India's overty story belies reality on the ground

India’s GDP growth has plummeted to a decade’s low in the last fiscal year. In terms of the world index, India ranked at number 168, according to the CIA’s “World Fact Book”. Signs of recovery are not visible. Rather, macro-economic fundamentals are extremely weak. Inflation, fiscal deficit and current account deficit are the major areas of concern.

The rupee has weakened considerably against the dollar, and this poses a headache to importers. The scenario is reminiscent of pre-reform 1991.

The polity is fractured and bleeding. Divisive forces have resumed their activities ever since the announcement of a separate state of Telangana. The coalition partners are divided, there have been serial scams, and the leadership issue has resulted in a deficit in governance.

Opinion polls conducted recently by national television channels have made the Congress jittery about its prospects in the next Lok Sabha (lower House) election.

Amidst this gloomy scenario comes the announcement of the Planning Commission on the number of people living below the poverty line. The estimates show that the poverty level fell from 37 per cent in 2004-2005 to 22 per cent in 2011-2012. This has supposedly raised 138 million people above extreme poverty. In 2012, there were 269.3 million people (rural 216.5 million; urban 52.8 million) living below the poverty line, out of a total population of 1.2 billion.

This further illustrates a significant decrease from nearly two decades ago. In 1994, there were 403.7 million people, or 45.3 per cent of the population, in poverty. The commission’s figures suggest that the annual rate of decline in the poverty count accelerated to 2.18 per cent for 2004-2005 and 2011-2012 from an annual drop of 0.74 per cent between 1993-1994 and 2004-2005.

The Planning Commission’s findings are based on the methodology recommended in 2005 by a panel of experts headed by the economist, the late Suresh Tendulkar. The methodology defines poverty in terms of consumption or spending power of an individual during a certain period. Only those spending up to 27 rupees a day in rural areas and 33 rupees a day in urban areas would be counted as living in poverty. Thus, for a family of five, the all-India poverty level in terms of consumption expenditure would amount to about 4,080 rupees (US$63) per month in rural areas and 5,000 rupees per month in urban areas.

The Tendulkar calibration is roughly equal to the World Bank’s poverty line, which is based on purchasing power parity (PPP) of $1.25.

The PPP level compares the amount of currency needed to buy the same item in different countries. The yardstick is used by the UN in over 180 countries.

The extent of decline – from 37 per cent to 22 per cent over the past seven years – has ignited debate throughout the country. There is no denying that the Planning Commission’s poverty line has been set at an absurdly low level, which conceals the true scale of poverty in India.  Considering the cost of food, rent and essential commodities, it is impossible for many people to make even the barest purchases of food. The average cost of one kilo of rice at subsidised rates is currently around 18 rupees.

NC Saxena, who monitors the food programme on behalf of the Supreme Court, feels that the estimates of the numbers living in poverty are meaningless in the present economic situation, although he concedes that consumption among the weakest sections of society has increased significantly over the past decade.

This may be music to the ears of the mandarins of the Planning Commission. With the Congress-led UPA government in deep trouble, one wonders if the commission is engaged in a rescue act. This can be a convenient propaganda plank for the government in the next general election. Besides, more people in the poverty bracket would mean a larger financial burden on the government, which it may not be in a position to bear. A lower poverty line allows the government to target welfare policies for the perceived benefit of the weakest sections. The timing of the announcement is bound to raise eyebrows.

The Planning Commission’s statement says that the data from the 68th round of the National Sample Survey (2011-2012) of household consumer expenditure is now available. But the government could have waited for the recommendations of another panel headed by C Rangarajan, economic advisor to the prime minister. The panel was set up in June 2012 to review the methodology used for estimating poverty, after widespread criticism over how the poverty line had been set by the government on the basis of the recommendations of the Tendulkar committee. Here again, the political calculation carried weight, since the Rangarajan committee’s report is expected only by July 2014.

Did the Planning Commission want to keep the number of poor artificially low? If so, why?

The answer has to be found in the ethos of our politicians and their chosen planners. They do not like to be reminded about the ground realities. They are more interested in India’s newfound place in the comity of nations, and refuse to accept inconvenient truths.

Besides, we have learnt to live with racism of a peculiarly inverted kind. Even if it is true that India is still mired in poverty, the so-called “patriots” are against a public discourse on the subject. They are against what they call “India bashing”. 

Hygienic sanitation facilities do not exist in large parts of rural India.

The UN estimates that 5 million Indians die every year for lack of clean water. Beyond definitions and calibration of poverty lies the fact of the matter: little or nothing has been done to alleviate poverty.

 

Debaki Nandan Mandal is a former joint secretary of the government of West Bengal.