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The real poverty issue-Satya N Mohanty

The recent brouhaha following the release of the poverty headcount ratio has triggered heated discussions with regard to their reliability. While it is very clear that the completeness and the consistency of the statistics are not in question, what is being questioned is the possible fudging of the data to reduce the poverty line. The data has not been fudged, as has been brought out very clearly by many authors. It has also been brought out clearly that the parameters remain the same and if at all have been more generous to include expenditures other than food.

However, any definition of poverty will have an element of arbitrariness. The poverty line is the level of income below which people are defined as impoverished. The poverty line in India defines the bare minimum income for basic food and other necessities for a person. In addition, it indicates the percentage of people below or above the benchmark line. What is heartening is that the poverty figures are coming down rapidly. The absolute figure of the poor has reduced by 54 million over a period of 5 years, which stands in stark contrast to the earlier figures. Between 1993-94 and 2004-05, the decline was only 0.7% per year, whereas during the 5 years from 2004 to 2009, it has come down by 1.5% per annum. Earlier several states had either a constant figure of poverty or, in several other states, the figure was going up. The distrust of these figures is worth noting rather than getting bogged down in the minutiae of cynical rejection.

In as much as the headcount ratio goes, in small size states like Goa, Himachal Pradesh and J&K, it is around 9%; in states like Kerala and Punjab, the poverty figures are below 15% and in Tamil Nadu and Uttarakhand, they are around 18%. Interestingly, seven large states have shown a substantial decline in poverty compared to their earlier poverty figures i.e. between 20% in Haryana and 26.7% in West Bengal with Andhra Pradesh, Gujarat, Karnataka, Rajasthan, Maharashtra figuring in the middle. Have the states reached the tipping point in terms of reduction of poverty? Perhaps they have, but we need to understand more.

That leaves seven states that still report poverty figures of more than 30%. Five out of the seven states, including Madhya Pradesh, Orissa, Uttar Pradesh, Assam and Jharkhand, show poverty figures around 36-39%. Bihar shows stubbornly high figures at 53% and Chhattisgarh at 48.7%. Interesting features are that in states like Tripura, the poverty figure is down from 40.60% to around 18%, and in Orissa, a drop of 20 percentage points leaves the poverty head count ratio at 37.01% against 57.20% earlier. In Maharashtra, the drop is 34.64%, leaving the poverty ratio at 24.66%. Similarly, noteworthy achievements can be seen in case of Rajasthan, Maharashtra, Gujarat, where poverty figures, from high 30s, have been reduced to the low 20s. We need to study what has worked in these cases.

‘What’ has worked in the rapid reduction of poverty in these states and ‘why’ it has worked needs understanding. That may help give us a clue to the solution to the massive problem the country faces in this front. It will also show why, despite a positive feedback loop of Bihar, poverty still remains high and why is it coming down ever so slowly in UP?

The message is very clear:

Given our political economy, where politics is linked to creating entitlements based on poverty, the resultant cacophony is understandable. In a paternalistic state like India, rapid reduction of poverty perhaps limits the rhetoric and clientistic politics. We need not be unduly disturbed by the clamour that declining trends of poverty will always trigger off. Equally important are the rhetoric and posturing of several players in the poverty field. Any news of rapid poverty reduction will provide brave causes for them to fight for.

It is now beyond doubt that the bar has not been lowered to enable more people to cross it, nor is it a shifting goalpost as the present day politics would like it to be.

It is a well-accepted fact that although poverty is based on consumption expenditure, households with the same consumption expenditure will have different levels of consumption based on whether or not they are receiving food subsidies through the PDS. Does it explain Tamil Nadu and Orissa’s reduction in poverty?

Some people have hastily concluded that NREGS is the behind the fall in poverty figures. The issue require stronger validation.

The nub of the story lies somewhere else and that needs to be studied because the findings will help formulating policies to engineer more rapid reduction of poverty. If the growth seem to be like rising water which lifted many boats, the country should be ready with a bouquet of policies to handle poverty alleviation in the presence of moderate growth. We may quibble about the items that should form part of the poverty basket or whether the poverty line is fixed low, but the declining trend is undeniable.

Let not the message be lost in the medium. The babble that surrounds the debate is fine, but the country missing the message is anything but wise. Somewhere we will have to accept, as CP Scott said, that comments are free but facts are sacred. We are better off learning from these statistics rather than debunking them.

The author is a civil servant. Views are personal