Poverty in India An Unsolved Puzzle : Part 1

At the time of independence over 47% of our population was under the below poverty line (BPL). After sixty-four years of experience with a range of schemes for poverty alleviation including the two phases of economic reforms and nearly a double-digit growth rate of the GDP for the past about a decade, we are still the second poorest nation of the Asia. As per the Planning Commission’s latest estimates, the official figure of poverty is 28.3%. This official rate is much lower than the various national and international findings.

It has been termed as official rate of poverty, as there has been no consensus on the enumeration technique, methodology and the percentage of people to be under the poverty category in our population. However, before we study those different data and various opinions about poverty and poor people, we should know what poverty is. Poverty is a condition where a person is unable to maintain a healthy physical and mental standard of life. In other words, it is a situation where people are compelled to live under sub- human conditions that are obviously not chosen by them.

The reasons behind poverty are many. The long colonial rule sucked our economic resources and stifled economic development. The social stratification has forced the people to live at the lower strata of the society. Thus, depriving them access to educational and economic opportunities. Moreover, the large size of population demands lots of economic resources to provide for a healthy and productive life. Consequently, it has been a big handicap in our efforts to eradicate poverty. The trickle- down theory of planning era too did not help much to reduce poverty, because it did not bring equal development across the country. Many geographic regions, economic and social groups remain untouched by the wave of development. Despite the two decades of economic reforms, the fruits of progress and prosperity have not been evenly distributed; the differences between rural and urban, upper and lower class and other socio-economic gaps have remained unaltered. However, it would not be fair to say that so far no progress has been achieved on the poverty reduction front. With the spread of literacy, public distribution system (PDS), and welfare programs for the empowerment of women and other weaker sections, a noticeable reduction has been witnessed in the number of poor.

There are different methods to measure poverty and to estimate the number of poor people in the total population. The World Bank and various international agencies use the PPP based assessment of monthly consumption expenditure. The PPP method convert the local currency into an internationally accepted currency, say dollar, to calculate the expense on essentialtial commodities. The calorie intake method, is used by the Planning Commission of India, and the Asian poverty line has been used by the Asian Development Bank (ADB).

In India, poverty is measured by per day calorie intake of a person that is 2100 calorie in urban areas and 2400 calorie in rural areas. The 28.3% poverty rate estimated in 2004-2005 is based on the survey of NSSO with the criterion of monthly expenditure of below Rs.356.35, in rural areas and Rs. 538.60 in urban areas. Based on which over 300million people in India are under the BPL. For the same year, the WB estimated poverty at 41.6% taking 1.25$ dollar income per day. The Asian Development Bank went even further, estimating it at 54.8% using the 1.35$ per day income, which bring 622 million people under poverty line.

While analyzing the above data, one obvious question comes to mind that why there is so much of difference between India’s official poverty rate and figures from other international agencies. This is because, our poverty line indicates a mere existence of life expressed through one’s capability to spend on food. This implies minimum amount a person needs to buy food for his living (that is Rs.12 in rural areas and Rs.19 in urban areas). It does not include other necessities of life such as, pure drinking water, health and sanitation, cloth, education etc.

The Tendulkar committee appointed by the Planning Commission has included various indicators to measure poverty. The committee has estimated 37.2% people under the poverty line. It has recommended to do away with the practice of using different criteria for rural and urban India. This will help in using a uniform definition of poverty for the entire nation. However, it did not make any revolutionary changes in the Planning Commission’s estimates, and has only increased per day expenditure from Rs.12 to Rs.15 in rural area and did not make any changes in urban expenditure. However, this minor increment in consumption expenditure has increased the rural poverty to 42% from 28% bringing nearly ten crore people under the line of poverty.

Moreover, these estimates do not present the complete picture because they are based on 2004-05 prices. In addition, in last couple of years inflation has entered into double-digit, especially in food items. This has affected rural and urban people equally. Therefore, the criterion of the Planning Commission and NSSO of minimum monthly expenditure per person per month is no more relevant. The Saxena committee has taken a lead in this regard and fixed the monthly expenditure at Rs.650 in rural areas and Rs.1000 in urban areas. This can be considered a bit satisfactory. But at the same time it has simply added 10.87 crore more people into the BPL category.

Hence, it is understandable that why poverty has become an unsolved puzzle in India. The official rate of poverty is set at a low level to hide the intensity of the issue. Besides, it does not recognize the minor differences between those so-called BPL and APL people. Because, it only includes the expenditure on food items and not the income that makes a man capable to access a healthy, productive and dignified life. Furthermore, such an incomplete definition and data used in planning and policy formulation has made the whole exercise inefficient and ineffective as it always remains far from the target of total eradication of poverty.