Poverty yardstick cannot use decades-old methods

Published: 11th August 2013 12:00 AM  |   Last Updated: 09th August 2013 12:43 PM   |  A+A-

Identification and measurement of poverty have been vehemently debated in India for the last four decades. India started its estimation of poverty in 1973-74 based on household consumption expenditure in the National Sample Survey. Ever since, estimation has been as complex or more than poverty itself. 

The Planning Commission argues that the rural consumption expenditure account which rose from Rs 49 to Rs 816 in 2011-12 (Rs 56 to Rs 1,000 in urban areas) contains lesser percentage of people and claims the policies adopted in the recent past have their proof in the poverty measure. The academics who reject this argument say it is illogical since according to the Commission, only 13.7 per cent population in urban areas and 25.7 per cent in rural areas are under the poverty line. Utsa Patnaik pooh-poohs the Commission by saying it may declare urban India completely poorless within a few years if it continues with the same method of scaling poverty.

Those opposing the Planning Commission’s measure are posing their argument mainly on the lesser expenditure possible by the poor for food compared to non-food items in the recent past. The non-food expenditure by the poor has been increasing ever since its measure started. In 1993-94, the food expenditure of the rural poor was 63 per cent. It went down to 48 per cent in 2011-12. Their urban counterparts’ food expenditure fell from 54 per cent to 38 per cent during the same period. On the other hand, non-food expenditure rose from 36 per cent to 51 per cent in rural areas and from 45 per cent to 61 per cent in urban areas.

Why are the poor choosing to have more non-food than food from their meagre income? This question had worried even an economist like Adam Smith two centuries ago. “A linen shirt, for example, is, strictly speaking, not a necessary of life. The Greeks and Romans lived, I suppose, very comfortably though they had no linen. But in the present times, through the greater part of Europe, a creditable day labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty, which, it is presumed, no body can well fall into without extreme bad conduct.”

It simply means while society transforms from feudal to capitalist system, the poor choose the indicators of decent living by having more non-food articles in their day-to-day lives which were forbidden to them by feudal landlords (in India by the upper caste). The fashion statement of the Indian poor by choosing chappals, umbrellas, churidars and cheap jeans has deeper social meaning than the stale counts in economic surveys. They have bought millions of mobile phones and two-wheelers to make their life brighter even while suffering from its recurring expenditure. The poor cannot live in a bread alone mode anymore. 

Comparison of poverty using the 1973-74 baselines is not agreeable. The `49 in 1973 cannot be equated with `816 today. If compared with land value or gold, it has to be manifold. The crude comparison can only make crude results and assumptions which may be necessary but not at all sufficient to understand the real poverty situation in a growing economy like India’s.

India has grown and its poor have definitely improved their lives not only by acquiring non-food articles but also by having better access to education and healthcare. But the disparity between the top and bottom overshadows the achievements. India cannot sit complacent by the lower percentage of poor through the decade-old comparative measures. 

Policymakers and academics have to sit together to re-engineer the poverty indices using state-of-the-art tools and techniques accepted internationally. Since the reduced measure of poverty is not used to reduce the facilities (for example, the Food Security Act) to the poor, the Planning Commission can itself take up the new venture.

(John is member  of Kerala State Planning Board. cpjohn.kerala@gmail.com)

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