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Prof. Suresh Tendulkar interviewed by Pooja Suri and Amiti Sen


Suresh Tendulkar created a flutter among policymaking circles when a committee led by him raised the estimate for poor households in the country to 74 million from the Planning Commission estimate of 65.2 million. The former chairman of the Prime Minister’s Economic Advisory Council explained why his numbers are more credible in an interview with ET’s Pooja Suri and Amiti Sen. Excerpts:

Why did your committee decide to accept the existing urban poverty line and change the rural poverty line? Both were derived by applying the consumer price index to the poverty lines calculated in 1973-74...

Tendulkar: We did not exactly go with the existing updated (for the year 2004-05) poverty line, but with the headcount ratio or the proportion of the urban population below poverty line, which is much less controversial than the corresponding estimate for the rural population.

The old updated poverty estimates put the ratio of the poor in urban and rural areas at 25.7% and 28.3%, respectively for 2004-05. There are two problems here. According to the old poverty line, estimates of the poor in urban areas in major states turned out to be higher than that in the rural areas in several states. This is unrealistic because average urban living standards are much higher than the rural.

Also, the poor are concentrated in the rural and not in the urban areas. This is what prompted the government to appoint this expert group.

Unrealistic estimates are also emerging because consumption pattern in the original poverty line based on 1973-74 has changed significantly even among the poor households. Food consumption has moved away from cereals to non-cereals. Secondly the price indices used to extend those poverty lines over time are outdated in terms of weight as well as price base.

Why do poverty estimates based on sample surveys of NSSO and count of poor by the state governments lead to different estimates?

Tendulkar: These are two distinct problems. One is the estimation of the aggregate magnitude of the poor and the other is identification of the poor for reaching the benefits of the government’s welfare programmes. To find the estimate of the poor or the proportion of population living below the poverty line, we use the exogenously specified poverty line. The sample survey of the household consumption expenditure carried out by the NSS every five years gives you the size distribution of the per capita monthly expenditure. You apply the poverty line to that to find out the proportion living below the poverty line.

The other problem is the identification of the poor at the ground level, which requires a census of the poor households and cannot be done on the basis of the sample survey. The criterion that we use for specifying the poverty line, namely monthly per capita consumption expenditure, cannot be implemented in the census because it is not possible to get a reliable estimate of household expenditure in the last 30 days in the time available to census investigators.

How do we progress if there is wide divergence?

Tendulkar: The government has been taking the expert group estimates as control totals at the state level for allocating resources for centrally sponsored schemes. Invariably, the state level estimates turn out to be much higher. Like for Andhra Pradesh, it is 80%. You tell me whether it sounds like a realistic estimate. That is why while the state is free to use whichever estimate it wants, as far as the resources coming from the Centre are concerned, they are basically using the expert group estimates.

Using your estimates, the poverty line for rural areas goes up to Rs 15 a day and urban Rs 19 a day based on 2004-05 prices. Is it fair to say that a person at this level is not poor and does not need government support?

Tendulkar: While fixing the poverty line for arriving at food expenditure we have ensured that the normative food expenditure as per the malnutrition outcomes estimated by National Family Health Survey are alleviated. For each state, rural and urban population separately, we have worked out the normative food expenditure on the basis of the malnourished proportion of the population. We found that for most of the states the reported food expenditure near the poverty lines (people who are just slightly better off than those classified as poor) is at least 95% of the corresponding state-specific normative levels. So we have essentially done all the cross-validation at least to convince ourselves.

Private expenditure on education and health has been increasing and was not explicitly provided in the earlier poverty line. We have covered education by taking the norm that all children between 5-14 age group around the poverty line are sent to school. For ensuring accounting for minimum health, we have taken into account both the curative expenditure as well as the hospitalisation expenditure incurred by households to meet the contingencies of illness and hospitalisation.

The Arjun Sengupta committee classifies people earning Rs 20 per day or less as poor and vulnerable. Since the government is likely to go by your estimates, the group earning more than Rs 15 but less than Rs 20 will get excluded from the poor count...

Tendulkar: Deprivation perception can be of two kinds — self and socially perceived. I would feel deprived if I don’t have a luxury car but that doesn’t make me deprived and hence poor. That is something you must keep in mind. You can always jack up the poverty line and increase the proportion of the poor. That is up to you. Who the vulnerable are would be different for different peoples’ judgement.

Calorie norms were much higher in the 1970s compared to present levels as they were subsequently brought down to norms determined by the FAO, which may also have been a reason behind falling poverty. Given the fact that our health indicators are so poor, is it justifiable to lower the calorie norms?

Tendulkar: Since 1973-74, the demand for calories has been coming down (as measured through the NSS) and the food consumption patterns have been changing. More importantly, it has been pointed out by experts that nutritional status is not determined by what you eat in the last 30 days, which is what the NSS measures, but by what you have been eating over the years. Hence, there is no surprise that there is little correlation between the calorie intake and malnutrition outcomes emerging at the state level from the NFHS. So, there is no point sticking to the calorie criteria.

The Economic Times, 25 May, 2010, http://economictimes.indiatimes.com/opinion/interviews/Unr
ealistic-poverty-estimates-prompted-govt-to-set-up-expert-
panel-Tendulkar/articleshow/5970470.cms