Plan panel accepts its poverty estimate was flawed
Prasanna Mohanty | October 4, 2011
Notwithstanding any of the excuses that planning commission deputy chairman Montek Singh Ahluwalia has offered to justify his ridiculous affidavit before the supreme court on the poverty estimate, rural development minister Jairam Ramesh, seemingly, brought about a sensible policy rethink that their joint press conference of October 3 reflected. The press conference made two big points – one, that there would be no cap on the number of beneficiaries for the government welfare schemes, including distribution of subsidised food and two, the beneficiaries would be selected on the basis of the socio-economic caste census, rather than the poverty line determined by the plan panel.
These announcements answered the specific questions that the supreme court had posed in response to which the planning commission’s controversial affidavit was submitted. The affidavit did not answer the question about capping the number of beneficiaries. It only revised the poverty line upward by doing a lazy job of adjusting it to the June 2011 inflation level. Thus, the poverty line set by the Tendulkar committee, Rs 18 per capita per day in urban areas and Rs 15 per capita per day at the 2004-05 prices, became Rs 32 per capita per day for urban areas and Rs 26 per capita per day for the rural areas in the said affidavit. Once the planning commission submitted this affidavit, it made no sense for Ahluwalia to assert that it was a mere “factual explanation” and that the revised poverty estimate “would not decide benefits or entitlements to food subsidy”. Had that been the case, he wouldn’t have allowed such an affidavit in the first place.
As economists and food right activists have rightly pointed out, the planning commission’s poverty line estimate is actually a benchmark for the destitute rather than the poor. One may survive on the paltry sum of Rs 32 and Rs 26 in urban and rural areas, respectively, but not find healthy living condition or proper education. It is ridiculous to continue to follow the Tendulkar committee’s estimate, which was an indirect assessment based on an uncertain accuracy of the NSSO data. More so when it involves providing subsidized food to the people battling a high-level of malnutrition – 46 percent of children below the age of three are underweight, according to the government’s own finding in 2006.
It was Ramesh who publicly questioned the planning commission’s methodology, pointing out that a far more scientific and direct exercise to identify the BPL families was going on at the moment - Socio-economic and Caste Census of 2011 - which his rural development ministry is coordinating. Ahluwalia accepted that this census should form the basis to identify the beneficiaries. As for not capping the list of beneficiaries for the food subsidy and other welfare measures, the assertion came from Ramesh, not Ahluwalia.
Ahluwalia’s problem in dealing with the poverty and welfare measures stems from his concerns about growing subsidy involved, including the food subsidy, as he has pointed out so many times in the past. That is why he has been advocating dismantling of the public distribution system and replacing it with the direct cash transfer. With cash transfers he will have more control over the subsidy. He has cleverly used data to point out that about 52 percent of PDS supply is diverted to build his case for cash transfer. What he doesn’t reveal is that this finding is for a time immediately after the targeted PDS replaced the universal PDS in 1997. He has also ignored recent findings that show PDS diversion is going down substantially in many states. Development economist Jean Dreze and his group of researchers presented their findings after surveying nine states in July. They concluded that the PDS was witnessing “an impressive revival” across the country and that “the days when up to half of the PDS grain was diverted to the open market are gone”.
Ironically, Ahluwalia is never heard talking about corporate income tax written off every year. While food subsidy for 2011-12 stands at Rs 60,573 crore, the same budget documents state corporate income tax written off for 2010-11 stands at Rs 88,263 crore.
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