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Debate on poverty of poor quality, says Basu
-The Business Standard

Terming the debate over poverty numbers of a poor quality, chief economic advisor in the finance ministry Kaushik Basu today said even if different yardsticks were adopted, roughly the same conclusions would be drawn on decline in the number of people below the poverty line, between 2004-05 and 2009-10, as was estimated by the Planning Commission.

The decline in the number during the period was the sharpest in any five years since Independence, Basu said, re-asserting the Planning Commission's point.

"I feel it is a very poor quality debate on poverty measurement," he said at a function here.

Pointing out there was a lot of misunderstanding on measuring poverty, Basu said one may question the yardstick applied, but should remember to apply the same barometer for both years — 2004-05 and 2009-10.

"That does not mean you cannot contest the poverty number. The important thing is, you have to use the same yardstick to measure poverty over time. If you change the yardstick, you will probably get different numbers for 2004 and 2009. But the decline will be roughly the same. Some seven per cent decline in poverty, which is a very sharp decline," he said.

He said a debate on different yardsticks for providing benefits of social welfare schemes is worthwhile. "But, those debates don’t change the fact that the decline we have seen is a major one. Probably, the decline in poverty numbers has slowed after 2009 as the economy slowed,” he said.

Among the G-20 members, India has an extreme position with the lowest per capita income and high poverty, he said. “If you look at the extent of poverty in India against the poverty in other G-20 countries, it is the largest,” he said.

Based on consumption expenditure survey and inflation, the Planning Commi-ssion said the poverty line per month per family stood at Rs 2,894 in 2009-10 against Rs 2,234 in 2004-05 in rural areas. For urban areas, the new line was Rs 4,298 in 2009-10 against Rs 3,364 in 2004-05.

On that basis, a conclusion was drawn that the poverty line was reduced to Rs 28 a person per day from Rs 22 in 2004-05 in urban areas. This also meant a family had five members.

Similarly in rural areas, the new poverty line was reduced to Rs 19.29 a person per day in 2009-10, compared to Rs 14.89 in 2004-05. This was much less than the affidavit given by the Planning Commission for poverty lines of Rs 32 in urban areas and 26 for rural parts.

But, the affidavit given by the Commission was for June, 2011. Also, at the time of the affidavit, the Commission did not have household consumption expenditure survey given by the National Sample Survey Organisation.