The
report of the expert group on the estimation of poverty
led by Professor Suresh Tendulkar has been submitted
to the Planning Commission. Apart from issues of comparability
of data across NSS rounds, the most important ToR
for the committee was to ''review alternative conceptualizations
of poverty, and the associated technical aspects of
procedures of measurement and database for empirical
estimation'' of poverty in India.
Poverty, of course, is a multi-dimensional concept.
However, official statistics in India have always
referred, arguably narrowly, to only income poverty
(using the proxy measure of consumption expenditure
from the NSSO surveys). In India, we have been using
a calorie-based procedure to fix the poverty line
as the minimum level of expenditure that would enable
a person to purchase a specified food basket. A task
force of the Planning Commission in 1979 defined the
poverty line as that per capita expenditure at which
the average per capita per day calorie intake was
2400 calories in rural areas and 2100 calories in
urban areas. This task force used age-sex-activity
specific calorie allowances recommended by a Nutrition
Expert Group in 1968 to estimate the average daily
per capita calorie requirements for rural and urban
areas. Estimates of average expenditure incurred by
that population in each State that consumed these
quantities of calories as per the 1973-74 survey of
NSSO were fixed as poverty lines.
Based on the observed consumer behaviour in 1973-74,
it was estimated by the task force that an expenditure
of Rs 49.09 per capita per month was associated with
a calorie intake of 2400 per capita per day in rural
areas and Rs 56.64 per capita per month with a calorie
intake of 2100 per day in urban areas. These poverty
lines were updated for future years by simply accounting
for the changes in consumer price indices. As such,
the all-India poverty lines updated for 2004-05 were
Rs 356.30 in rural areas and Rs 538.60 in urban areas,
all per capita per month. The shares of population
below these poverty lines (the head count ratios;
HCR) were estimated to be 28.7 per cent in rural areas
and 25.9 per cent in urban areas.
These estimates of poverty threw up a number of controversies.
First, the NSSO estimates of poverty were arrived
at using poverty lines that were extremely low in
levels. An amount of Rs 356.30 per month per person
amounted to just Rs 11.90 per day in rural areas,
which was at best a destitute income. The fact that
about one-fourth of India’s population did not incur
even this level of expenditure was in itself a revealing
point.
Secondly, the levels of poverty and deprivation reported
from independent surveys, including village surveys,
were far higher than the NSSO estimates of poverty.
Thirdly, the NSSO estimates were at great variance
with estimates of nutritional outcomes that other
surveys like the National Family Health Survey (NFHS)
provided. For instance, according to the NFHS-3 in
2005-06, the share of underweight children (under
3 years) in rural India was 44 per cent and the share
of stunted children in rural India was 41 per cent.
Among women in the age group of 15 to 49 years, 58
per cent were anaemic and 39 per cent had below normal
body mass index (BMI).
Fourthly, there were major methodological issues involved
in the use of consumer price indices, continuously
re-weighted keeping the 1973-74 consumption basket
unchanged, to update the poverty lines over time.
The consumption basket of rural and urban persons
had changed significantly after 1973-74. One striking
absurdity that resulted was that in some States, urban
poverty rates were estimated to be higher than the
rural poverty rates.
The Tendulkar committee has reviewed the present methodology
for measuring poverty and has suggested major changes
for the future. These changes may be crudely summarised
as follows:
-
Given the poor correlation between calorie consumption
levels and nutritional outcomes, the calorie-norm
for estimating the poverty line should be abandoned.
Instead, the committee has suggested a new method.
-
This
new method involves the consideration of the present
all-India urban poverty line as the basis for every
other poverty line. This consideration is justified
on the basis of two independent validating reasons:
(a)
The population that corresponded in 2004-05 to the
poverty line expenditure in urban areas consumed
1776 calories per capita per day, which was close
to the calorie norm of 1800 calories per capita
per day suggested for India by the Food and Agriculture
Organisation (FAO).
(b) The actual levels of per capita expenditure
in urban areas in 2004-05 were also sufficient to
meet a defined ''normative level of expenditure
on education and health services''.
-
The
all-India urban poverty line has to be consistently
estimated based on the mixed reference period method
(using a combined 365 days and 30 days recall) rather
than the present uniform reference period method
(using a uniform 30-day recall).
-
With the present all-India urban poverty line as
the basis, the Committee has recommended the identification
of its parity levels at the State-level for rural
and urban areas separately. Thus, applying purchasing
power parity (PPP), separate rural and urban poverty
lines are to be estimated for each State at which
the levels of consumption in the urban areas can
be sustained.
-
It
is thus postulated that the new poverty lines, fortuitously,
meet not just food expenditure requirements, but
also those of education and health that are important
basic needs.
Using
the above method, the new poverty lines for 2004-05
have been re-estimated by the committee as Rs 446.68
for rural areas and Rs 578.80 for urban areas (per capita
per month). Using these poverty lines, the HCRs in 2004-05
were estimated as 41.8 per cent in rural areas and 25.7
per cent in urban areas. These new estimates are an
upward revision in rural areas from 28.7 per cent as
per the old method, and a slight downward revision in
urban areas from 25.9 per cent as per the old method.
The upward revision in the rural areas is due to the
use of the PPP method, which has reduced the urban-rural
price differentials implicit in the present method of
estimation.
The upward revision of rural poverty by the committee
is indeed a welcome step, as this would help States
to expand their BPL coverage in the public distribution
system (PDS) using grains from the central quota itself.
It is also welcome that non-food expenditures like those
on education and health have not just been included
(in fact, there was an allowance in the earlier method
too), but also that provisions have been made to update
them across time. However, these steps solve only a
part of the problem, as the system of targeting in welfare
schemes like the PDS is likely to remain in place and
large sections of poor people above the new poverty
line would remain outside targeted welfare provisions.
Take an example: the new poverty line for rural areas
has been revised from Rs 356.30 per capita per month
to Rs 446.68 per capita per month. In daily terms, this
means an increase from Rs 12 to Rs 15 per capita. This
is just a meagre upward revision. For urban areas too,
the increase is meagre; the revision of poverty line
is from Rs 538.60 per capita per month (Rs 18 per day)
to Rs 578.8 per capita per month (Rs 19 per day). In
other words, the new poverty line continues to be extremely
low in levels and keep a large section of the population
outside the definition of the ''poor''.
Juxtapose this with the fact that 77 per cent of the
population lived at less than Rs 16 per day with respect
to expenditure in 2004-05. In 2004-05, the average MPCE
of those households with expenditure less than double
the poverty line (i.e., of the 77 per cent; the ''poor
and vulnerable'', as classified by the NCEUS report)
was only Rs 486, or Rs 16 per day. If the average expenditure
stands at Rs 16 per day, there is likely to be a sizeable
section of the population above the newly suggested
poverty line of Rs 15 per day in rural areas and Rs
19 per day in urban areas. In a targeted welfare provision,
these sections of the population would remain to be
excluded.
Another central question is whether abandoning the calorie
norm is a wise step or not. It is true that calorie
intakes were poorly correlated with nutritional outcomes
(as in the famous case of Kerala). However, abandoning
the calorie norm altogether and taking solace from the
fact that calorie intakes appear to be adequate at the
new poverty lines is an overstretched and arbitrary
proposition. It is unclear whether there is any basis,
theoretical or empirical, for this relationship to hold
at all the years to come.
The Tendulkar Committee report is the latest input to
the ''Great Indian Poverty Debate''. The reason for the
rising contestation around poverty data in the recent
years is the use of HCRs to arbitrarily fix the number
of households eligible for many important welfare benefits,
such as the PDS. In this method, the questions of estimation
of the number of poor and the identification of the
poor remained separate processes, and were thus open
to bizarre policy outcomes. It is for the absence of
a reliable method of combining estimation and identification
that political and social movements have been demanding
universalisation of welfare provisions like the PDS.
The Tendulkar Committee report itself is evidence to
the fact that levels of poverty are extremely sensitive
to even minor changes in the poverty line.
While the increase in the number of poor households,
as suggested by the Tendulkar Committee, may indeed
help expand the coverage of welfare schemes, it would
still fall short of including all the needy sections
from the ambit of such schemes. One would welcome the
newly suggested methodology for arriving at a strictly
technical measure of poverty. However, it is important
to insist that the new estimates are not mechanically
linked to the issue of eligibility to access major welfare
schemes. In a country with such mass poverty as India,
universalisation remains the most efficient tool for
ensuring livelihood security. |
