March 23, 2012

Poverty line(s)

Today's Hindustan Times carries an article I did reacting to the most recent figures about poverty from our Planning Commission.

On re-reading it this morning, I'm concerned (always easy to be wiser in hindsight) that I didn't make clear enough my fundamental point: that while the definition of the poverty line had to change, what I'd like to see is how that affects previous estimates of poverty. Why? Because only then can we get an idea of what has really happened to poverty over the years.

Absent that, we're left to wonder about numbers like 27%, 37%, 29% and the like. Absent that, a decline from 37% to 29% is hard to comprehend, because earlier estimates were different.

I realize it is difficult to apply new methods to old data, but I'd still like to see some attempt to do so, purely so that we can understand poverty trends.

In any case, you can read the article here.

Comments welcome.


Vivek said...

Dilip, as far as I understand (and I could be wrong), the poverty line is calculated on the basis of cost of certain basic subsistence goods/services by a person. It is unfortunate that it is called the "poverty line", whereas it would have been more appropriate to call it something like "government scheme eligibility criteria", because poverty is a whole different issue than just being able to survive a day.

Narinder Jit Kaur said...

Dilip, I think the figures seem to be misleading, I mean at least to a lay person like me.The government cannot bring down poverty by changing the poverty standards. It all seems like 'if you can't convince them, confuse them' policy.

ramani said...

dilip, what can one say? the original poverty line estimates were the amount of money a person earned to spend on purchasing the minimum needed to survive: 2400 KCals in rural India per day per capita. this assumed that about 80% of earnings or so went for food, the rest for clothing, education, shelter. i dont think they factored in illness (the second largest cause of rural indebtedness after agriculture). however, even these norms were minimalistic - a person doing hard manual labour in rural india needs more than 2400 KCals per day. however, we find now that people are consuming less and less - closer to 2100 KCals or less - not because their bodies have "adjusted" as some experts would have us believe, but because they cannot purchase anything more. therefore the state of famine you see in large parts of india today. if we stopped giving subsidies and incentives to industry (including the health care industry), we would perhaps raise the miserable level where we currently draw the line of the officially poor.
also, poverty estimates are done by the expenditure of each family: so if someone spent rs. 10,000 on an illness last year, that is added to their income: regardless of the fact that the poor soul borrowed the money, or got it by selling his lone buffalo.
so don't even try to make sense of all this.

Gaurav Raghav said...

You have pointed out an important matter here.