Counting India’s poor

1 Apr

We have heard time and again the agenda of the present government being to promote “inclusive growth”.   One of the major debates in this area is how to increase access to public services, subsidies, essential commodities etc to the poor.  Obviously, this can be done only when the poor are counted properly.  Today’s post encapsulates current problems with doing so.

The major problem in increasing access to the poor is in estimating how many poor there are in the country.  Different experts, government estimates etc. are increasingly fighting over just how many poor are there in the country.  One part of this fight is over how to count the poor and how to calculate the poverty line.

The official government estimate is calculated by using a survey done by National Sample Survey Organization (NSSO).  The last estimates were released in 200-01 on the basis of a survey done by 1993-94.   According to this estimate there are 30 crore people in the country who are below the poverty line.  This translates to around 27% of India’s total population.

Others however challenge the very method of calculating poverty.  A committee headed by prominent economist Dr. Suresh Tendulkar has estimated that 37% of India’s population lives below the poverty line.  This higher number comes because the committee also decided to include costs of health, clothing, and education in their definition of poverty.  Presently, the definition includes only the cost of calorie-intake for people.

Another prominent economist vociferously argues that India does not estimate poverty correctly, and that if correctly estimates, our poverty levels are much lower than what the official estimates say.  According to him, in the NSSO surveys,

And there is no concern, not even a footnote mention, of the glaring error of at least 41 per cent understatement in the consumption of the poor? Talk about missing the entire forest, and the trees as well.

On the other extreme is a report by the National Commission for Enterprises in the Unorganized Sector (NCEUS), which is an advisory body to the government of India.  According to them, a whooping 77% of India’s population spends Rs. 20 or less on consumption everyday!!  According to their estimates, there were 836 million or 83.6 crore people in this category in 2004-05.  Whats worse, this number has increased since 1999-00 when this number was 811 million.

Estimation of poverty is  a big deal for the country not just to know what kind of policies to adopt, but also to know just how expensive these policies will be.  If for example the government decides that 77% of India is below the poverty line, it might start 5-10 more NREGA-like programs and increase taxes to pay for it!!   On the other hand, if it decides that poverty is being over-estimated in the country, it might decide to remove its focus from NREGA-like programs entirely.

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