Poverty up, poverty down

In April, India's Planning Commission accepted recommendations put forth by the so-called Tendulkar Committee on a new poverty headcount for the country. Constituted by the Planning Commission under economist Suresh D Tendulkar, the committee, after four years and a new methodology, arrived at a new figure for the number of Indians living below the poverty line: 37.2 percent, ten points higher than the previous official figure. With the government's subsequent official acceptance of the recommendations, these numbers now translate to roughly 407 million people, compared to the earlier number of 297 million, living on around USD 1.15 per day.

The Tendulkar numbers are the latest addition to the longstanding debate in India over how 'poverty' should be defined. This includes the practical difficulties involved in assigning a number to it, but also the linking of that number to critical policy issues, such as government welfare schemes – and, of course, the implications of globalisation, neoliberalism and India's economic reforms post-1991. While over the past two decades India has seen growth rates of gross domestic product (GDP) that were high by historical standards, their impact on overall deprivation remain highly contested. Officially, poverty numbers showed a decline from 36 percent of the population in 1993-94 to around 27 percent in 2004-05. But those numbers have been fiercely contested, with economists from all corners wading into the statistical rat's nest to try to prove that the figures suggested either too much or too little reduction in poverty.

Poverty calculations in India have been both pioneering and controversial. In 1971, economists V M Dandekar and Nilkantha Rath suggested a nutrition-based norm for calculating a poverty line, arriving at the figure of 2250 calories as the minimum daily requirement for the average Indian. Eight years later, a Planning Commission taskforce tweaked this a bit, to set the norms at 2400 calories for rural areas and 2100 for urban areas. But over time it was observed that the stipulated calorie norms were not being met at the official poverty lines, a fact formally noted in 1991 by the economist Rohini Nayyar.

110 million more
Eventually there emerged something of a consensus among non-government economists that the figure of 27 percent underestimated real poverty levels – though by how much, no one really knew. There were other glaring discrepancies in the official poverty numbers, too. In 1979, the Planning Commission defined the poverty line as the per capita expenditure with which a person could afford to consume a minimum number of calories per day. Based on 1973-74 consumption patterns, as reported by the National Sample Survey Organisation (NSSO), the money deemed necessary was fixed at INR 49 rupees (rural) and INR 57 (urban) per month. Since, then the poverty line(s) have merely been adjusted for inflation. Thus, in 2004-05, the rural/urban poverty lines were INR 538/356 rupees per month, making for a ridiculously low figure of INR 11.86 per day for rural areas – more of a 'destitution' line. Independent surveys have likewise indicated that poverty levels are higher than those fixed using NSSO data.

With an eye to correct this discrepancy, the Tendulkar Committee began its reappraisal by abandoning the calorie norm and taking the (pre-Tendulkar) all-India urban poverty line as correct, a line that was then applied to rural areas to calculate a similar line at purchasing-power parity. The urban poverty line was taken as the basis because it was observed that the urban population in 2004-05 that matched the poverty-line expenditure was consuming roughly 1770 calories per person per day. This was well below the 2100 calories fixed by the government, but corresponded to a calorie norm of 1800 recommended by the UN Food and Agriculture Organisation (FAO) for India. It was this exercise that pushed the rural poverty line from 28 percent up to 41.8 percent, while keeping the urban poverty line nearly constant at 25.7 percent, thus yielding an all-India figure of 37.2 percent as opposed to the previous 27.5 percent.

One other point bears mentioning. The 1973 NSSO analysis was predicated on the belief that a poor person's income would be spent mostly on procuring food. Although education and health were recognised as necessities, it was presumed that these would be publicly provided. The Tendulkar Committee revised this assumption, given that over the last two decades the state has been gradually retreating from the provision of essential services. Subsequently, the new figures are based on spending for food, education and health.

The ramifications of this reappraisal are indisputably significant. For one, the government's acceptance of the new poverty numbers will mean a substantial additional financial burden – adding an additional 110 million people's worth of subsidies for food grains, cooking gas, old-age pensions and more. Dipa Sinha, an activist with the Right to Food campaign (which believes that the state has primary responsibility for guaranteeing basic entitlements), says that the new numbers were accepted only grudgingly by the government, under pressure from the Congress party (read: Sonia Gandhi). 'Anyway, the Congress manifesto mentioned providing rice and wheat at three rupees a kilogram, and the high command was clear that what was in the manifesto was the minimum they should be doing,' Sinha said. 'What they might try to do is dismantle the government's Public Distribution System (PDS) and give cash directly.'

A report prepared by the Ministry of Finance's top bureaucrats provides some clues about the direction in which the economic winds are blowing. On the PDS, the Economic Survey 2009-10, released in February, states:

An altered system [that], once in place, will be no more costly to run than the existing one and is likely to be much more effective … The two planks of this system are (i) the subsidy should be handed over directly to the households, instead of giving it to the PDS store-keeper in the form of cheap grain and then have him deliver to the needy households and (ii) the household should have the freedom to choose which store it buys the food from. For the success of this 'coupons system' what is needed is an effective method of identifying the poor.

Weakening the PDS would be a bad idea warns Sowmya Kidambi, a longtime leader with the Mazdoor Kisan Shakti Sangathan (MKSS) of Rajasthan, one of the prime movers behind the National Rural Employment Guarantee Act (NREGA). 'The scope for protest would be shattered if people are made dependent on government cash handouts,' she wrote in an e-mail to this writer, 'because no one would risk upsetting the government for fear of losing cash.'

A few rupees, more or less
So how exactly will India's new poverty headcount affect government policy? Will the numbers actually be plugged into existing government schemes, or will they be treated as simply another number, as some have already warned? In 1993, an expert group on poverty estimation explicitly stated that the poverty lines at that time should not be used for the purpose of targeting public programmes. But for all practical purposes, of course, poverty lines have been used to determine allocations for public programmes such as distribution of food grains through the public distribution system for above and below the poverty-line populations (called APL and BPL).

One such legislation is the proposed bill on food security. Will the Tendulkar Commission's poverty numbers be used to decide who gets subsidised foodgrains? It is already fairly clear that, the upward revision notwithstanding, the new poverty lines will still leave out people who have a genuine need for subsidised government food schemes. 'Suppose the poverty line corresponds to a daily expenditure of 18 rupees per person,' says Dipa Sinha. 'Does that mean that a person who earns 19 rupees is doing fine, and will be excluded from targeted programmes? Fixing a poverty line will always contain an element of arbitrariness.' Consider the fact that the Tendulkar Committee recommendations raised the rural poverty line from a per-day earning requirement of 12 to 15 rupees, while the urban poverty line went up from 18 to 19 rupees per day. An increase of a few rupees was enough to push 100 million more people below the poverty line.

On the whole, Southasian countries score very low on a host of development indicators. Till such time as these are brought up to a minimum acceptable standard, it would be an abdication on the state's part to exclude people who are nominally above the poverty line from welfare programmes. Yet given the multi-dimensional nature of poverty and deprivation in the region, a single poverty line might be insufficient. Economic and social deprivation, after all, occur in multiple, non-coincident forms. A person who has access to potable water might not have a primary school in the vicinity, and someone else who has access to water and education might not have access to hygienic toilets or primary health centres. If government programmes have to be targeted, understanding the nature of derivation of the target population would inevitably help to serve them better. For instance, a targeted food programme would take into consideration malnutrition rates, while a literacy programme would take as its starting point school dropout rates.

The Tendulkar Committee has suggested abandoning the 'calorie norm' calculated according to 1970s consumption patterns. In the years since then, consumption patterns have almost certainly changed, which was not reflected in subsequent poverty-line calculations. National Sample Survey data in subsequent years have showed that people have been consuming far less than these minimum requirements, for which there are currently two general explanations. One view argues that people, as they grow richer, start consuming more milk, fruits, eggs and meats, rather than getting much of their energy from cereals. 'The per capita consumption of rice and wheat has been coming down,' says Suresh Tendulkar. 'I think the food consumption has been shifting to non-cereals, and this change also applies to poorer sections of the population' – meaning that poorer sections are also getting richer. The other view holds that people are eating less because less food is reaching them, through the PDS and other channels. As the prices of non-food items have increased and wages stagnated, people inevitably began to cut down on food. According to economist Utsa Patnaik, annual foodgrains availability per capita had fallen from 177 kg in the early 1990s to 154 kg by 2003-04. This, she says, is further accompanied with an absolute decline in incomes and purchasing power for a majority of the population.

These explanations tend to broadly mirror views over the impact of the liberalisation of the Indian economy. Commentators on the right hold that the reforms have unleashed prosperity and increased purchasing power. This has led to increased consumption of fish, eggs, meat, fruits and milk, thus  pushing up their prices and leading to inflation. Commentators on the left, meanwhile, argue that economic liberalisation has led to a systematic downgrading of government services, including the PDS, which in effect means that people are eating less than they did in previous years. The Tendulkar   Committee's intervention has now thrown light on a phenomenon that otherwise slips under the radar screen of most middle-class Indians. But in fact, the report is merely an indicator of the sorry state of affairs in the 'emerging superpower'. Delivering the millions from absolute poverty will clearly take another level of undertaking altogether.

~ D Tushar is a New Delhi-based filmmaker, photographer and writer.