Poverty in India had increased between 2012 and 2020.
What is Poverty?
- Fundamentally, the concept of poverty is associated with socially perceived deprivation with respect to basic human needs (Tendulkar, 2009).
- This is a crucial definition to consider since the Tendulkar committee’s estimation method is the last officially recognized method for arriving at poverty numbers in India.
A relative term
- If you think about it for a moment, poverty is a “relative” concept.
- Poverty is essentially about how you are “relative” to those in your surroundings.
- For example, with Rs 1,000 in your pocket, you may be “rich” if those around you have no more than Rs 100 with them.
- But, in another setting, say around those who have no less than Rs 10,000 with them, you will come across as “poor”.
- As such, as long as there are variations in the income and/or wealth levels in a society, there will be “poverty”.
What is abject poverty?
- Apart from the relative nature of poverty, there is such a thing as abject poverty.
- It typically refers to a state where a person is unable to meet its most basic needs such as eating the minimum amount of food to stay alive.
What is a Poverty Line?
- From the point of view of policymaking, poverty levels typically refer to some level of income or expenditure below which one can reasonably argue that someone is poorer than the rest of the society.
- The whole point of the bulk of policymaking is to improve the living standards of the poorest in the country.
- But to design policies, one must first know what the target group is, how much does it earn (or spend, since robust data on income is not easily available).
- This is done by choosing a “poverty line” — or a level of income or consumption expenditure that divides the population between the poor and non-poor.
Why define a Poverty Line?
The purpose behind choosing a poverty line is two-fold.
(A) To accurately design policies for the poor
- Doing so allows you to target your policies towards the two poorest people in the country.
- Often such policies are redistributive in nature — such as giving subsidised food grains or providing some kind of social security like MGNREGA.
- In an ideal world a government would have the resources to help everyone in the economy but in reality, even the government’s works within some financial or budgetary constraints.
(B) To assess the success or failure of government policies over time
- Over time the overall GDP doubles but the income of the general public falls.
- Hence the government would know that its policies are not bearing fruit.
Poverty Estimation in India
- Planning Commission Expert Group (1962): It formulated the separate poverty lines for rural and urban areas at ₹20 and ₹25 per capita per year respectively.
- VM Dandekar and N Rath (1971): They made the first systematic assessment, based on National Sample Survey (NSS) data. They suggested providing 2250 calories per day in both rural and urban areas.
- YK Alagh Committee (1979): It constructed a poverty line for rural and urban areas on the basis of nutritional requirements and related consumption expenditure.
- Lakdawala Committee (1993): It suggested that consumption expenditure should be calculated based on calorie consumption as earlier. State specific poverty lines should be constructed. It asked for discontinuation of scaling of poverty estimates based on National Accounts Statistics.
- Tendulkar Committee (2009): The current official measures of poverty are based on the Tendulkar poverty line, fixed at daily expenditure of ₹27.2 in rural areas and ₹33.3 in urban areas is criticised by many for being too low.
What has happened in India’s fight against poverty?
- There are two ways to assess India’s performance.
- One is to look at the headcount ratio of poverty which is the percentage of India’s population that was designated to be below the poverty line
- The other variable to look at is the absolute number of poor people in the country
- If one looks at the headcount ratio then India made rapid strides since 1973.
- Even though India is home to possibly the largest number of poor people in the world, there has been no official update on India’s poverty levels since.
Who oversees the Poverty Level?
- Poverty levels are updated by using the Consumer Expenditure Survey, which is conducted by the National Statistical Office (NSO) once every five years.
- The last such survey was conducted in 2017-18.
- That survey reportedly showed that for the first time in four decades consumer expenditure in India had fallen.
What are the latest findings?
- Poverty levels, as well as the absolute number of poor, had risen between 2011-12 and 2017-18.
- The government claimed that the survey suffered from “data quality” issues.
- The next round of the Consumer Expenditure Survey (CES) was supposed to be conducted in 2021.
Causes of rise in Poverty
- GDP growth decline: It is a fact that India’s GDP growth rate had registered a secular deceleration between the start of 2017 and 2020.
- Jobless growth: The second and related factor is the unprecedented rise in joblessness.
- Wages decline: Millions were pulled out of poverty between 2004 and 2011 due to sharp rise in non-farm employment and associated wages. But for many of those workers, real wages have either fallen or stagnated.
- Pandemic impact: Covid induced lockdown sent millions of workers back to villages, seeking MGNREGA work at minimum wages.
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