method a household would end up spending much more than that Rs 32 on a daily basis to acquire grains. In this process even though the basic earning of the family is much lesser than Rs 32 they are not included as poor by the state. Several such households now depend on informal credit sharing acquiring major debts to purchase food grains. Further the removal of the consumer price index for agricultural and rural labourers (CP-AL) from poverty estimation methods has excluded a majority of small and marginalised farmers from being included as poor.

It is important to realise that there are several primitive rural households in India who are only dependant on the delivery of the governments welfare services as security nets. Thus is it extremely important that the actual beneficiaries are able to obtain benefits from the various welfare policies. Rightful identification of eligible households is a must in context to the rural poor in India and thus every reform and effort must be made for maximum inclusion.

The article was originally published in The Dialogue and has been republished under a collaborative partnership arrangement.