Eradicating poverty in India a Sisyphean task

Niti Aayog comes up with yet another plan, aims for zero poverty by 2032

rahul

Rahul Dass | April 23, 2016 | New Delhi


#NSSO   #Welfare   #World Bank   #Suresh D Tendulkar   #Montek Singh Ahluwalia   #Narendra Modi   #poverty   #Niti Aayog   #Economy   #Angus Deaton  


The Narendra Modi government wants to banish poverty from India by the year 2032, a target that is ambitious and fraught with potential pitfalls.

The government has thrashed out an action plan that promises to enable India’s economy to grow at a fast trot of 10 percent per annum until 2032, helping eradicate poverty in the next 16 years and creating a staggering 175 million new jobs, according to a report in the Business Standard.

If this doesn’t turn out to be a pipe dream, then India’s economy in 2032 will be $10 trillion strong, while it is hovering a little over $2 trillion in 2016.

The successive governments have focused on the poor, with high-pitched promises. Yet the ground reality for over 300 million of India’s poor – who form a quarter of the 1.2 billion population – remains unchanged.

In 2011, the then planning commission, now known in its new avatar as Niti Aayog, had come out with a quirky poverty baseline, triggering a huge storm. It said that anyone spending more than Rs 965 per month in urban India and Rs 781 in rural India will be deemed not to be poor, which essentially means that if someone spends more than Rs 32 a day in urban areas or Rs 26 a day in villages, he will not be eligible to draw benefit of welfare schemes for those living below the poverty line.

The poverty line parameter came in for sharp criticism as it was felt that it was unrealistic and would in a way artificially reduce the number of poor in the country.

The then planning commission deputy chairman, Montek Singh Ahluwalia, in a letter to the then attorney general Goolam Vahanvati, however, said, “The fact is that Rs 4,824 per month for a family [of five] to define poverty is not comfortable but it is not all that ridiculous in Indian conditions.”

Statistics can work any which way and this was amply clear while deciding on who is poor.

The Suresh D Tendulkar committee in its 2009 report made it clear that the estimates of poverty will continue to be based on private household consumer expenditure of Indian households as collected by the National Sample Survey Organisation (NSSO). 

The expert group also took a conscious decision to move away from anchoring the poverty lines to a calorie intake norm in view of the fact that calorie consumption calculated by converting the consumed quantities in the last 30 days as collected by NSS has not been found to be well correlated with the nutritional outcomes observed from other specialised surveys either over time or across space (that is, between states or rural and urban areas).

They were not the only ones who took a critical look at the methodology to work out whom to describe as poor.

The World Bank in a policy research note observed that poverty measures for India are based on the household expenditure surveys done as part of the NSS. Since NSS began in the 1950s, it has used 30-day recall for consumption of both food and nonfood items to measure expenditures. These so-called “uniform reference period” (URP) consumption aggregates collected in every consumption survey (except 1999/2000) provide the longest consistent series for measuring poverty in India.

“Since 2015 is the target year for the Millennium Development Goals, the assessment of changes in poverty over time is best based on the URP method, which was used to set the baseline poverty rates for India in 1990. For 2011/12, India’s poverty rate using URP-based consumption was 21.2 percent,” the World Bank noted.

Nobel Laureate Angus Deaton, the British economist who has a long association with India, made a significant contribution towards understanding poverty in this country. His research on price indices was the key for the poverty line to be devised. He also extensively used the NSS data to fine-tune the way consumption expenditure was calculated.

In the Lionel Robbins Memorial lectures delivered at the London School of Economics, Deaton spoke about poverty, inequality and difficulties of measuring them in India. He said that the country had shown historically unprecedented economic growth over the last 30 years and now the household consumption has grown 3.5 percent a year from 1980 to 2014.

Critically, he said there was slower than warranted poverty decline and around 300 million poor living at or below destitution standards. Additionally, half of India’s children are severely malnourished.

So, the debate over who is poor and who is not rages on. There are no clear-cut answers and straitjacket solutions to pulling people out of the morass of poverty. The latest government initiative, if it is not jettisoned mid-way, may well hold an economic key that may not hinge on just looking at day’s earning of Rs 32.

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