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| Poverty line: Can we do without one? |
| Business Standard / New Delhi Oct 05, 2011, 00:54 IST |
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Yes, since it will always suffer errors of exclusion and inclusion; but we still need it to assess economic progress.
 ASHWANI KUMAR
Former Member, Central Employment Guarantee Council (MoRD)*
The practical way out is to move towards the universalisation of social-welfare programmes and junk the socially-insensitive BPL acronym
The Planning Commission’s affidavit on poverty line in the Supreme Court comes not only as a Kafkaesque delusion, but also reflects the deeply Brahmanical and technocratic mindset of the welfare mandarins at the Yojana Bhawan. The irrationality of poverty line becomes more atrocious when it is used to cover not only the rising cost of food but also all non-food essentials, including clothing and footwear, cooking fuel, lighting, transport, education, medical costs and house rent. The Planning Commission, seduced by statistical models, has become a mere accounting office. This is evident from the way in which experts and officials of the Planning Commission and the ministry of rural development (MoRD) have converted the simple art of “headcount of poverty” into a new science of disenfranchising the poor.
Historically speaking, the genesis of this atrocity lies in consumer expenditure surveys on which crude poverty estimates are prepared by the Planning Commission. Ironically, these surveys were pioneered by scientist and statistician P C Mahalanobis. This has caused statistical uncertainty and dogma leading to widely differing and discomforting identification of India’s poor. However, this situation turned from bad to worse when the Commission changed the definition of poverty line in 1973-74 and also delinked it from the nutritional requirements of the poor. This came as a double whammy since estimates of general under-nourishment – also called protein-energy malnutrition – are nearly twice as high in India as in sub-Saharan Africa. The main purpose of poverty line is to identify the poor for food subsidy and for the MoRD’s programmes. If the MoRD’s BPL survey of 1992 suffered from the fallacy of a fixed-income criteria of Rs 11,000, the 1997 survey changed arbitrarily the concept of poverty line from a household to a person basis.
Further, the MoRD’s “hit-and-miss” BPL survey of 2002 exposed the flaws of a 13-point scoring methodology. This resulted into such public outrage that the Supreme Court stayed the distribution of new BPL cards. Next, the N C Saxena report in 2009 also suffered from the same fallacy plus lack of transparency and participatory verification. It also retained the “capping” of the poor, not only for each state but also for each district, block and gram panchayat. Consider the absurdity of a criterion of “share of length of metalled road to total of the district” for capping the number of poor in the block! BPL surveys suffer from errors of “exclusion and inclusion” for which the poor, especially the tribals, suffer the most. Moreover, they are outrageously costly. For example, the cost of undertaking the present BPL survey at the rate of Rs 20 per household by the MoRD is about Rs 350 crore of which Rs 148 crore has already been spent in 2009-10.
Though the much-hyped joint statement of the Planning Commission and the MoRD has resulted in the scraping of the capping of the poor, the verdict on further debate on poverty will have to wait for the Socioeconomic Caste Census (SECC2012) results. Ironically, the decision to form another “expert committee” to examine the feasibility of a multidimensional vulnerability-based dispensation of entitlements shows the faith in bureaucratic means.
Evidence from the past clearly suggests that it is almost impossible to design and implement simple, transparent and verifiable criteria for the identification of the poor. Therefore, the logical and practical way out is to move towards the universalisation of social-welfare programmes and junk the socially-insensitive BPL acronym. Believe it or not, houses of the so-called poor have “BPL” painted on them in Chhattisgarh’s Sarguja district! The success of programmes based on self-selection criteria like the Integrated Child Development Services and Mid-day Meal Scheme, the near-universal public distribution system in Tamil Nadu and Kerala and right-based entitlements in the Mahatma Gandhi National Rural Employment Guarantee Act provide a road map for a more fair system. And in this universalised system there is justification for “differentiated entitlements”, with underprivileged households getting more as argued by right-to-food activists.
The author also teaches at Tata Institute of Social Sciences, Mumbai
 HIMANSHU
Assistant Professor of Economics, School of Social Sciences, JNU
If there has to be planning for ‘inclusive growth’, one has to have an idea of how many are excluded from the growth process
The issue is not whether we need a poverty line or not but for what should the poverty estimates be used. Almost all countries have a yardstick to measure progress over time and across space. Poverty line and poverty estimates fulfil the essential purpose of such a yardstick. After all, if the purpose of economic policy is to improve the well-being of the population, then we do need to ask how many have benefited from economic growth every now and then. However, poverty estimates are only one of such statistical estimates that serve this purpose. A proper evaluation of economic policies requires a gamut of such statistical indicators including growth rates, unemployment rates and inflation rates.
But not all countries measure poverty using the same poverty line. Most of the developed countries have a poverty line that is relative. Relative because it is a poverty line pegged to the median household expenditure of the country. In most countries, it is 60 per cent of the median expenditure. On the other hand, most developing countries have a poverty line that is fixed in absolute dimensions updated only to reflect changes in price indices. In India, poverty lines have traditionally been absolute. These were originally anchored to the minimum expenditure required to afford specified calorie norms. The Tendulkar Committee delinked the poverty lines from anchoring on any specific calorie norm and recalibrated the existing urban official poverty lines to correct for spatial and inter-temporal price changes more accurately than were in-built in the previous poverty estimates. This correction in price indices led to the rural poverty-line being revised upwards by almost 30 per cent with changes also in state poverty-lines.
The current debate on the poverty line has focussed more on whether the poverty lines currently in use are low or high. But the more important question that is being asked is whether these estimates are used to identify and limit the number of households that are eligible for social assistance. In fact, the real question is the second one. The first question is irrelevant so long as your entitlement to various social assistance schemes is not dependent on the poverty line. It was this mistake that the Planning Commission committed while replying to the Supreme Court. Fortunately, this issue has now been resolved with the Planning Commission agreeing to delink poverty estimates from identification of beneficiaries for social assistance. But the more important issue of public distribution system entitlement continues to be linked to poverty estimates. This was also re-enforced by the National Advisory Council that accepted the Tendulkar Committee poverty estimates as valid for deciding the number of priority households.
But what are poverty lines used for? These are used for various purposes and most importantly for tracking the progress of people at the bottom end of the distribution. This is a valid question that needs to be asked and the current poverty lines are just a measuring rod for this. These also give us a comparative picture of how different states are doing in terms of benefiting the bottom end of the distribution.
But any sensible planning requires the use of estimates on the absolute level of deprivation in various dimensions, but also the relative level of deprivation and poverty across states. If there has to be planning for “inclusive growth”, one has to have an idea of how many are excluded from the growth process and what can be done to bring them into mainstream. For balanced regional development, it is also imperative that state resources be directed towards states that are poorer. Poverty estimates not only give an idea of the magnitude of the problem, but tracked over time, they can also be used to evaluate the success and failure of alternative economic policies for poverty alleviation.
But if the purpose of the poverty estimate is only as yardstick to measure the magnitude of the problem and the relative performance of groups over time and across states, then the issue of poverty lines being low and high is only a matter of academic debate. India has had a rich tradition of such debates on what a poverty line should be and what it implies in real terms. That debate must continue.
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