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LATEST NEWS UPDATES | Poverty: Where do you draw the line? by Sudhanshu Ranade

Poverty: Where do you draw the line? by Sudhanshu Ranade

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published Published on Oct 4, 2011   modified Modified on Oct 4, 2011

There are two ways to identify the poor: in terms of how much they lack, and in terms of what you can do for them.

To begin with, India's poverty line was set at the total (food and non-food) expenditure observed for the person who was just about consuming a nutritionally adequate number of calories.

In subsequent years, rural and urban poverty lines were adjusted to take inflation on board, without adjusting for changes in the consumption basket, including the trend towards consuming fewer (but better) calories.

In 2009, the Tendulkar Committee decided to junk the calorie-plus approach, among other things, because “when a nation is on the move, its standards must move with it”.

Since nobody had serious problems about the proposition that, according to the then-existing norms, 25.7 per cent of the urban population was poor in 2004-05, since the uproar was only about the 28.3 per cent rural figure, the Committee decided to freeze the baseline for urban poverty at its 2004-05 level, namely Rs 578.80 per capita per month.

Then, in a major departure from convention, the Committee reset the rural poverty line to the level at which, at rural prices, a person could purchase the urban consumption bundle.

As a result, the rural poverty line went up to Rs 446.68 per capita per month; and the head count ratio from 28.3 per cent to 41.8 per cent.

Adjusted for inflation, urban and rural poverty lines in August 2011 were Rs 990 and Rs 801 per capita per month; or Rs 33 and Rs 26.70 a day. And that brings us back to the question of how one defines poverty.

It is all very well to shout down anyone who says that only 42 per cent of rural people are poor.

So long as we remember that that still leaves us with 450 million poor people on our hands. And so long as we keep reminding ourselves that the passion of Sonia Gandhi's National Advisory Council is not matched by its performance.

There is no place for the old, ill and infirm in its preferred mechanism for income transfer, and the rest have to slog to earn their ‘entitlements'.

Only half of the Rs 40,000-crore allotted for the employment guarantee programme gets paid out as wages, while the rest is cynically used to justify an illusory reduction in the ‘effective revenue deficit'.

Last but not least there is inflation, which forces the poor to run faster and faster to stay in the same place.

The Hindu Business Line, 1 October, 2011, http://www.thehindubusinessline.com/industry-and-economy/economy/article2503520.ece


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