The poverty line, again PDF Print E-mail
Thursday, 22 March 2012 00:00
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If BPL Census the clincher, why revive poverty line?

Given the ferocity of the debate in Parliament over the poverty data released by the Planning Commission, it appears the government has shot itself in the foot—more so when it clarified in September that anti-poverty expenditure would be based on the BPL Census and not the Tendulkar panel’s poverty line. It is, of course, true as the data shows that India has done well and that economic growth does deliver inclusive growth (http://bit.ly/ GDIZhL), but since the political class does not deal in hard facts, the debate is once again back to what it was in September when the Planning Commission gave its poverty line affidavit to the Supreme Court: is R32 per day (for urban areas, in 2011-12 prices) enough for anyone to live anywhere near a decent life? Expect a resurgence of the old stories of what can be bought for R32 a day, perhaps even more journalists trying to live on this sum and then reporting on it!

But now that the old debate has been revived, perhaps the government needs to go on the front foot and make some forceful points. One, given the government spends R3,00,000 crore on subsidies each year, this means another R24 per day for the 35 crore poor, taking their daily consumption levels (R32+R25) pretty close to what the political class/activists are saying is a fair poverty line. If the poor don’t get the R25, that’s because of 50%-plus leakages, so the only solution is Aadhaar-type solutions the political class is not keen on. Two, since the NSS understates consumption by over 50%, if it says 29.8% of Indians consume less than R32 per day, the actual figure is more likely to be around 15% or so. Put another way, if it says 29.8% consume less than R32 a day, it’s more likely that 29.8% of the population consumes less than R64.

Finally, let’s make a comparison to the richest country in the world. As WSJ has pointed out, the US census of 2010 counted a family of five poor if the household had a combined income of $26,439 a year, which worked out to $14.5 per person a day. As a ratio of each country’s per capita income, this means the US poor are relatively worse off than the Indian poor. Put that way, India’s poverty line doesn’t look that out of whack.



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