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30 July, 2013

Crunching poverty figures

BRP Bhaskar
Gulf Today

No loud cheers greeted the Planning Commission’s announcement last week that the number of Indians below the poverty line fell significantly from 37.2 per cent in 2004-05 to 21.9 per cent in 2011-12. Instead, there were cries of foul play, with politicians, including some belonging to the ruling Congress party, and civil society activists deploring the unscientific methodology the government follows to determine poverty levels.

The methodology now employed was proposed by a committee, headed by Suresh Tendulkar, an economist, in 2009. Based on it, the Commission calculated that a per capita monthly income of Rs816 in villages and Rs1,000 in cities was all that was needed to ward off poverty. Accordingly, it reckoned that a family of five can meet its consumption expenditure with as ridiculously low a monthly income as Rs4,080 in rural areas and Rs5,000 in urban areas.

Following widespread criticism of the Tendulkar methodology the government had appointed another committee headed by C Rangarajan, a former Governor of the Reserve Bank of India, to draw up fresh norms. Its report is not expected until next year. 

Brushing aside criticism, Planning Commission deputy chairman Montek Singh Ahluwalia said, “Whatever method you apply and wherever you keep the poverty line, poverty has indeed declined.”

Poverty may be declining but when we move from percentages to actual numbers we get an alarming picture of the ground situation. A poverty incidence of 21.9 per cent means as many as 270 million Indians are poor. This is much more than the total population of Indonesia (which was 237,641,326 in 2010), the world’s fourth largest country after China, India and the United States.

India and Indonesia both emerged from colonialism around the same time. India began its path as an independent nation with the British-built administrative apparatus intact and a fair body of educated personnel to run it. When Ahmed Soekarno took over the administration of war-ravaged Indonesia, it had only a dozen people with modern education. He asked every literate person to teach one, and in a matter of decades, Indonesia raced ahead of India in literacy.

India recently overtook Japan as the world’s largest economy in terms of purchasing power parity. However the country is unable to pull its weight in the global scheme of things because it is bogged down by the huge backlog of poverty.

Pulapre Balakrishnan, an economist, writing in The Hindu, last week suggested that India is out of line with one central aspect of the Asian development model which is the wide-spreading of the fruits of growth. An official assessment made on the completion of India’s first five-year plan (1951-56) revealed that the benefits of development are not reaching the intended beneficiaries. Several subsequent studies have shown that substantial portions of funds earmarked for poverty alleviation are siphoned off by intermediaries and do not reach the needy.

Various measures devised to plug leakages have not yielded results, primarily because the intermediaries are men with political clout who can manipulate the system. While the poor figure prominently in political rhetoric at the time of policy formulation, they are often sidelined at the time of policy implementation. The long tradition of social exclusion appears to be the main reason why, unlike, say Japan or Indonesia, India lags in the empowerment of the weak.

The big states of the north, west and east top the list of the poor. Uttar Pradesh has the highest number of poor people — nearly 60 million (29.4 per cent of the state total), followed by Bihar with about 36 million (33.7 per cent) and Madhya Pradesh with 23.4 million (31.6 per cent). They are followed by Maharashtra with about 20 million poor (17.3 per cent) and West Bengal 18.5 million (19.9 per cent).

The government’s own figures show that about 48 per cent of the rural population is below the poverty line. This shows that while the urban economy boomed in the early phase of liberalisation, the rural areas lagged behind. Several of the new policies now mooted to boost the economic growth rate are likely to impact the rural areas adversely.

In Odisha, the government-fixed minimum daily wage for an unskilled worker is Rs150. In Kerala, his counterpart can command a wage of up to Rs550. The evolution of a simple formula to determine the poverty line in a country with so much variety is no easy task. Regional variations have to be factored in.  --Gulf Today, Sharjah, July 30, 2013.

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