Poverty Line India: Livelihood & survival

 written by: Khyati Srivastava

“The prices of vegetables have shot-up, and my wages have been the same! What should a poor person like me eat?! How to survive and make ends meet?!”

Often we hear such statements in the market-place from almost every other mouth. The latest UN report on poverty mentions India to have 1/3^rd of world’s total 1.2million extremely poor population. When on every Indian street we find sluggish caricatures in flesh and blood begging for food, the expert committees now and then come-up with mocking figures of livelihood enough for survival. Then, the media encashes another headline to incite the people about how the present careless government is deceiving them with all these figures. Recently, a committee headed by former RBI Governor C. Rangrajan report on Poverty-line came up with figures defining a fresh poverty-line for rural/urban poor. Earlier to that we had Suresh Tendulkar committee recommendations which were flared up by the media with extreme criticisms and defamation of UPA Government. 2014 general elections were fought on great of hopes and urge for change! Hence the former opposition came up to power under Narendra Modi’s leadership ending up the prevalent coalition politics of India. With 282 seats in Lok Sabha, BJP-led NDA (NDA-330 seats) has a great responsibility to fulfill its promise of ‘achhe din’. With Rangrajan committee report coming with figures not very much different from Tendulkar’s, media is again inciting people by criticizing the report and blaming the Modi-government.

The grave question that gets flushed behind all this struggle is how much do these figures actually matter to the people they are meant for? How are these figures arrived at? What is the actual political picture behind? How much is the present government related to it? And most importantly, how will these figures change the existing hardships of the people? Let us find answers to these queries here.

1. Latest Committees:  As per the data released by Planning commission India in July’2005, the percentage of the population living below the poverty line in India decreased to 22% in 2011-12 from 37% in 2004-05.

Tendulkar committee chaired by Suresh Tendulkar, was established in the same year, to lay down the methodology for poverty estimation. It estimated the figures for 2004-05, and based on the same methodology figures were estimated thereafter.

The calculations were based on Household’s Consumption-Expenditure comprising items like cereal, pulses, milk, edible oil, non-vegetarian items, vegetables, fresh fruits, dry fruits, sugar, salt & spices, other food, intoxicants, fuel, clothing, footwear, education, medical (non-institutional and institutional), entertainment, personal & toilet goods, other goods, other services and durables. Further to design the Poverty-line, it used the data on value & quantity consumed of the items mentioned above, by the population that was classified as poor by the previous poverty line. For updating the lines, the committee recommended to use consumption basket of people close to poverty line for adjusting changes in prices & patterns of consumption, instead of using indices of Consumer Price Index. The figures arrived thereby were:

This implies, as per Tendulkar Committee, in 2011-12 if a person earns Rs27 per day in Rural areas and Rs33 per day in Urban areas, is not poor. This brings about total 270-million (21.9%) estimated to be Below Poverty Line (BPL) for 2011-12. The poverty line of India was fixed here by the UPA-govt, where in actual life these figures did not covered even 2-times basic meal. Hence the formula faced severe criticism.

The Planning Commission under the same UPA regime hence, formulated a new expert panel in 2012 under the chairmanship of C.Rangarajan, with objectives to:

(i)                 Review the poverty estimation methodology and estimate figures wef 2011-12.

(ii)               update the consumption-basket based poverty-line;

(iii)             review & suggest alternative methods of estimating poverty;

(iv)              Design it in a manner to link with eligibility for taking advantage from Government’s welfare schemes.

The Rangarajan Committee has adopted a different yardstick to estimate the poverty. It is based on the Household’s ability to save as criteria to determine poverty. Thereby, under this report a person shall be considered poor if he is unable to save. It has used NSSO data, CMIE survey report, CSO data and ICMR norms and submitted its report in 2014, published on 7^th July’2014.

As per Rangrajan Committee, 29.5% population (363 million) in 2011-12 was below poverty line. Hence, 91.6 million have lifted out of poverty between 2009-10 to 2011-12 as per the report. 

By the statistics enlisted in the Rangrajan report as mentioned in the table above, a person earning Rs32 daily in rural areas and Rs47 daily in urban areas shall not be considered as poor. Moreover, it implies that at this level households’ reach ability to save too. Even though the new report has increased the benchmark for being identified as poor as compared to Tendulkar Report, it is still considerably low.

2. Tendulkar Vs Rangrajan : If estimates of both experts are compared, then the latest Rangrajan has increased the burden of poverty in India.  

When the new poverty line defined increases the population below poverty line, it must be noted that the real difference reflected in the new report is in the urban BPL figures. The urban BPL number is projected to have nearly doubled to 102.5 million based on Rangarajan's estimates, compared to 53 million based on the previous Tendulkar committee's recommendations. 

Tendulkar’s report estimated in 2009-10, 278.2 million people to be BPL in rural areas decreased to 216.7 million in 2011-12. Hence, 61.5 million rural population revived from poverty. While Rangrajan has portrayed that in 2009-10, 325.9 million people were BPL and by 2011-12 this figure reduced to 260.5 million. Hence, according to this there has been reduction of 65.4 million in rural poor. Further implying more reduction in poverty but still remaining a higher quantum. Similarly, for urban areas, Tendulkar report said that in 2009-10, 76.5 million population was BPL which reduced to 53.1 million in 2011-12. Hence, overall reduction of 23.4 million. Whereas, Rangrajan has depicted that in 2009-10, 128.7 million urban people were BPL which reduced to 102.5 million in 2011-12. Hence, the overall reduction of 26.2 million. In aggregrate, Tendulkar estimated poverty downfall of 84.9 million in the same period, while Rangrajan has estimated it to be 91.6 million (as shown in chart above).

Eventually, the new government is at criticism on this. But actually this new government has no role herein, as Rangrajan committee has met its objectives well as designed on its formation, by the former government. However, the implications of this report definitely will influence the agenda of this government. 

Anyways, the common man worried again by this newly defined poverty-line must understand that these figures actually do not have any direct implications, and moreover the Rangrajan committee has revised figures for 2011-12. It has not provided any way for the present scenario. Moreover, there is no need to make these poverty estimates a touchy-issue. They are not holy-guidelines, rather just an economic/statistical effort to know the economic status and pave ways towards planned development.