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Sad debate on poverty line by Arvind Panagariya

Watching the recent debate on the poverty line has been a depressing experience. As the debate unfolded, we witnessed self-righteous commentators engaged in a game of one-upmanship to prove that no one was more concerned for the poor than they, electronic media failing in its responsibility to inform the public simple facts and the Planning Commission proving itself incapable of communicating in simple terms the rationale behind its proposal either the public or the Supreme Court. 

To understand what was so wrong with the debate, it is important to note at the outset that the revised poverty line, which became the punching bag of all and sundry, had been recommended by the late Professor Suresh Tendulkar, an economist with impeccable knowledge of both the history and economics of poverty and poverty lines in India. He had also been known and uniformly admired for his integrity and forthrightness. Therefore, contrary to the picture the activists and media painted, the revised poverty line was not a sinister plot of an evil Planning Commission. 

But perhaps the most shocking aspect of the debate was that it left virtually everyone in the country believing that the Planning Commission had proposed to lower the poverty line! By omitting to mention that the proposed poverty line was revising the existing poverty line that had existed for four decades upward and focusing exclusively on its low level, the media duped much of the nation into thinking that the Planning Commission was engaged in a shadowy exercise to disqualify many of the existing poor from their below-poverty-line status. For its part, the Planning Commission too utterly failed to forcefully clear the fog. 

When I visited India in late September and early October 2011, to my utter amazement, I could find nobody outside of the specialists who did not think that the Planning Commission was lowering the poverty line. My mother-in-law, who at 78 years of age avidly follows the major debates through Hindi medium print press and television, was convinced that the government was trying to cut some of the poor from its benefit rolls. It took me a good half-hour to convince her that the proposed poverty line was higher, not lower, than what had been in use until now. 

The central government had originally adopted the poverty line as an instrument of monitoring progress in combating poverty. Accordingly, at the recommendation of our best experts at the time, it had fixed the line at the subsistence level of consumption expenditure. This choice allowed the government to track progress in lifting the people from subhuman to humane existence. 

The alternative was a poverty line that would assure a household comfortable living, alevel at which, say, it could afford a scooter. But progress relative to such a poverty line would have provided no information on what was happening to the destitute. 

One wonders precisely what the media had been trying to prove by slotting its air time to those telling the audience thatRs 32 would buy only half dozen bananas in Jor Bagh or thatRs 32 was the hourly rather than daily expenditure of a college student. Would it have liked the government to fix the poverty line at an expenditure level that would allow each household to buy a Nano car? At least from the viewpoint of keeping track of the fortunes of the destitute, the modest upward adjustment to the poverty line that Professor Tendulkar recommended was not as crazy as the media made out. 

Even this adjustment increased the total number of poor in India in 2004-05 from 302 million at the old poverty line to 407 million. With growth having made substantial anti-poverty programmes possible, however, the poverty line has also served as the guide to identifying the number of beneficiaries of the central government's antipoverty programmes. Here one can argue with greater justification that even the upward revision of the poverty line is insufficient to bringing all of the truly needy into the fold of anti-poverty programmes. 

Even then the matter is more complex than the activists and media pundits would have us believe. Thus, despite impressive growth we have achieved, we remain a poor country. This means the revenue resources available for anti-poverty programmes are still meagre. If we choose a high poverty line as per the activists' exhortations, we would be spreading the limited revenue resources thinly over larger population. 

Activists pretend that there is no limit to the available revenues when they suggest raising the poverty line to a level, suggested by the late Arjun Sengupta, which would turn three-fourths of the population into beneficiaries of antipoverty programmes. Their implicit suggestion that antipoverty programmes can be extended to 900 million Indians without significantly cutting the current entitlements of the bottom 400 million borders on nonsense. 

Unfortunately, the Planning Commission has now lost the battle and the best course for it would be to largely drop the practice of centrally-defined official poverty line. Instead, it should simply publish the distribution of population by different expenditure categories and let different entities, including state governments, choose their own cutoff expenditure levels for the purpose of identifying the beneficiaries of anti-poverty programmes. 

If some states want to opt for higher poverty lines than others and can muster the revenues to assist the poor it implies, it is their business. After all, Nitish Kumar did not follow the Centre when deciding to allocate funds for bicycles for schoolgirls! So, for the purpose of determining inter-state transfers, the Tendukar poverty line could still be used.