How many are poor? Take your pick from 27.5 pct to 80 pct

The Planning Commission’s estimates might put the poverty line for urban and rural areas at Rs 32 and Rs 26 per person per day, but it has not found many takers for these numbers.

Even though the commission has itself substantially increased its estimates from the previous ones (2009), a comparison of previous official estimates with those by other organisations shows a historical difference of opinion.

But this is not the first time that official poverty estimates are coming under fire. In fact estimates of people based on various poverty lines range from 27 percent to 80 percent. The latter would be incredible since it would mean four out of five Indians is below the poverty line, but that’s the kind of result one gets depending on which poverty line we accept as realistic.

[caption id=“attachment_95281” align=“alignleft” width=“380” caption=“The Planning Commission’s estimates might put the poverty line for urban and rural areas at Rs 32 and Rs 26 per person per day, but it has not found many takers for these numbers. Rupak De Chowdhuri/Reuters”]  [/caption]

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The latest numbers are based on the methodology proposed by the Tendulkar committee, an expert group that was set up a few years ago, ironically, to address issues with the previous methodology for poverty estimates. The Tendulkar Committee proposed a changed treatment of food-related expenditures, uniformity of basket for rural and urban areas and provisions for health and education.

For 2004-05, this new methodology yielded a poverty ratio that was almost 10 percentage points higher than that estimated by the official numbers till that point (27.5 percent). This was based on the estimation that the rural poverty line should be increased from the official estimates.

This put the poverty ratio at the national level at 37.2 percent, with 42 percent people below the poverty line in rural areas and 26 percent below the poverty line in urban areas.

However, this revised figure too was refuted by another commission within the central government. The National Commission on Enterprises in the Unorganised Sector (NCEUS) was established in September 2004 as an ‘advisory body and watchdog’ for the sector.

The commission estimated that the poverty line in India in 2004 should be revised upwards to Rs 20 per day (which was also in line with the purchasing power parity-based rate of $1.25 a day as estimated by the World Bank), which came to about Rs 600 per person per month. If this were to happen, almost 60 percent of India would have been below the poverty line in 2004, with over 70 percent of the poor living in rural areas.

The alternate poverty estimates of the NCEUS also found resonance with the ‘Saxena Committee Report on Poverty Estimates in India’, which was established under the aegis of the Union rural development ministry.

According to the committee, the poverty ratio is at least 50 percent, in accordance with the Rs 20 per day spend as the poverty line of 2004. Even this, it said, is based on a slightly lower calorie intake requirement than deemed necessary. It further estimates that if the minimum requirement is maintained, as much as 80 percent of the population falls below the poverty line.

It is thus, unsurprising, that the rural development ministry has recently also raised objections to the poverty lines put forward by the Planning Commission. While estimates by other organisations and bodies are not there, one point is clear: they see poverty as much more than what the Planning Commission has estimated.