Poverty Scenario in India
The absolute level of poverty is estimated by standardizing the minimum physical quantities of cereals, pulses, milk, butter etc., for a subsistence level and then multiplying the physical quantities by price quotations to arrive at a figure of per capita consumer expenditure. It may be noted that as prescribed by the Indian Council of Medical Research, these physical quantities should lead to the provision of 2,400 calories per capita for rural areas and 2,100 calories per capita in urban areas. Obviously, the stipulation of per capita consumer expenditure should result in providing the recommended energy intake in the form of Required Daily Allowance (RDA). This procedure was accepted by the Planning Commission in 1969 and the poverty line was fixed at Rs. 20 per capita monthly expenditure at 1960-61 prices. Dandekar and Rath used the criterion of Rs. 15 for rural areas and Rs. 22.5 for urban areas at 1960-61 prices.
Later, the Planning Commission appointed an Expert Group under the Chairmanship of professor D.T. Lakdawala which submitted its report in 1993. The Expert Group estimated a monthly expenditure of Rs. 49 for rural and Rs. 57 for urban areas at 1973-74 prices. The Expert Group used the Consumer Price Index for Agricultural Labourers ( CPIAL) for rural areas and a simple average of Consumer Price Index for Industrial Workers (CPI-IW) and the Consumer Price Index for Non-Manual Employees ( CPINM) for urban areas.
It would be of interest to know the total number of poor and poverty percentages in the total population. The data reveals that between 1973-74 and 1987-88, though the poverty percentage declined from 54.9 per cent in 1973-74 to 44.5 per cent in 1983, the total number of poor remained around 320 million. Even in 1993-94, the number of poor was 320 million, since the period 1987-88 to 1993-94 showed a negative decline of poverty percentage of the order of 0.7 per cent per annum.
The fastest decline in poverty is observed during 1993-94 to 1990-2000 at the rate of 3.4 per cent per annum and the absolute number of poor declined to 260 million in 1999-2000. But during the next five years, though the rate of growth of GDP was of the order of 6.5 per cent per annum, several poor showed a very small decline from 260 million to 250 million, indicating an annual average decline by 0.8 per cent during 1999-2000 and 2004. Obviously, the rate of poverty reduction slowed down, which raised a question mark about the efficacy of growth driven strategy that is being followed in the liberalisation – globalisation era.
group data to arrive at the number of persons below the poverty line, but just glosses over the calorie intake to ensure that the associated energy intake meets the calorie norm as the basic criterion for determining the level of expenditure at which this can be ensured. Patnaik mentions, Thus the current data are being used selectively, with only the distribution of persons by expenditure classes being used, and the associated energy intake part being ignored completely. If the norm of 2,400 calories is applied, it is revealed that 74.5 per cent of the population for rural areas was below the poverty line. Thus, the official method of estimation poor leaves out 47.5 per cent of the total population of around 350 million actually poor persons.
An Estimate of the Rural Poor has been made based on official estimates and MPCE (Monthly Per Capita Expenditure) providing 2,400 calories. Since the norm of MPSCE for 197374 was correctly applied, the estimate of poverty by both the methods works out to be 56.4%. But for years 1993-94. had 1999-00, the official estimates were much lower than that based on MPCE providing 2,400 calories.
Utsa Patnaik concludes her critique with the following observation: Sometimes to justify the indirect method, it is argued in an illogical manner that the original consumption norm of 2,400 calories was ‘too high’. First, it is not too high because the average intake of those below it works out to less than 1,900 calories which are lower than in any other country in the world except the least developed countries. Second, even if it is accepted for the sake of argument that it is too high, it does not justify comparing 1999-00 ‘poverty’ figures which are of all those persons below 1,890 calories intake, to those below 1,970 calories in 1993-94 and below 2,400 calories intake in 1973.
Check out these notes on Redefining Poverty Line – Basic Needs Approach.