Poverty line rigmarole

News reports last week indicated that the Niti Aayog prefers the Tendulkar poverty line to map the extent of poverty in the country. This is a recommendation in a draft report of the Aayog’s task force on elimination of poverty in India and the final report is expected in six months.

If the Aayog sticks to this recommendation, can the government accept it? If it does, there will be a bizarre situation of a Bharatiya Janata Party-headed government accepting something it bitterly opposed when not in power and the Congress’ Rahul Gandhi’s quite likely to protest about something his party’s government had adopted and tried hard to defend. 

A quick recap of the earlier manufactured controversy. In 2009, an expert group headed by the late Suresh Tendulkar recommended a new methodology for estimating poverty, which replaced the earlier Lakdawala formula. Under the Tendulkar formula, rural poverty in 2004-05 was higher than under the Lakdawala formula, urban poverty was at the same level and overall poverty was higher (37.2 per cent against 27.5 per cent). 

All was quiet on the otherwise fierce poverty line battlefront till 2011 when the Supreme Court, hearing a public interest litigation on distribution of food grains to malnutrition-hit areas, asked the erstwhile Planning Commission to work out per capita norms of poverty line. The poverty line was based on monthly household consumption (Rs 4842 for urban and Rs 3905 for rural areas) but got further over-simplified to per person per day consumption (both are not the same), throwing up the controversial Rs 32/26 a day poverty line. The BJP had enthusiastically joined the cacophony of protests, along with its other ideological opponents, over this line.

But here’s a clue to why a BJP-led government may find it easier to accept the Tendulkar line now. After the uproar over the Tendulkar line in 2011, a defensive United Progressive Alliance government set up another committee headed by C Rangarajan to review the poverty estimation methodology. Rangarajan’s report, submitted to the new government in June 2014, suggested a new poverty line that was higher (a monthly per capita consumption expenditure of Rs 972 or Rs 32 a day in rural areas and Rs 1407 or Rs 47 a day in urban areas). Consequently the percentage of below poverty line (BPL) population in 2011-12 increased. So, while the BJP can still score political points against the Congress for poverty during its rule, a higher poverty line will make its own task even more daunting and expose it to the same criticism it levelled against the UPA government. The Rangarajan report has not been accepted; instead the Niti Aayog was tasked with deciding upon the poverty estimation methodology.

When the Aayog set up the task force on poverty estimation, there was some hope that there would be fresh thinking on the subject and that India would switch from an absolute measure of poverty (based on a normative assumption of what people need for their basic needs) to a relative measure (a percentage of a country’s average income or consumption). An absolute measure has someone — a government, an expert group — deciding ideal consumption norms which can always be questioned. Fixing a relative cut-off line (60 per cent of India’s average income) is less prone to controversy over judgement calls. During the 2011 controversy, there were jeers that economists did not know what poverty was, so how could they decide the poverty line. Unfortunately, the Aayog seems to be deciding between the Tendulkar and Rangarajan formulas, both of which follow the absolute measure approach. Perhaps the Aayog working group’s final report could do a rethink on this and engage with the idea of a relative poverty line or even a mix of the two. 

News reports based on the leaked working group draft also say that it suggests de-linking welfare schemes from the poverty line. This, too, is a throwback to 2011, when Planning Commission deputy chairman Montek Singh Ahluwalia and rural development minister Jairam Ramesh called a damage-control press conference to reassure that the poverty line would be used only to measure head-count poverty and not to decide on entitlements.

Since most subsidies are targeted at the BPL population, there was apprehension that a low poverty line would mean depriving a lot of genuinely needy people of welfare. At that time it was said that the Socio-Economic Caste Census (which was then under way) would provide a more scientific way of determining eligibility for entitlements. The poverty line, Ahluwalia assured, will only help track the progress of poverty reduction over time.  

The rural SECC report is now out — there is no sign of the urban one — and it does provide an extremely granular picture of deprivation, down to the individual household level. It shows 8.69 crore rural households fulfil one of seven criteria of deprivation (the condition of their house, no adult member in the working age group, female headed household with no male member in the 16-59 age group, no literate adult above 25 years, SC/ST households, landless households deriving a major part of their income from manual labour) and within that 16.5 lakh fall in one of the following categories — they don’t have shelter, they live on alms, they are engaged in manual scavenging, have been released from bonded labour or belong to primitive tribal groups. Both these figures are higher than the number of rural poor under both the Tendulkar and Rangarajan formulas. That means that, at a macro level, people will not lose out so long as the SECC is used as a criteria for welfare eligibility.

But the SECC is not without problems at the micro-level. There are exclusion and inclusion criteria based on a certain number of select deprivations. Now, the automatically included category is just 0.92 per cent of rural households. This could cause another uproar and lead to the inclusion criteria being relaxed and that could see some non-eligible people getting subsidised goods and services. 

As it sets about finalising its report, the Niti Aayog task force needs to look into all these issues and also whether it might be better to shift to a relative poverty measure. Only then will the poverty dialogue be a meaningful one.

The writer is a senior journalist and author