T N Ninan: Righteous rage indeed

Looking back at the recent poverty debate, it is clear that this was another case of Left-leaning commentators venting their spleen without reason

The poverty debate that flared up three weeks ago is dying down. Looking back, it is clear that this was another case of Left-leaning commentators venting their spleen without reason. Because, at the widely-mocked expenditure level of Rs 32 per day in the cities and Rs 26 in the villages, the official Indian poverty line is comparable to that used by the United Nations (UN) for its Millennium Development Goals (MDG). The MDG poverty line is $1.25 per day. At the current exchange rate, adjusted to get purchasing power parity, that works out to about Rs 29, for both village and city in India — not very different from what the Planning Commission told the Supreme Court. So should the UN’s assumptions and targets, accepted around the world, be hooted out of court too?

Second, the prescribed wage under the rural employment guarantee programme matches the poverty line for a five-member family: Rs 130 in the villages. The National Advisory Council (NAC) wants it to be more; can’t afford it, says the government. So why doesn’t the redoubtable Aruna Roy, who is a member of the NAC, ask Manmohan Singh if he can live on that wage, in the manner that she posed the question to Montek Singh Ahluwalia? If she doesn’t ask the prime minister, because it would be rude and irrelevant, why wasn’t it rude and irrelevant when posed to Mr Ahluwalia?

The late Suresh Tendulkar’s calculation method actually increased the number declared officially to be poor, from 27.5 per cent of the population to 37.2 per cent (for 2004-05). Likewise, another committee in 1993 had changed the method of measuring poverty, and thereby raised even more sharply the number below the poverty line for 1987-88, from 29.9 per cent to 46.3 per cent. If the charge is that government economists have been fiddling with poverty numbers to bring them down, someone should point out that the “fiddling” has raised the poverty numbers, not once but twice in the last two decades.

The professional naysayers argue that Indian poverty levels have not declined at all, indeed that they are higher now than in 1983 — when the country’s per capita income was less than a third of what it is today. They also say that the hunger situation now is worse than during the Bengal famine of 1943! And they keep repeating the mythology that 77 per cent of the population lived on less than Rs 20 per day in 2004-05. If we take their numbers as given, a poverty line set slightly above Rs 20 per day, adjusted for inflation up to 2011, would be about Rs 35 per day. And such a poverty line would cover about 80 per cent of the population — all of whom would then get the benefit of the government’s anti-poverty programmes. Trouble is that no country in the world has a poverty alleviation and income transfer programme that covers 80 per cent of its population, because it would simply bankrupt the treasury.

The truth is that these exaggerated poverty numbers simply cannot be a reflection of the reality. If indeed 80 per cent of the people live at various levels below Rs 35 per day today, their annual consumption expenditure would be Rs 10,00,000 crore or Rs 11,00,000 crore. With total private consumption estimated at about Rs 50,00,000 crore, this gives the remaining 20 per cent of the population a level of spending that is nearly four times as much as that of the bottom 80 per cent. The truth, however, is nowhere near as horrific: the richest 20 per cent consume less than the bottom 80 per cent, not four times more. But who wants inconvenient facts when righteous rage is so much easier?