From UPSC perspective, the following things are important :
Prelims level : PLFS and NSO data
Mains level : Poverty trends and estimates and issues
- The claim of poverty reduction in India during the pandemic year of 2020-21 is contested due to discrepancies in data and survey design. The PLFS data is used to make this claim, and there are recent papers that have come up with divergent claims on trends in poverty, showing both a rapid decline in poverty as well as a sharp increase.
Use of Comparable Estimates
- Poverty estimates in India have always been based on consumption estimates from the NSO, particularly based on the consumption expenditure surveys (CES).
- The last official poverty estimates were for 2011-12, even though a comparable consumption survey was conducted in 2017-18.
What is Periodic Labour Force Survey (PLFS)?
- PLFS is a large-scale household survey conducted by the National Statistical Office (NSO) of India.
- It collects data on various aspects of the labour force in India, including employment, unemployment, and labour force participation rates. In addition to these labour force indicators, the PLFS also collects data on consumption expenditure, which can be used to estimate poverty levels.
Issue with PLFS Data
- Estimates are not comparable: The PLFS estimates of poverty are not comparable with those from the CES, as the PLFS estimates are based on a single question.
- Consumption estimates: The issue of sensitivity of consumption estimates to survey design, the level of aggregation and details has been extensively written about and was at the heart of the Great Indian Poverty Debate of the early 2000s.
- Details about consumption expenditure is not just relevant: The sensitivity to the details of questions asked to collect consumption expenditure is not just relevant across different surveys but also across different rounds of the PLFS.
- The first set of conclusions can be drawn for the period between 2011-12 and 2017-18.
- Using the CES based full schedule and the leaked report for 2017-18, a rise in poverty can be seen.
- For a similar time period, the single question asked in the earlier rounds of PLFS can be compared with the 2014-15 (72nd round) NSO survey on services and durable goods expenditure which had exactly the same question in the same block with the same instructions making them comparable to estimates from the PLFS from 2017-18 to 2019-20.
- These suggest that the poverty headcount ratio was 27 per cent in 2014-15 and rose to 36 per cent in 2017-18, declining to 32 per cent in 2018-19 and remaining at that level in 2019-20.
- Unfortunately, for the period during the pandemic (2019-20 to 2020-21) that the PM paper tries to address, it is difficult to say what happened based on available consumption data because of the questionnaire changes mentioned above.
Impact on Policy
- The absence of official estimates on poverty is also a reflection of the lack of political priority of the government on such a crucial indicator.
- Currently, a survey on consumption expenditure is being canvassed by the NSO which again follows a completely new methodology and schedule. While it may provide another set of estimates of consumption expenditure, it is unlikely to help resolve the poverty debate.
- The issue of what happened to poverty after 2011-12 is crucial for policy. However, frequent interference in the statistical system through changes in survey and questionnaire design, suppression of data, and delaying the release of crucial data are making it difficult to have a correct assessment of reality. The absence of official estimates on poverty is a reflection of the lack of political priority of the government on such a crucial indicator.