The multitude of data on poverty
generated by various panels wont help till suitable action
is taken
There was an Internet-based
debate on growth versus poverty. Using some of this material
and adding more, the Consumer Unity and Trust Society (CUTS)
put together a volume that was recently released in Delhi by
Montek Singh Ahluwalia. From his talk there, one learnt that
using the Tendulkar methodology, the poverty ratio in NSS
66th Round of 2009-10 would have been around 32%. But
because that was a drought year, NSS was redoing the survey
and one would, therefore, not have poverty numbers till
2014.
There are too many red herrings
floating around on poverty numbers. Poverty is a
multi-dimensional concept. It is no one’s case that the
minimum level of income or consumption expenditure is the
sole criterion for identifying someone as below poverty line
(BPL) or above poverty line (APL). Since the Alagh Committee
of 1979 and Lakdawala Committee of 1993, Planning Commission
used NSS large samples and calorie norms to work out poverty
numbers. In 2004-05, using this old Planning Commission
methodology, national poverty ratio was 27.5% and poverty
was concentrated in Bihar, Chhattisgarh, Jharkhand, Madhya
Pradesh, Orissa, Uttar Pradesh and Uttarakhand. The
Tendulkar Committee moved away from calorie norms and
computed all-India poverty ratio of 37.2% in 2004-05. If one
does an apple-versusapple comparison, poverty declined by
around 1% a year.
To muddy waters further, the
National Commission for Enterprises in the Unorganised &
Informal Sector (NCEUIS) created a new poverty line of . 20
per person per day — compared to official poverty line of
around . 12 per day — and using same data for 2004-05,
estimated that 77% of the country’s population was BPL, and
poor and vulnerable. There are also international poverty
lines of $1.25 per person per day and $2, at constant 2005
prices. About 37% of India’s population lives on less than
$1.25 per day and 75.6% on less than $2 per day. Since
poverty isn’t only about income or expenditure poverty,
there are Millennium Development Goals (MDG) too. This has a
system of goals, targets and indicators, and an MDG report
for 2011 has just been published.
On reducing poverty ratios by
half by 2015, it states, “India has also (China being the
other country) contributed to the large reduction in global
poverty. In that country, poverty rates are projected to
fall from 51% in 1990 to about 22% in 2015.” In the same
vein, there is HDI, based on education (literacy and gross
enrolment ratio), health (life expectancy) and PPP
per-capita income. Human Development Report (HDR) makes the
point that, so far, India’s improvement in HDI has been
driven fundamentally by income growth. That is, we haven’t
done that well on education and health.
There are also state-level HDRs
and from these, we know that backward states are Bihar,
Uttar Pradesh, Madhya Pradesh, Orissa, Rajasthan,
Chhattisgarh and Rajasthan. In recent times, HDRs have also
introduced a multi-dimensional poverty index (MPI), and this
tells us that problem states are Bihar, Jharkhand, Uttar
Pradesh, West Bengal, Maharashtra and Madhya Pradesh. There
are intra-state divergences too. Consequently, if one pins
down backward districts, one will find most of these are in
Bihar, Madhya Pradesh, Jharkhand, Chhattisgarh, Orissa,
Rajasthan and Uttar Pradesh. But all these are mere numbers.
We should ask several questions. First, are people willingly
poor? At best, there can be a qualification for the old,
disabled and households where head of the household happens
to be a woman. These apart, people in working-age groups do
not wish to be poor. Income growth and liberalisation
ensures such people are no longer poor. As a minor
statistical point, income and expenditure distributions
aren’t symmetric.
They are log normal, with a
thick part towards the left. As soon as this thick part of
the distribution passes above the poverty line, however that
happens to be defined, there will be sharp drops in poverty.
This has already begun to happen for India and will
continue, assuming we can ensure that growth continues. In
states that have grown, there have been such sharp drops in
poverty: Punjab, Haryana, Kerala, Tamil Nadu, Gujarat,
Andhra Pradesh and Assam. Second, even if people do not wish
to be poor, they may be stuck because they do not have
access to education and skills, health services, market
information, technology, financial products, roads,
electricity, water, sewage and sanitation. This is the
poverty trap. But then, the answer is to efficiently provide
these public goods or collective private goods. If such
people continue to be poor, that is because in more than 60
years, these goods and services haven’t been efficiently
provided, notwithstanding colossal amounts of public
expenditure.
People may also be poor because
they are stuck in subsistence-level agriculture and have no
other employment opportunity. If such people are poor, that
is because in more than 60 years, we haven’t been able to
reform agriculture and the rural sector. Nor have we
efficiently provided skills. Third, poverty results from
lack of integration. There are sections in the Constitution
that prevent this: Articles 370-371 and Schedules V-VI.
Fourth, are scheduled castes, scheduled tribes, other
backward classes and Muslims deprived because they belong to
these collective categories, or are they deprived because
they lack access to public or collective private goods?
Poverty is an individual household characteristic. It is
imperfectly captured by such collective identities. Fifth,
in the intervening period, we might need to subsidise the
poor. But unless we recognise the household nature of
poverty and decentralise identification, we will go round
and round in circles, notwithstanding Aadhaar. That is the
reason we will have plenty of numbers and precious little on
policy.
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