In 2011-12, only 21.9% of Indians were below poverty line

A person spending over Rs 33.33 a day in urban areas, Rs 27.2 in villages not considered poor

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The proportion of people living below poverty line (BPL) has came down from 37.2 per cent in 2004-05 to 21.9 per cent in 2011-12 — a decline of 15.3 percentage points in a period that roughly coincides with the first eight years of the United Progressive Alliance (UPA) rule at the Centre.

In urban areas, the poverty rate fell 9.8 percentage points to 13.7 per cent from 37.2 per cent, while in rural areas 16.3 percentage points to 25.7 per cent from 42 per cent, according to official data released on Tuesday.

This means the poverty rate declined 2.18 percentage points in each year between 2004-05 and 2011-12, against an average 0.74 percentage points a year in the 10-year period between 1993-94 and 2004-05, during which non-Congress governments were in power (except the 1994-96 Narasimha Rao regime). India’s economy grew at an average 6.2 per cent annually during the said period, while the rate rose to 8.4 per cent in the next eight years under UPA. 

 

The figures announced on Tuesday, however, are based on the poverty line of 2011-12 that assumes only those people who spent less than Rs 27.2 per day in villages and Rs 33.33 in urban areas were poor.

In absolute terms, 137.4 million people were lifted above the poverty line over the seven-year period. Compared with 407.2 million poor people in 2004-05, the number came down to 269.7 million in 2011-12 — a reduction of 33 per cent.

 

The $1.25 level set by the World Bank is taken as the poverty line globally. The rupee’s value against the dollar averaged 47.85 in 2011-12. The purchasing power parity (PPP) rate for the rupee against the dollar could be arrived at by dividing the average exchange rate by 2.55. So, at the 2011-12 exc hange rate of Rs 47.85 a dollar, the PPP rate would be Rs 18.76. The $1.25 poverty line at that PPP rate would mean Rs 23.45 — less than India’s poverty line for both rural and urban areas as announced for 2011-12 on Tuesday.

The estimates were based on the controversial Suresh Tendulkar methodology that had evoked sharp criticism from civil society for drawing the poverty line at Rs 22.42 in rural areas and Rs 28.65 in urban areas in 2009-10. Faced with a backlash, the government had appointed a committee under the Prime Minister’s Economic Advisory Council Chairman C Rangarajan to review the methodology. In 2004-05, the poverty line was at Rs 14.89 per person per day in rural areas and Rs 19.32 in urban areas.

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However, the Planning Commission thought the correct way to assess poverty was households’ monthly expenditure. So, Rs 4,080 was taken as the poverty line in rural areas and Rs 5,000 in urban areas in 2011-12 — against Rs 3,364 and Rs 4,298 in 2009-10 and Rs 2,233.4 and Rs 2,899 in 2004-05, respectively (assuming a household has five members).

This time, the Planning Commission was a bit cautious. It conceded that absolute levels of poverty would be higher after the Rangarajan panel gave its recommendations. However, the rate of decline would be similar, it clarified in a press note.

"It is important to note that although the decline (in poverty rates) is based on the Tendulkar poverty line, which is being reviewed and might be revised by the Rangarajan panel. An increase in the poverty line will not alter the fact of a decline. While the absolute levels of poverty will be higher, the rate of decline will be similar," the Planning Commission said.