The publication of a fact sheet by the National Sample Survey Office (NSSO), containing the results of the NSS Household Consumer Expenditure Survey (HCES) data for 2022-23, a decade after the publication of the last survey data in 2011-12, has again sparked a debate regarding poverty in India. Using the 2022-23 data on average monthly per capita consumer expenditure (MPCE) for rural and urban areas, some experts have gone overboard in claiming poverty has been nearly eradicated in India.
For instance, NITI Aayog CEO B V R Subrahmanyan claimed poverty in rural India, estimated at around 25.7 percent of the population in 2011-12, has declined to below 5 percent. Economist Surjit S Bhalla went further and claimed poverty has shrunk to just 2 percent.
These claims seem intriguing, especially since the government has promised free supply of foodgrains to 60 percent of India’s population for the next five years. Comparable history shows that the East Asian economies experienced sharp declines in poverty only at high economic growth rates. China, for instance, reported a sharp decline in poverty levels only when its GDP growth exceeded 10 percent between 1978 to 2010. India’s GDP growth has ranged between 3.8 and 7 percent in the last five years and the GDP shrank 5.83 percent in 2020 because of the pandemic.
The government junked the NSS’s 2017-18 survey on grounds of data quality, although the survey had used the same methodology as the 2011-12 survey. Critics suggest the reasons for not releasing the results were different—it, for the first time in four decades, suggested that real MPCE had declined 3.7 percent from Rs 1,501 in 2011-12 to Rs 1,446 in 2017-18, implying poverty had increased. The decline was sharper in rural India (8.8 percent) compared to that in urban India (2.2 percent). This was embarrassing on the eve of the Lok Sabha elections in 2019. A 2022 World Bank report suggested 56 million people in India fell below the poverty line of $2.15 per day in 2020.
The 2022-23 NSS survey, thus, makes a sharp departure from 2011-12, in which households in rural and urban areas were categorised into three groups and selected on criteria such as land possessed in rural areas, and possession of one or more cars for non-commercial use in urban areas.
The 2011-12 survey covered 347 items, whereas the 2022-23 survey covered 405. In place of a single questionnaire and single visit to canvass data from the sample households, the 2022-23 survey used four sets of questionnaires with multiple visits. The survey also presents data on the average MPCE after imputing the value of freebies provided to households such as free foodgrains, fuel, laptops and bicycles.
The fact sheet doesn’t present data on the distribution of households by these categories. Is the sample representative of rural and urban populations? What proportion of rural households owned lands? Similarly, what proportion of urban households owned cars? What is the weight assigned to urban households owning or not owning cars in the sample and, similarly, for rural land-owning and landless households? Have these been accounted for while estimating the average MPCE?
Putting aside these comparability issues, let us assess the estimates. The average MPCEs for rural and urban India were Rs 3,773 and Rs 6,459, respectively. For the bottom 5 percent of the rural population, this figure was Rs 1,373 and Rs 2,001 for the urban population. These figures for the top 5 percent of the rural and urban areas were Rs 10,501 and Rs 20,824. It is a pity that even after a decade, the average real MPCE in both rural and urban India has not even doubled (from Rs 2,760 and Rs 4,865 in 2011-12 as against Rs. 3773 and Rs 6459 in 2022-23 respectively).
In terms of the poverty line for rural areas suggested by the Tendulkar Committee (Rs 1,575 at 2022-23 prices), the bottom 5 percent of the rural population fall below the line. If we consider the poverty line suggested by the Rangarajan Committee (Rs 1,876 at 2022-23 prices), then the bottom 20 percent falls below the line. If we include the imputed value of the so-called freebies, the bottom 5 percent of the rural population are below the poverty line by the Tendulkar Committee, whereas by the Rangarajan Committee’s calculation, the bottom 20 percent fall below the poverty line.
Despite all the hype about the rapid development in recent years in Uttar Pradesh, Madhya Pradesh, Bihar, West Bengal, Odisha and Chhattisgarh, it is distressing to note that the standard of living measured in terms of the average MPCE in rural areas of these states (Rs 2,466 to Rs 3,384) are not only below the national average but lag far behind the northwestern and southern states. For instance, the average MPCE for rural areas was the highest for Kerala (Rs 5,924), followed by Himachal Pradesh (Rs 5,561), Punjab (Rs 5,315), Tamil Nadu (Rs 5,310), Andhra Pradesh (Rs 4,870), Telangana (Rs 4,802) and Karnataka (Rs 4,397).
The average MPCE (Rs 3,798) for rural areas in Gujarat was slightly higher than the national average (Rs 3,773). If the imputed value of freebies is included, the average MPCE (Rs 3,820) falls below the national average.
Interestingly, Rajasthan fared well, with the average MPCE (Rs 4,263) in rural areas being well above the national average and other so-called BIMARU states.
The situation of those self-employed in agriculture, casual labourers, and scheduled tribes and castes in rural areas are distressing. India’s quest for emerging as the third largest economy in the world will be meaningless if the benefits are not shared proportionately by them all.
(Views are personal)
(ninankn@yahoo.co.in)
K N Ninan| Former professor of economics at the Institute for Social and Economic Change, Bengaluru