How Poor Is Poor?

In 1950, India adopted a democratic polity and declared it a republic, where highest decision makers are elected by people. This gave birth to electoral process in the country and every after five years, people elected those, who not only decided their fate but gave direction to public policy. In the last 61 years, though many issues came and faded away, poverty remained a constant. Successive governments, since then, initiated, sustained, and refined many programmes to help the poor and thus politics of poverty began in the country.

However, India’s politics of poverty has generally been characterised by its poverty of politics. Although poverty is the overwhelming fact of the national life, it is hardly the theme of our politics despite various programmes initiated since Independence. It is stunning rates of GDP growth that command the attention of Parliament and the media, hardly the accompanying deterioration in the Gini co-efficient that measures disparities in the economy, disparities that in our case are widening so obscenely as to threaten the very continuance of our democracy.

Ritually, in every session of Parliament, we debate drought, floods, unemployment and rural development. Unfailingly, the House empties as soon as these themes are taken up and the press gallery stares naked over the proceedings. Lucky is the MP who gets a line of what he says into the TV evening news or the papers next morning. A virtual blanking out from the minds of the dynamic, surging, media-guzzling middle class follows of the everyday lives of the vast majority of our people—the 836 million who live on less than Rs 20 a day, as identified by the Arjun Sengupta Committee.

If Sengupta’s assessment is believed then it is aghast to note here that the scenario exists despite Community Development Programme (CDP) initiated in 1952, Indira Gandhi’s 20-point programme with a slogan “garibi hatao”, food for work initiated during late 70s and 80s or a similar programme like the present Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). All failed to eradicate poverty in the country. Instead, all these programmes perpetuated poverty and total number of poor increased. The latest figures show that present total number poor in the country is more than the total population of India at the time of Independence.

Even the UN Human Development Index (HDI) has placed India at 132. In 1994 India was at 134, so the country has slithered just two places up in the last 15 years despite a 15-fold increase in central government budget spending on anti-poverty programmes, from around Rs 7,500 crore in 1993-94 to well over Rs 1,20,000 crore in the 2008-09 (in addition to another Rs 70,000 crore of farmers’ loan waivers). There is simply no correspondence between outlays and outcomes: outlays have soared; outcomes have remained derisory.

Under circumstance, food becomes the most precious issue among the poor amidst rising prices of essential commodities, as the poor spend about 80 per cent of their income on food. The price of food is a major determinant of poverty. Often when food prices rise sharply, rioting and looting follow. Until the late 1970s, the government frequently had difficulty obtaining adequate grain supplies in years of poor harvests. During those times, states with surpluses of grain were cordoned off to force partial sales to public agencies and to keep private traders from shipping grain to deficit areas to secure very high prices; state governments in surplus-grain areas were often less than cooperative.

After the late 1970s, the central government, by holding reserve stocks and importing grain adequately and early, maintained sufficient supplies to meet the increased demand during drought years It also provided more remunerative prices to farmers

In rural areas, the government though undertook programmes to mitigate the worst effects of adverse monsoon rainfall, which affect not only farmers but village artisans and traders when the price of grain rises. The government has supplied water by financing well digging and, since the early 1980s, by power-assisted well drilling; rescinded land taxes for drought areas; tried to maintain stable food prices; and provided food through a food-for-work programme. The actual work accomplished through food-for-work programmes is often a secondary consideration, but useful projects sometimes result. Employment is offered at a low daily wage, usually paid in grain, the rationale being that only the truly needy will take jobs at such low pay.

Probably the most important initiative has been the supply of basic commodities, particularly food at controlled prices, available throughout the country. But of late it has been disbanded in favour of targeted PDS, which gave birth to dual pricing of food and thus a lot of pilferage leading to scarcity.

In the 1980s and early 1990s, Indian government programmes attempted to provide basic needs at stable, low prices; to increase income through pricing and regulations, such as supplying water from irrigation works, fertilizer, and other inputs; to foster location of industry in backward areas; to increase access to basic social services, such as education, health, and potable water supply; and to help needy groups and deprived areas.

The total money spent on such programmes for the poor was not discernible from the budget data, but probably exceeded 10 per cent of planned budget outlays. India has had a number of anti-poverty programs since the early 1960s.

It was Prof. Suresh Tendulkar who did pioneering work to arrive at the absolute number of poor in the country. Union Rural Development Minister Jairam Ramesh wants the people to believe that the ongoing Socio-Economic and Caste Survey would give a more reliable data on the number of people who really need the government’s welfare measures.

However, the state governments are not willing to believe the assertions of Ramesh. The reason for skepticism on the parts of the state governments is for the reason the below poverty line cap is already fixed for each of the states. Therefore, the ongoing Socio-Economic and Caste Survey could rather become an exercise in excluding and including people in the poverty bracket, which is already pre-determined on the basis of the Tendulkar Committee report.

It’s interesting here to note the contribution and works of Prof. Tendulkar. The Central government in 2009 constituted a Committee under the chairmanship of Prof. Tendulkar to report on methodology of estimation of poverty. Till then poverty in the country and the number of poor people were decided on the basis of calorie intake by individuals in the urban and rural areas of the country.

The Tendulkar Committee, which submitted its report in 2009 and was subsequently accepted by the Planning Commission, made a departure from the methodology based on calorie intake to expenditure incurred by people on food, education, health, electricity, clothing and footwear. This was supposedly a much wider and logical methodology.

The Tendulkar Committee in its report stated that every third Indian is living in poverty. Also, the number of the poor shot up by nearly 10 per cent to over 37 per cent. The report pointed out that 41.8 per cent of the rural population spends a meager sum of Rs 447 a month on essential necessities like food, fuel, light, clothing and footwear.

Mr Ahluwalia had found the Tendulkar Committee reasonable to determine the number of people living below the poverty line (BPL).

The Tendulkar Committee fixed the poverty line for urban areas at a consumption expenditure of Rs 579 per capita per month, and for rural areas at Rs 447 per capita per month at 2004-05 prices. It was further brought to a daily expenditure by dividing the monthly sum by 30 to Rs 20 per day for urban areas and a per capita consumption of Rs 15 per day for rural areas at 2004-05 prices. These very amounts at June 2011 price have been adjusted to Rs 32 and 26 respectively to take into account the inflation in the intervening period.

However, the worrying aspect is the absolute number of poor in the country who stand at about 40 crore by 2009, though the percentage declined from 37.2 per cent as arrived by Tendulkar Committee based on the 2004-05 National Sample Survey data to around 32 per cent in 2009-10. As the National Advisory Council (NAC) member NC Saxena very rightly pointed out that despite two decades of economic liberalisation and high growth India had not been able to reduce the absolute number of poor in the country. This is in contrast to what China and Vietnam have achieved following the same trajectory of economic liberalisation and high growth. Therefore, it will not be easy to dismiss the skepticism that something is badly amiss somewhere.

The debate is getting just wider as the central government is in the process to push through the Food Security Bill. This legislation seeks to make the food entitlement a right and divides the beneficiaries into two parts “priority group” and “general group”. The legislation also banks heavily on the Tendulkar Committee report and adds another 10 per cent in its estimate of poor people by making about 75 per cent people in the rural areas and 50 per cent in the urban areas as the targeted beneficiaries of the Food Security Bill.

However, the task is not easy as it appears to be in mere drafting of the legislation. It was none other than Union Agriculture Minister Sharad Pawar who sounded the warning bell by remarking: “I do not want Soviet Russia happening here.” The characteristic remark is full of consequences, as Mr Pawar himself advised the government to first examine the economic consequences of implementing the Food Security Bill. A rough estimate suggests that the central government may have to spend about Rs 1.15 lakh to Rs 1.25 lakh in the first five years of implementing the legislation apart from the impact of such a huge subsidy on the overall economic activities of the country.

The irony is that while the Tendulkar Committee had pegged the poor at 37.2 per cent, the Planning Commission later revised it to 27.2 and to top all the state governments put the figure at 10.52 crore families or 45 per cent of all Indians. However, the state governments do inflate the number of poor in their states to serve their populist policies. Still, one cannot deny the fact that notwithstanding percentage of the poor in the country the Rs 32 per capita per day expenditure in the urban areas and Rs 26 for the rural areas appear to suggest that the country has not succeeded in its famed “trickle-down” theory of economic growth.

Though one could be patient to wait for the poverty data to be available by the middle of the next year from the ongoing Socio-Economic and Caste Survey, still the argument could be made that not many people are being made to cross the poverty trap and therefore the government may need to put more focus on making the poor to earn more than feed them for almost free.

By Shitanshu Shekhar Shukla