Niti Aayog might use poverty lines only for analytical purposes

Aayog task force says defining a poverty line is a controversial issue

In the wake of the various controversies surrounding poverty lines at the erstwhile Planning Commission, its successor National Institution for Transforming India (Niti) Aayog feels this barometer should be used only for analytical purposes. Specific indicators be used for social welfare schemes.

At a recent meeting, an Aayog task force said defining a poverty line was a controversial issue. It could be based on calorie intake or minimum norms of some other items of consumption such as clothing, shelter, education, health and transport or a combination of all these, sources told Business Standard.

The task force — of Aayog Vice-Chairman Arvind Panagariya, member Bibek Debroy and experts like Rathin Roy, Surjit Bhalla and the government’s chief statistician, T C A Anant — recently discussed the issue of using the poverty ratio as a yardstick for indentification of beneficiaries. Its members felt this was better used as an indicator for analytical exercises to assess the change in the level of living. Data on sector-specific indicators could be used for targeting beneficiaries from schemes on that segment. The Socio-Economic and Caste Census, 2011, will be one of the sources.

Also, the purchasing power parity (PPP) concept can be considered for allocation of resources among states for various schemes. PPP among states can be derived from the National Sample Survey consumption expenditure data or state-wise poverty lines.

“Poverty estimation is as important as GDP (gross domestic product). It gives an idea on the programmes, which groups are falling apart. Even if you have a foolproof identification system, it won’t give you a picture of people who are falling apart. You need to have a statistical barometer to know that,” said Himanshu, an assistant professor at Jawaharlal Nehru University here. The Planning Commission had got into a big controversy on these issues, with its calculations on the basis of national consumption and expenditure surveys. Earlier, the Rangarajan panel had found 29.5 per cent of India's population was poor in 2011-12, against 21.9 per cent estimated under the previous methodology, which had drawn sharp criticism from various quarters.

In absolute terms, 363 million people were below the poverty line that year, higher by about 93 million over the 269.8 million estimated earlier. However, the poverty rate — the number of poor as a proportion of the population — came down swifter in the estimates of the Rangarajan panel than calculated earlier on the Suresh Tendulkar methodology.

A greater number of people were classified under poverty in 2011-12 as the Rangarajan committee raised the poverty line compared to that fixed earlier. It had said anyone spending up to Rs 47 a day in urban areas and Rs 32 in villages would be considered poor as of 2011-12.

The Tendulkar methodology had pegged these levels at Rs 33 in urban areas and Rs 27 in villages. By either method, poverty was reduced during 2009-10 to 2011-12 (the first three years of the second UPA government). For 2009-10, the Tendulkar methodology had pegged the poverty line at Rs 22 in villages and Rs 29 in urban areas. These were raised to Rs 27 and Rs 40, respectively, by the Rangarajan committee.

All these numbers had stirred controversies, with political parties and social activists poking fun at the Planning Commission over these numbers.

The task force notes as most government programmes are either universal or based on programme-specific indicators, data for which is separately calculated and used in a programme-specific manner. The National Rural Livelihood Mission, Indira Awas Yojana, National Old Age Pension Scheme, are the three programmes that remain target group-oriented (for the poor only) but these programmes have other criteria for selection of beneficiaries, the members said.