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BJP, experts question new poverty numbers-Appu Esthose Suresh & Asit Ranjan Mishra

Even as the opposition took the government to task for tweaking consumption data to show that the number of poor in India has declined, as first highlighted on Monday by Mint columnist Himanshu, Planning Commission deputy chairman Montek Singh Ahluwalia defended the methodology used for the calculation by the plan panel.

Ahluwalia said the inclusion of money spent on the mid-day meal scheme in so-called private household expenditure was correct because the scheme is a “conscious act of policy” by the government to boost consumption.
 
“It is absurd to say that we should not count it in,” he added. By that argument, it could be said the government should discount the impact of the its flagship job guarantee scheme on private consumption, he said.

In his Page 1 column in Mint on Monday, Himanshu, an assistant professor at Jawaharlal Nehru University and visiting fellow at Centres de Sciences Humanines, wrote: “The inclusion of such items as private household expenditure, which is provided by the government, may itself be controversial. It raises questions on whether other benefits that the households receive, such as free text books, school uniforms, subsidized food and so on (cooking gas, colour TVs and laptops in some states) should also be included as part of private expenditure by households.”

The inclusion of the amount spent on the mid-day meal scheme as part of private consumption exaggerated the decline in poverty by 18 million, the columnist, who uses only one name, pointed out.

The Bharatiya Janata Party’s Arun Jaitley, leader of the opposition in the Rajya Sabha, raised the issue in Parliament, citing the Mint column.

While participating in the budget debate, Jaitley said: “Reports have appeared that this (the reduction in poverty) is on the basis of changing the goal post, that Rs. 32, which was once considered curiously enough to take a man out of poverty, has now become Rs. 28.”

He added: “And, now, it appears..that while calculating this figure of 7.3% (overall reduction in poverty)—I am sure, the finance minister will get into this question—the schemes such as the mid-day meal scheme which are external aids to remove poverty, have been taken into consideration ....I am not so sure whether that is a correct calculation.”

Himanshu argued in his column that the actual poverty estimate is 35.2% in rural areas, 21.5% in urban areas and 31.5% for all India, and not 33.8%, 20.9% and 29.9%, respectively, as claimed by the Planning Commission because the plan panel included expenditure of the government on the mid-day meal, provided to students at government schools, as part of household expenditure in 2009-10.

The item was missing in the earlier estimate in 2004-05, resulting in the data being non-comparable.

Ahluwalia said the government’s expenditure on the mid-day meal scheme has increased significantly since 2004-05, which is why it makes sense to include it now.

However, Y.K. Alagh, former Planning Commission member who also headed an earlier panel to estimate poverty, said including the mid-day meal scheme in private consumption could lead to double-counting.

“You have to make up your mind. If social security schemes are counted as private consumption, then you need to net it out from government expenditure, which is not being done now. You cannot treat it both ways,” he said.