Wednesday 7 August 2013

Poverty Estimates for 2011-12: The Facts and the Debate-Part-II


            In the first part of this article we discussed some basic concepts about poverty and poverty line. In this part we will discuss methodology and recommendations of the Tendulkar Committee and the data regarding poverty estimates presented by the Planning Commission for the year 2011-12.  As per these estimates All India poverty lines have been drawn at Rs.1000/- per capita per month for urban areas and Rs.816/- per capita per month for rural areas. The percentage of people below poverty line has been estimated to be 25.7% in rural areas, 13.7% in urban areas and 21.9% for the country as a whole. The number of people below poverty line was estimated to be about 27 crores.

Report of Tendulkar Committee
            
              Tendulkar Committee perceived consumption poverty as the inability of the individual or household to satisfy a minimum basket of basic human needs that is expected to be reflected in some normative standard of living that should be assured to each individual/household. This is reflected through a poverty line basket (PLB). The PLB suggested by the Tendulkar Committee comprises of food items, fuel, clothing, footwear, education, medical expenses, entertainment and other foods and services. The Committee also suggested shares of various components in the consumption. For example in urban PLB cereal comprises 16.7% of the expenditure, milk 7.5%, edible oil 5%, sugar 2.3%, salt and spices 2.5%, fuel 12.2%, clothing 6.6%, education 3.2% and medical (institutional and non institutional) at 3.5%.
            
              The Committee calculated indexes statewise for both rural and urban areas. The Index for food, clothing, fuel, intoxicants and footwear was calculated on the basis of the expenditure incurred on a bundle of commodities some of which like wheat, rice, kerosene and sugar were considered to be provided through PDS. Index for cost of education per child and Index for cost for health facilities were calculated separately. On the basis of these indices, the Committee calculated an aggregate index and also calculated the poverty line as well as poverty percentage or the poverty Head Count Ratio for 2004-05. Calculations were made separately for all the states as well as the rural and urban areas. Poverty line and poverty Head Count Ratio were also calculated for All India for both rural and urban areas. For the year 2004-05, All India poverty lines were Rs.446.68 for rural areas and Rs.578.8 for urban areas. Poverty Head Count Ration for 2004-05 was 41.8% for rural areas and 25.7% for urban areas. The Committee also provided methodology for updating these poverty lines and Head Count Ratio.

Recent Data
            
                The present data fixes urban poverty line at Rs.1000/- per capita per month and rural poverty line at Rs.816/- per capita per month. On daily basis, these translate into Rs.33/- per day per person for urban areas and Rs.27/- per day per person for rural areas. These figures have been stated to be impractical. The figures have drawn wide criticism as being insensitive and impractical as the media repeatedly points out that it is not possible to have a single meal in the city in this amount.

            However, media statements do not always present the entire picture. An objective analysis of the present data would indicate that these figures are not that much far from reality as are being made out. The Planning Commission while presenting the estimates had stated that though daily figures could be worked out for arithmetical purposes, these figures are for a complete month and should be treated as such.

            Let us consider the data in the light of this statement. For an example, cereals form 16.7% of the total expenditure for urban poor. For Rs.33/- the proportion comes to a little more than Rs.5/- which appears illogical, but when we consider it for the whole month, the per capita expenditure on cereals comes to Rs.167/- which makes some sense. It makes more sense when the figures are considered for a family of five, in which case expenditure on cereals for the family comes to Rs.835/-. This figure would seem reasonable, particularly after considering the fact that a major part of the requirement of cereals for these families is met through PDS which provides an APL (Above Poverty Line) family at about Rs.7 per Kg and rice at Rs.10 per Kg. Rates for BPL (Below Poverty Line) families are even lower. Similarly, a number of services like medical treatment and education are either being provided by the Government free or at highly subsidized rates which reduce expenditure on this account.

            It could be said that only those items are in comfort zone which are provided in some way through Government agencies. In commodities which are to be procured from the open market, the situation is not that comfortable. This is true, but then, poverty line is not about a comfortable life, it is about sustenance, though a humane and dignified one. It is a tool to segregate, that section of people which does not have even those levels of income which could provide them basic amenities of life. Quite reasonably, this group needs to be segregated for providing support through various welfare schemes.


            One could argue that those marginally above these poverty lines are also in need of welfare schemes. This could again be very well be true but the question is who should be first beneficiary of any welfare schemes. Priority should start from the bottom. The most vulnerable and most deprived should be first beneficiaries. As per the present data, population below poverty line comprises 21.9% of the population. These people do not even have the income corresponding to the said poverty lines and it is reasonably fair that such people get the benefit of the welfare schemes in the first instance. Hence, the debate on quantification of poverty lines becomes irrelevant, particularly in view of the fact that the Rangarajan committee has already been constituted to revisit the issue. It would have been more fruitful if the debate had centered on ways to ameliorate the conditions of those below poverty line even by these standards. 

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