Information technology has wonderful uses, and there are huge pluses associated with the digital world. Therefore, I have received e-mails on the column published on September 19, Making sense of GDP growth and poverty. Years ago, these would have been in the form of letters to the editor, not all of which would have been published. When readers write in, a columnist is gratified. The gratification is greater when a column is read and understood, not merely glanced at.
Many years ago, I wrote a column on trade unions and labour laws. I was travelling that day, and a reader came up to me at the airport and said, “I greatly enjoyed your column today.” I was flattered. Since another column had appeared in another newspaper that day, I asked, “On what?” This was a time when onion prices had skyrocketed, and he replied, “Onion prices.” I was promptly deflated, but hopefully didn’t show it, and nodded sagely (The other column wasn’t on onions either).
The thrust of the September 19 column was, “There is no inconsistency in this. They measure different things.” Specifically, readers have written in on what I said about poverty. What did I say? The last NSS consumption expenditure survey was held in 2011–12. The last Tendulkar poverty line is also for 2011–12. I had said, “My guess is—in the absence of data ... India’s overall poverty ratio will be around 18% today.” My guess, not my estimate.
In the absence of data, both the IMF and the World Bank (actually, authors who work in these organisations) made assumptions and tried to compute poverty ratios today. The IMF used the international poverty line, not the Tendulkar one. It also adjusted for gaps between NSS and national accounts and extrapolated. These are methodological differences, and any such finding wouldn’t be comparable with what the poverty ratio would be, had NSS data existed today and had a Tendulkar poverty ratio been computed.
The World Bank used CMIE data. There are problems with CMIE data and with assumptions made in the World Bank paper (such as imputations), both acknowledged by the authors themselves. To state it bluntly, both the IMF and the World Bank made heroic assumptions because satisfactory data do not exist. I made no estimate. I guessed. We will know, one way or the other when proper data surfaces.
A column isn’t meant to be a survey of literature—the kind you see in journals. Before commenting, I think it helps if readers read the column carefully and the papers (IMF, World Bank) they refer to in the course of comments. By the same token, many government (Union and state) schemes use deprivation criteria from SECC and decentralised identification of deprivation. Those deprivation criteria aren’t the same as a head count ratio computed from a survey. Not only is one a census and the other a survey, but the poverty ratio, as defined by something like Tendulkar, isn’t a variable in determining deprivation. It can’t be. Deprivation has to be decided through a census, which is a complete enumeration. A survey based on a sample won’t do. A survey only helps to understand trends.
Similarly, the National Food Security Act fixes a percentage of the rural population and a percentage of the urban population without any reference to any Tendulkar poverty ratio. Numbers are fixed in the statute.
To use the clichéd metaphor, the column was about an orange, while the readers’ comments were about an apple. This is understandable since poverty has many dimensions.
Readers will recall the controversy that was created when Montek Singh Ahluwalia was Deputy Chairman of the former Planning Commission, and the poverty line was fixed at ₹32 per capita per day, on an average, since there are rural/urban and inter-state differences in what the poverty line should be. That figure was the Tendulkar poverty line, originally computed for 2004–05 and then reapplied in 2011–12. Of course, it is a bare minimum required for subsistence, and as economies evolve, the perception of what is “bare minimum” also changes. That’s the reason an expert group was set up under C Rangarajan to revisit the Tendulkar poverty line, and a report was submitted in 2014.
This added some more items to the minimum consumption basket, and hence, poverty following the Rangarajan methodology was higher in 2011–12. However, the Rangarajan report was never officially accepted, and officially, the poverty line still remains the Tendulkar one. Perhaps one should mention SDG Goal 1, on reducing poverty, although all SDG timelines have been disrupted for all countries due to Covid-19. The SDG hierarchy has goals, distilled to targets, further distilled to indicators, so that movement towards goals can be measured.
As originally stated, Target 1.2 was, “By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions.” Indicator 1.2.1 was, “Proportion of population living below the national poverty line.” To comply, one needs a national poverty line, and the head count ratio in 2030 should have become half of what it was in 2015. Niti Aayog monitors India’s progress towards SDGs and quantifies poverty through a Multidimensional Poverty Index (MPI). More on that later.
Right from the beginning, it was known that poverty is multidimensional and cannot be captured only through a head count ratio and percentage of individuals or households who cannot afford that minimum consumption basket. In the 1970s, there was a discussion about a Physical Quality of Life Index (PQLI), based on literacy rate, infant mortality rate and life expectancy. Following all that discussion, in 1990, UNDP launched a Human Development Report (HDR). Mahbub ul Haq and Amartya Sen were the driving forces behind this.
Over the years, HDRs have experimented with several measures—Gender-related development index (GDI), Gender Empowerment Measure (GEM), Human Poverty Index (HPI), Gender Inequality Index (GII), MPI and inequality-adjusted HDI (Human Development Index). HDI is at the core, and it has remained fairly robust. Unless readers write in about this column, the next one will be on HDI
Bibek Debroy
Chairman, Economic Advisory Council to the PM