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This article, written by Jaya Mehta (email: a prominent Indian economist and activist, will be printed in Alternative Economic Survey 2003-2004, published by Alternative Survey Group.

Poverty in India

"When the government violates the people's rights, insurrection is, for the people and for each portion of the people, the most sacred of rights and the most indispensable of duties."

- Marquis De Lafayette

Poverty estimates in our country are derived from the household consumer expenditure data collected by National Sample Survey Organisation (NSSO) every fifth year. Household consumer expenditure surveys are also conducted annually but the sample size is much smaller. Planning Commission does not take cognizance of these annual surveys. Everyone eagerly awaited the quinquennial survey results for the year 1999-2000 (55th round) for an authentic picture of the poverty trend during the decade of economic reforms. The quinquennial survey of 1993-94 and the annual surveys through out 90s indicated that the declining trend in poverty ratio achieved during 80s, was halted (reversed?) in the reform era. The reform lobby was uncomfortable with the annual surveys and insisted that rigorous poverty estimate could only be obtained from the quinquennial surveys of large sample size.

The 55th round results (1999-2000) took everyone by surprise. The poverty ratio came down from 36% in 1993-94 to 26% in 1999-2000 - 10% decline in just 5 years. The reform programme of the government was a magic wand. Did it actually physically annihilate the poor and the marginalised?

The reported numbers on farmers’ suicides, the starvation deaths, victims of communal riots, dalits killed by the upper castes and the tribals killed in police firing are indeed alarming for any civilized society.

The 55th round survey results created a serious controversy with respect to reference period. The NSSO has been collecting consumer expenditure data on the basis of a uniform 30-day recall period since 1950s. There had been a persistent clamor that one-month recall period was too long and the expenditure on food got underreported. NSSO responded by changing the reference period. In the 55th round, the consumer expenditure for food, pan, tobacco, etc. was recorded for two reference periods, one- week recall and one-month recall. The reference period for clothes, consumer durable etc. was 365 days and for other items it was one month.

The changed reference period increased the expenditure estimates and reduced poverty figures in one stroke. Such drastic reduction in poverty raised a big uproar. The 1999-2000 figures of headcount poverty ratio could not be accepted especially in view of the annual survey results and in view of the trends shown by other variables closely related to poverty. The experts (pro and anti globalization) argued about the rigour of monthly and weekly recall period and ultimately agreed on one point. The 1999-2000 poverty estimates were not comparable with 1993-94 estimates. Hence, no inference could be drawn regarding impact of reform on poverty.

The experts are civilized people. In this world fraught with violent conflicts, they have learnt to live in harmony with ‘notes of dissents’ to protect their honour. However, if they were to face a group of class 10th or 1st year students, who are particularly encouraged to ask questions, then it is not unlikely that one of them will stand up and ask:

Q.      “ What exactly is the meaning of 36 % or 26% poverty in the country?”

The expert will answer,“ It is the percentage of population which lives below the poverty line.”

Q.         & #8220;What is ‘poverty line’?”

A.         & #8220;It is Rs. 327 per month per capita for rural India and Rs.454 per month per capita for urban India for the year 1999-2000.”

Q.         & #8220; How are they obtained?”

A.         & #8220;The Planning Commission updates the ‘poverty lines’ for the year 1973-74 according to relevant price indices”

Q.         H ow were the poverty lines for the year 1973-74 computed?

A.         & #8220;The planning commission identified the expenditure group from the NSSO consumer expenditure data, whose expenditure on food fulfilled the calorie norms. The average per capita per month expenditure of this group was fixed as the ‘poverty line’. The poverty line was Rs. 49 for rural areas and Rs. 56.6 was for urban areas.”

Q.         & #8220;What were the calorie norms?”

A.         & #8220;For rural India, it was 2400 Kcal per capita per diem and for urban India it was 2100 Kcal per capita per diem.”

Q.         & #8220;What were the poverty ratios in 1973-74?”

A.         & #8220;The poverty was 56.4% in rural areas, and 49% in urban areas.”

Q.         & #8220;Does it mean that in 1973-74, 56.4% population in rural areas did not have sufficient purchasing power to afford 2400 Kcal and 49% population in urban areas could not afford 2100 Kcal?”

A.         & #8220;That is correct.”

Q.         & #8220;Does it mean that we have made considerable progress in 25 years and in 1999-2000 only 27% of our rural population cannot afford 2400 Kcal?”

If the expert is bothered about rigour and truth, he/she cannot answer this question in affirmative. According to NSSO 55th round data the rural poverty line of Rs.327 in 1999-2000 corresponds not to 2400 Kcal but to 1868 Kcal. The rural poverty line, which would correspond to 2400 Kcal, is Rs. 567 and the corresponding poverty ratio is 74.9%. Thus in 1999-2000, 74% of our rural population cannot afford 2400 Kcal.

Table1

Calorie intake at different expenditure level

(1999-2000)

Rural

Urban

Expenditure class

Calorie intake

% Expenditure on food

Expenditure class

Calorie intake

% Expenditure on food

0-225

1383

67%

0-300

1398

64%

225-255

1609

67%

300-350

1654

64%

255-300

1733

66%

350-425

1729

62%

300-340

1868

65%

425-500

1912

60%

340-380

1957

65%

500-575

1968

58%

380-420

2054

64%

575-665

2091

56%

420-470

2173

63%

665-775

2187

54%

470-525

2289

62%

775-915

2297

52%

525-615

2403

60%

915-1120

2467

49%

615-775

2581

58%

1120-1500

2536

45%

775-950

2735

55%

1500-1925

2736

41%

950-more

3778

46%

1925-more

2938

32%

Source: Nutritional intake in India NSS 55th round. Report No.471.

The expert may find this statistics too uncomfortable and may like to end the conversation. However, if these figures are given to the student, he will easily infer that either the definition of poverty should be revised or the poverty figures should be revised.


II

We present below the state wise poverty lines and poverty ratios obtained according to the planning commission definition of fulfilling 2400 Kcal and 2100 Kcal norms. These are juxtaposed against the official figures. Our estimates are only approximate. We neither had the requisite data nor did we attempt finer statistical adjustments to get more accurate estimates. Our intention here is only to bring home the wide divergence between the two sets of figures and thus point at the absurdity of official estimates.



Table 2

Poverty in India

States

Rural

Urban

Official Estimates

Our Estimates

Official Estimates

Our Estimates

Poverty line

Poverty ratio

Poverty line

Poverty ratio

Poverty line

Poverty ratio

Poverty line

Poverty ratio

A.P.

262.94

10.5

565

89.4

457.40

27.2

775

62.8

Assam

365.43

40.3

675

92.9

343.99

7.5

775

60.0

Bihar

333.07

44.0

470

79.8

379.78

33.5

535

60.2

Gujarat

318.94

12.4

775

86.5

474.41

14.8

775

53.6

Haryana

362.81

7.4

615

47.5

420.20

10.0

847

54.7

H.P.

367.45

7.5

560

44.75

420.20

4.6

575

11.3

Karnataka

309.59

16.8

681

84.6

511.44

24.6

838

58.5

Kerala

374.79

9.4

950

79.6

477.06

19.8

1014

68.6

M.P.

311.34

37.3

497

79.25

481.65

38.5

665

62.1

Maharashtra

318.63

23.2

950

94.9

593.71

26.7

915

62.2

Orissa

323.92

47.8

498

82.9

473.12

43.5

425

34.3

Punjab

362.68

6.0

775

66.6

388.15

5.5

717

46.2

Rajasthan

344.03

13.5

525

55.8

465.92

19.4

620

46.8

Tamilnadu

307.64

20.0

950

94.5

475.60

22.5

840

58.8

U.P.

336.88

31.1

496

68.5

416.29

30.8

616

59.7

W.Bengal

350.17

31.7

615

85.6

409.22

14.7

621

45.3

Delhi

505.45

9.2

1120

53.6

All India

327.56

27.0

567

74.95

454.11

23.5

718

54.9

Sources: 1. Household Consumer Expenditure in India 1999-2000 Key Results NSS 55th Round, Report No.454.

2. Nutritional Intake in India 1999-2000.NSS 55th Round, Report No.471.

Note

: We identified the expenditure groups where the per capita per diem calorie consumption was closest to 2400 Kcal in rural areas and closest to 2100 Kcal in urban areas. The average calorie consumption in the identified group was not exactly equal to 2400 or 2100. Sometimes it was more and sometimes less. Our estimates are based on the following approximations and adjustments. Accordingly, there could be slight overestimation or underestimation in the poverty figures computed by us.

a)In the cases where identified group’s average calorie consumption was less than 2400 Kcal or 2100 Kcal, the upper end point of the identified expenditure range was taken as the poverty line. The cases where average calorie consumption was slightly more than 2400 Kcal or 2100 Kcal, the poverty line was taken as the average aggregate expenditure of the identified expenditure group.

b)The poverty ratio was computed by adding the percentage population of all the expenditure groups below the poverty line. The cases where the identified group had calorie consumption below 2400 or 2100 Kcal, the entire population of this group was included in the poverty group. If the calorie consumption of the identified group was above 2400 or 2100Kcal, then half the population of thisgroup was included in the poverty group.

As can be seen from the table, the per capita monthly expenditure, which corresponds to the required calorie norms, is much higher than the official poverty lines. Correspondingly, in the rural areas of most of the major states, more than 80% of the population is not able to afford the food, which would fulfill their calorie requirements. The case of Andhra Pradesh is glaring. The official poverty line there is lowest and consequently planning commission estimates much acclaimed in Andhra as 10%. However, as per our computation 89.4% of population in Andhra Pradesh is not able to afford 2400 Kcal per capita per diem. Similarly in Gujarat, poverty line is low and poverty ratio is 12.4%. The calorie norms, however, require a poverty line in Gujarat, which is higher than other states and poverty ratio is 86%. In Tamilnadu again the poverty line is very high and poverty ratio is 94%.

The inconsistency in the government determined poverty lines and nutritional norms arise because the poverty lines computed in 1973-74 have been adjusted for the changes in price indices. Computing state level poverty lines according to state price indices has also accommodated the differing price trends in different states. However, the pattern of consumer expenditure is assumed to be constant. Neither inter state nor inter temporal differences in consumption pattern have been accounted for.

The expenditure pattern of the population has changed significantly both in rural and urban India. There is a shift in expenditure from food to non-food items. In the food basket, a shift is observed from cereals to non-cereals. This shift is observed over all expenditure groups even those at poverty line and below it. Thus, in 1973-74 the expenditure group at poverty line in rural areas spent 80% of its total expenditure on food. In 1999-2000, the expenditure group at rural official poverty line spends only 65% of its total expenditure on food. At the rural poverty line conforming the nutritional norms only 60% of total expenditure is spent on food. Obviously the poverty line updated for price alone will be unable to meet the calorie requirements.

III

There are two ways in which researchers define poverty: relative poverty and absolute poverty. Relative poverty means bottom 10% or 20% or 30% of the population, which cannot participate in the desirable patterns of life that exist in a given society at a given time. Absolute poverty, however, refers to a situation in which a person lacks those things that help to sustain human life. It refers to the basic human needs, such as food, shelter and clothing. Generally relative poverty is considered relevant for societies where everyone has attained a certain minimum level of living and people have higher aspirations from life. For a poor country absolute poverty is more relevant.

If our experts have decided that poverty in India is to be viewed in relative terms i.e.30% or lower, then the official estimates are always right and there is no need to bother about definition of poverty in terms of absolute norms.

However, if we accept that people have not yet got the basic minimum required for a dignified human life, then we must set explicit norms for the basic minimum. In 1978, the task force appointed by the planning commission defined poverty line as the actual expenditure of the expenditure group, which spends enough on food to fulfill the normative calorie requirements. Norms were thus fixed only for the food components. No norms were fixed for the nonfood items like clothes, housing, education, and health etc. Many of us have argued time and again that dignified living standards must include norms with respect to all the above items and more.

In this context, we look at the consumption patterns in rural India of the expenditure groups at the official poverty line and at the poverty line, which corresponds to the calorie norms.

Table3

Consumption Pattern In Rural India

Per capita Monthly Expenditure in Rs.

Item

Expenditure Groups

300-340

525-615

Cereals

99.25

117.77

Gram



0.35

0.79



Cereal substitutes

0.17

0.41



Pulses & their products

14.18

22.12

Milk & Milk products

16.29

57.68

Edible Oils

13.48

21.93

Meat, Fish and eggs

9.54

20.14

Vegetables

23.12

35.43

Fruits (Fresh)

2.75

8.32

Fruits (dry)

0.67

1.65

Sugar

7.33

14.52

Salt

0.93

1.19

Spices

9.86

15.28

Beverages, refreshment

10.02

24.55

All food

207.94

341.79

Pan

1.57

3.47

Tobacco

5.57

9.01

Intoxicant

2.65

4.23

Fuel & Light

26.23

43.65

Clothing

23.92

39.22

Footwear

2.97

6.3

Misc. Consumer Goods

15.71

30.03

Misc. Consumer Service

12.69

31.66

Rent

0.24

1.58

Taxes and Cesses

0.29

0.91

Education

3.69

10.74

Medical (Institutional)

1.65

7.35

Medical (Non-Instt.)

11.07

25.76

Durable Goods

4.61

10.83

All Non Food

112.85

224.74

Source: Household Consumer Expenditure in India 1999-2000 Key Results. NSS 55th Round, Report No.454.

The per capita monthly expenditure of the group at official poverty line is in the range Rs.300-340. The average per capita per diem calorie intake of this group is only 1868 Kcal i.e. 77% of the accepted norm. The expenditure on all the food and nonfood items is absurdly small. The major amount of expenditure on food is incurred on cereals. In Rs. 99.25, the group procures 12.27 Kg. of grain. Out of 6.85 kg of rice and 3.9 kg of wheat the amount bought from PDS is only 0.78kg and 0.18 kg. Daily per capita grain consumption amounts to 400gms. Daily per capita consumption of pulses is 22gms. The group spends Rs 16.29 on milk and milk products and procures1.61litres of milk per person in the whole month. The amount spent on fruits and eggs enables 1.32 bananas and 0.61 eggs in the whole month. These figures show how fallacious is the argument advanced by some that the calorie intake has reduced because even at poverty group people prefer to get their calories from more expensive food.

The expenditure on nonfood items is also ridiculously low. Two major items are fuel and light, and clothing. On fuel and light per capita monthly expenditure is Rs.26.23. A household of 5 then spends around Rs.130 on fuel and light. Around Rs. 70 is spent on firewood and chips. The household consumes only 10 units of electricity in the whole month. The amount spent on clothing per person per month is Rs.23.92, which amounts to Rs 290 in the whole year. Rs. 290 include expenditure on bedding, woolens and every day clothes. The expenditure on education is Rs.3.69 per capita per month. Again if it is a household of 5 with 2 school going children the amount spent per month per child is Rs10. Can these be the norms for dignified living in any society?

The expenditure at poverty line corresponding to calorie norms is only slightly better. It enables 13.45 kgs of grain. Monthly per capita consumption of milk is 5.15 litres. The group can afford 1.41 eggs and 3 bananas per person per month. The household spends Rs.218 on fuel and light. Apart from firewood and chips, the household also spends a little bit on kerosene. The consumption of electricity is around 28 units per month. The annual expenditure on clothing is around Rs.470, which allows a little amount to spent on bedding, towel and woolens. Similarly expenditure on education is slightly more respectable. It may amount to Rs. 25 per school going child.(The consumption in quantity terms is obtained from NSSO report no. 461).

Thus, even the expenditure group conforming to the calorie norms does not conform to other norms of dignified living and does not ensure fulfillment of the basic minimum. Therefore, there can be no justification for lowering the poverty line below the average expenditure of this expenditure group.

IV

If it is officially recognized that rural poverty in India is in the range of 75% and urban poverty 55% then it changes the policy perspective drastically. When 75% of the rural population belongs to the poverty group then poverty cannot be alleviated through targeted PDS or mid-day meal programme or Rozgar Yojanas announced afresh every year. Seventy-five percent rural poverty demands major restructuring in land ownership and land use pattern. According to the same 55th round NSSO data on employment & unemployment, 40.9% of the rural households are landless. Another 22.3% cultivate 0.01 to 0.4 hectares of land and 16.8% cultivate 0.41 to 1.00 hectares of land. Thus effectively 80% of the rural households do not have access to adequate livelihood resource base. The 55th round data also tells us about a drastic squeeze on employment possibilities in agriculture. The growth rate of agricultural employment fell from 2.08 percent between 1987-88 to1993-94 to 0.80 percent during the period 1993-94 to 1999-2000. People debouched out of agriculture have no working or living space outside. They migrate in huge numbers from one village to another or from village to the town in search of food and work.

Seventy-five percent rural poverty originates from a deep-rooted crisis in Indian agriculture. Similarly 55% urban poverty results from a crisis in Indian industry.

As Ralph Miliband has said the poor are an integral part of the working class and therefore poverty alleviation demands a restructuring where share of working class in the national wealth is expanded and the share of capital is constrained. The present economic reform programme (with or without human face) cannot and will not admit such a restructuring. What then remains the option with people? The poor in villages and the poor in town have to reassert their primary identity as working class identity and wage a united and forceful struggle for their rightful share in the Nation’s wealth.



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