The Planning Commission's recent affidavit to the Supreme Court stating that a person is to be considered 'poor' only if his or her monthly spending is below Rs.781 (Rs.26 per day) in rural and Rs.965 (Rs.32 per day) in urban areas, has exposed how unrealistic 'poverty lines' are. Some television channels assumed that these figures covered food costs alone and showed how they could not meet minimal nutrition needs at today's prices. These paltry sums however are supposed to cover not only food but all non-food essentials including clothing and footwear, fuel for cooking and lighting, transport, education, medical costs and house rent. The total is divided Rs.18/ Rs.14 for food and non-food in towns and similarly Rs.16/Rs.10 in rural areas, and includes the value of food that farmers produce and consume themselves.

Even a school child knows that working health cannot be maintained, nor necessities obtained, by spending so little. Amazingly, however, 450 million Indians subsist below these levels. One cannot say that they 'live' in any true sense: their energy and protein intake is far below normal, they are underweight, stunted, subject to a high sickness load but without the means to obtain adequate food or medical treatment. The majority belong to the Scheduled Castes and Scheduled Tribes. The official poverty lines do not measure poverty any more; they measure destitution.

The outcry against calling these destitution lines, 'poverty lines', is justified, for true poverty lines are much higher than these, and show 75 percent of all persons to be poor. Per head energy and protein intake has been falling for the last two decades as the majority of the population is unable to afford enough food. With 60 million tons of public food stocks, far in excess of buffer norms, piled up by mid-year, the sensible policy is to do away with targeting and revert to a universal distribution system, combining it with an urban employment guarantee scheme. Unfortunately the neo-liberal policy makers today ask the wrong question: 'How can we reduce the food subsidy?', and not the right question: 'How can we lift the masses of India from the current level of the lowest food consumption in the world, even lower than the least developed countries''?

Members of the Planning Commission and the Tendulkar Committee are experts, so how have such laughable figures of minimum cost of living emerged from their statistical labours? The fact is that over thirty years ago the then Planning Commission made a mistake of method, and the present Commission stubbornly continues to cling to that mistake despite its being repeatedly pointed out by many, including this author (The Republic of Hunger,2004). The mistake was to change the definition of poverty line and de-link it from nutrition standards.

The original definition of 'poverty line' was a sensible one, based on an Expert committee recommendation in 1979: using the National Sample Survey data on consumption spending, that particular observed level of total monthly spending per person, is to be called the 'poverty line', whose food spending part allowed a person to obtain 2400 kilo- calories energy per day in rural and 2100 kilo-calories energy per day in urban areas. Later the rural figure was scaled down to 2200 calories. The Commission accepted the Expert Committee's nutrition based definition but applied it only once, to the 1973-4 data, to obtain correct monthly rural/urban poverty lines of Rs 49 /Rs.56 at which 2200/2100 calories were accessible, and found that 56 percent of rural and 49 percent of urban persons spent less than this, and so were poor.

Then the Commission, for reasons unknown, changed the definition in practice, and never again directly looked at the total monthly spending which permitted nutrition 'norms' to be maintained, even though every five years the required information on this for every spending level was available – the physical quantities of food intake, and the corresponding daily average energy, protein and fat. The definition the Commission actually adopted was that the 1973-4 poverty lines were to be adjusted for inflation using a price-index, regardless of whether the lines so obtained still allowed nutritional standards to be met. Price index adjustment is being followed for the last thirty years, producing the present absurdity of Rs26/32 as rural/urban daily poverty lines.

Why these economists should have such faith in the ability of price indices to capture the rise in the cost of living is not clear. Price indices are needed for short period adjustment and are used for dearness allowance calculation, but they do not capture the actual rise in the cost of living over longer periods of time. The starting gross monthly salary of an Associate Professor in a Central University in 1973 was about Rs1, 000 which was quite adequate, since ration cards could be used; on this income one could even run a car. Applying the Consumer Price Index for Urban Non-Manual Employees which has risen 17- fold by 2011, the equivalent monthly salary for an Associate Professor joining now should be Rs.17, 000 on the Planning Commission's logic. But this would not support the most modest middle-class life-style of four decades earlier. The newly appointed Associate Professor's actual salary today is three times higher, thanks to the Pay Commissions which have periodically hiked salary grades.

Yet denying all experience and evidence, these economists assert that mere price-index adjustment is enough to obtain current poverty lines from those of 40 years ago. No wonder they have created such a mess with their unrealistic estimates. An expressive bucolic Bengali phrase is 'lyaje-gobare' or a 'cow's tail smeared with dung', and this is a good description for official estimates. As time passed, the actual spending at which minimal nutrition could be accessed, the original definition accepted by the Commission, cumulatively diverged upwards from the Commission's calculations based on its changed definition. By 2005 a rural person needed Rs.19 per day to access 2200 calories while at the official Rs.12, she could obtain only 1800 calories. (The Tendulkar Committee merely tinkered with the problem, raising the Rs.12 to Rs.13.8). An urban consumer needed Rs.33 per day in 2005 to meet 2100 calories whereas the official Rs.18 permitted less than 1800 calories. Today at the current official poverty lines of Rs.26/32 rural/urban, the minimal cost of living is even more seriously understated: the consumer can access even less food. State poverty lines vary and in a number of states the energy intake the official poverty line can command, is below 1500 calories per day.

The claim that poverty has declined is not true because the method of indexation actually used has not kept constant the nutritional standard against which poverty is measured, but has lowered it continuously. China's official poverty lines are equally absurd and for the same reason. A nutrition norm was applied in 1984 to obtain 200 yuan annual rural poverty line which thereafter was merely indexed, giving 1067 yuan by 2007, or below 3 yuan per day. This is supposed to cover all living costs but would not have bought even a single kilogram of the cheapest rice, selling then at 4 yuan according to information provided by China residents. Actual poverty in China is far higher than is claimed. One wonders if one will ever see honest estimates from official sources anywhere, since by now hundreds of economists are closely imbricated within a vast global poverty-estimating structure with the World Bank at its apex, producing increasingly misleading estimates every year in its glossy Reports. The World Bank's global poverty line is an equally large underestimate, for it is derived using ''purchasing power parity conversion'' from local currencies to US dollars, of these very same absurdly low local-currency official rural poverty lines of developing countries, including India and China.

What are the realistic poverty lines today based on the officially accepted nutritional norms? The current poverty lines allowing nutrition norms of 2200/2100 calories rural/urban to be met, are at least Rs.1085 per month (Rs.36/day) and Rs. 1800 per month (Rs. 60/ day). Since each full time worker needs to support nearly two more dependants, these correspond to a minimum daily wage of Rs.108 and Rs.180 respectively. But this is inadequate: no margin exists for medical emergencies, life cycle ceremonies, or old age. From the 2009-10 NSS data at least 75 percent of the total population is in poverty on this basis. This high level of deprivation is the rationale for going back to a non-targeted, universal food distribution system, but this will not be enough. The purchasing power of the poor has to be raised at the same time through employment generation schemes. Ironically, there has been a rise in unemployment according to the latest surveys.

* The article was originally published in The Hindu on September 30, 2011.