Poverty in India: Am I Poor? Where is the Poverty Line!
Poverty in India
India has two things in abundance: People and Poverty. On these two counts, it sure invites envy of all other nations in the world!
Economic experts like to call India HRRC – human resource rich country! It is not only the second largest nation with 1.33 billion people (behind China’s 1.37 billion) but already beats China in terms of number of youth. India is the world’s largest democracy and is set to become the most populous country by 2022 if the current population trend continues.
You can also call India PRC – poverty rich country! There are poor everywhere – world’s one-third poor live here. So, India is also the GPC – global poverty capital! Add to this the poor of Pakistan and Bangladesh (parts of unified India before 1947) and you can find around half of global poor. Thus, South Asia has the largest number of poor in the world. Only the sub-Saharan Africa can give competition to South Asia in the game of poverty headcount!
Counting poor is a great pastime of Indian government as well as the poverty experts. So many hundreds of millions poor right at one place makes India also a global poverty laboratory. The World Bank recently estimated 172 million (12.4 percent of total population) poor in India, based on its new poverty line of $1.90 per person per day.
The Indian government’s official poverty count is 269 million (21 percent of total population) using its own poverty line. It used to be 363 million (29 percent) prior to the announcement of new counting method in June 1014. Very soon by end of 2017 another set of statistic and a new poverty line would change all these numbers, yet again!
Then there is the Multidimensional Poverty Index (MPI) of the UNDP and Oxford Poverty and Human Development Initiative (OPHI), whose MPI 2017 poverty count is around 530 million (41 percent).
So, if you live in India, be careful. You never know how and when someone would come up with a poverty yardstick that goes right above your head! You see, becoming poor is so easy in India!!
Poverty Level in India: 1993 - 2012
Comedy of Indian Poverty Line!
In June 2011, the Indian Planning Commission stated in the Supreme Court of India that the poverty line for the urban area is Rs 32 per day and Rs 26 per day in rural area. But in March 2012, it lowered it to Rs 28.65 for the urban area and Rs 22.42 for the rural area. Then after Rangarajan committee it became Rs 47 a day for urban areas and Rs 33 a day for rural areas. One can of course justify every change!
India’s poverty line is abysmally low when compared with other poor countries: Rs 860 (now Rs 1407) per month in urban area and Rs 673 (now Rs 972) per month in rural area. For instance, South Africa has three poverty lines — food, middle and upper — and all three were higher than that of India. Converting in Indian rupees, the food poverty line was Rs. 1,841 per capita per month in 2010, middle poverty line was at Rs.2,445 and upper poverty line at Rs. 3,484.
Even Rwanda appears better in the poverty number game. Using the national consumption survey of 2011 at the prices of October 2011, the rural poverty line in Rwanda in Indian currency was estimated to be about Rs. 892 per month, somewhat larger than Rs. 860 per person in urban India. But food prices in Rwanda are lower than in India.
Where to Draw the Poverty Line
“Poverty is easy to spot, but hard to define.”
Whoever said this must have struggled hard to define poverty, which is very true.
There are different ways to look at poverty. Traditionally, poverty has been seen as just a lack of enough income. You guess some minimum income number based on your wisdom, knowledge or expert status – and make it the poverty threshold. People below this line are poor, else they are non-poor (of course, you won’t call them rich!).
India's First Poverty Line
In 1962, independent India made its first attempt to define poverty line. A Working Group of eminent Indian economists and social thinkers along with 1958 - Nutrition Advisory Committee of Indian Council of Medical Research (ICMR) recommended a national minimum for a rural Indian as Rs 20 per month at 1960-61 prices and for an urban Indian as Rs.25 per month; ensuring energy requirements for an active and healthy life. This did not include expenditures on health and education. It was clearly a subsistence poverty line because people are battling hunger and getting enough food was the foremost priority.
Indian Poverty Line Is Often Called Starvation Line!
A more systematic poverty line philosophy was recommended by an exert group called the Alagh Committee in 1979. It said that people consuming less than 2100 calories in the urban areas or less than 2400 calories in the rural areas are poor. Why discriminate? Because rural people do more physical work so they needed more calories – as per its logic. So, food consumption became the prime criterion for India’s poverty line determination. Needless to say it was more like a starvation line or under-nutrition line.
This methodology was improvised by the Expert Group (Lakdawala) in 1993 and then by another Expert Group (Tendulkar) in 2009. The improvisations led to a firmer reliance on the NSSO’s sample surveys on consumption expenditure by households, a much better method to adjust for inter-state and inter-region differences in price changes over time, and the use of the better recall period introduced in the National Sample Survey Organization (NSSO) surveys.
The Suresh Tendulkar Committee (in 2009) recommended to broad base the poverty line idea on the line of the basic needs approach and added other essentials of life like education, health and transport into the food consumption model. It also recommended a new method of updating the poverty lines, adjusting for changes in the prices and patterns of consumption looking at the consumption of people living close to the poverty line.
This method made some people happy because it somewhat broad-based the calculations, but was still far too inadequate. Many critics still wanted to call it a “starvation line’ instead of the poverty line. The most important input for poverty measurements come from the consumer expenditure NSSO surveys which on large sample is done every five year.
Using the Tendulkar method, the poverty line was fixed at daily per capita spending of Rs 28.65 for the urban areas and Rs 22.42 for the rural areas. [Then, 1 USD was around Rs 63; now it is around Rs 66]. Based on a survey of 2011-12, 269 million people (22%) are reported to live below the poverty line – net result of 25.7% rural and 13.7% urban poverty. Of the 269 million poor, 216.5 million live in the rural India. This unprecedented fall from 407 million (37%) estimated for 2004-05 to 22% poverty was widely ridiculed and criticized. So, a new expert group (Rangarajan committee) was set up to revisit the poverty line philosophy.
Setting up such a committee is the standard trick to delay and divert public attention. By the time the committee gives its findings or recommendations, public debate has already subsided and people have already forgotten the issue. So, what did the new expert group decide on poverty level?
It said that those spending Rs 47 in towns and cities and Rs 32 a day in rural areas should not be considered poor. For 2011-12, the Rangarajan committee estimated 29.5% poverty that made 363 million Indians poor.
Some time ago in 2017, the World Bank recently counted 12.4 percent poverty in India on its yardstick of $1.90 a day. It expects that the new survey results would bring it down to single digit percentage.
Ground realities remain the same, you can choose any poverty line, and hence which headcount, that serves your purpose! See, how conveniently poverty rate can be manipulated. In fact, you can wipe out all poverty by simply setting the poverty line at Zero; why bother about experts and their fancy statistical analysis!
A rich man is nothing but a poor man with money.
– W.C. Fields
The trouble with being poor is that it takes up all your time.
– Willem de Kooning
The poor are poor because the rich are rich.
In a country well governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be ashamed of.
The Multidimensional Nature of Poverty
UN Definition of Poverty
The Copenhagen Declaration at the “World Summit on Social Development” describes poverty as “a condition characterized by severe deprivation of basic human needs such as food, shelter, safe drinking water, sanitation, health, education, and information”.
Living in poverty means living deprived of several basic human needs simultaneously. An ideal anti-poverty framework would try to eliminate all these shortages (and the associated incapacities). Since there are so many factors that don’t directly depend upon income, a comprehensive approach would aim to go beyond the stereotype prescription of tackling poverty through reducing unemployment. In recent years, international bodies have started to promote and adopt this multidimensional view.
The first goal of the Sustainable Development Goals (SDGs) is to end poverty in all its ‘forms and dimensions’. Thus, now there is wide acceptance that poverty is multidimensional. Discussions leading up to the SDGs highlighted the need for new poverty measures.
One highly insightful multidimensional measure of poverty is already in use since 2010. It is Ophi’s Multidimensional Poverty Index (MPI) that utilizes 10 different indicators to probe different deprivations in the lives of the poor. Any person who is deprived in at least one third of the weighted MPI indicators is identified as poor (or ‘MPI poor’).
The MPI helps identifying different patterns of deprivations – clusters of deprivations that are common among different countries or groups. It can specifically point out in which aspects people are deprived and how different deprivations are interconnected. It can identify poverty traps and consequently strengthen the impact of interventions required to meet the SDGs.
The global MPI also reflects core SDGs.
Additionally, human well-being also depends upon non-material dimensions, which could be social, cultural, psychological, political and environmental. Social exclusion is a well recognized factor that promotes and sustains poverty. Corruption in various forms is yet another widespread malady that always works against the poor and decreases the well being. They are no less important than material factors. How to count or account for them? The solution depends upon how one looks at ‘development’. The answer is provided in a beautiful manner by Nobel winner economist Amartya Sen through the capabilities theory of development.
This development perspective puts people at the center of attention, not economy. It has provided solid theoretical foundation for the MPI.
The one dimensional income (consumption) poverty line presents a grossly simplistic picture of poverty. It tells nothing about how and why people are poor. Moreover, this poverty perspective leaves increasing income (and hence, consumption) through economic growth as the only option for reducing poverty. It only sees lack of sufficient income as the root cause of poverty, but more often than not monetary deficit is merely a symptom precipitated by various other deprivations. Therefore, poverty must best be seen as lack of proper development – both economic and human.
It is time to shift the focus from poverty to the poor – the deprived human beings – and uncover various basic factors that reduce their well being. It also means shifting focus of development from economy to people.
- Poverty Line in India: Changing Discourses and Policy Implications
Redefining poverty line by Rangarajan Committee report 2014 has set a fresh debate on India’s policy implications.
- A brief history of poverty counting in India
Poverty has indeed fallen in India, declares the Planning Commission from time to time, opening up the debate on poverty measurement all over again.