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Poverty at record low, spells respite for government

Poverty at record low, spells respite for government
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First Published: Thu, Mar 22 2007. 12 42 AM IST
Updated: Thu, Mar 22 2007. 12 42 AM IST
New Delhi: India’s poverty levels, riding on accelerated economic growth, are down to a record low, according to two separate surveys.
Based on national consumption surveys, the Planning Commission reported that poverty levels in the country, which averaged 36% in 1993-94 dropped to 27.5% in 2004-05. Using a different consumption criteria, the commission found that the decline in poverty levels actually accelerated in the period 1999-2000 to 2004-05, dropping from 26.1% to 21.8%.
The first method employs what is called the uniform recall period (URP) that requires an individual to recall his consumption pattern over a 30-day period. The latter, defined as the mixed recall period (MRP), measures consumption based on an individual’s consumption pattern over a 365-day period—and is typically useful in capturing such as footwear, clothing bicycles or other household effects.
The surveys are carried out by the National Sample Survey Organization.
Both sets of data will come as a good talking point for the ruling United Progressive Alliance, which is under a lot of pressure in recent weeks for escalating prices, especially of grains and other commodities, and for policies that some see as ignoring the common man.
But, the poverty figures are “an understatement of the real economic problem,” said Gurudas Dasgupta, a member of Parliament from the Communist Party of India, adding that the benefits of growth are not reaching everyone.
Added Vijay Malhotra, also an MP belonging to the BJP: “The poverty figures reflect the present government’s policy of last three years, how the rich are getting richer, while the poor and the lower middle class suffer from the impact of inflation. The so-called reforms are not paying off.”
According to the Planning Commission, based on the URP measure, an individual is below the poverty line if their consumption is less than Rs356.30 in the rural areas and Rs538.60 per month in the urban areas.
In other words it implies a daily income of Rs 11.87 in rural areas and Rs 17.95 in urban areas, which is currently same as the cost of kilo of onions.
The positive effects of economic growth are also more visible in the countryside, as poverty in rural areas has declined faster than urban areas by both methods—from 37.3% in 1993-94 to 28.3% in 2004-05 and 27.1% in 1999-2000 to 21.8% in 2004-05, compared with the decline of 32.4% to 25.7% and 23.6% to 21.7% in urban areas, respectively. With only 4.2% poor, Jammu & Kashmir is the richest state, followed by Punjab with 5.2%.
Poverty data has been dogged by controversies since 1999-2000, when NSSO introduced the MRP for measuring consumption, which returned a much faster reduction in poverty compared with the traditional measure using URP. Independent economists, however, believe that poverty would have been reduced faster than even these very optimistic numbers.
Surjit Bhalla, president, Oxus Reasearch, and member of the National Statistical Commission, says, “the pace of reduction in poverty in the 21st century is certainly faster than before, about a per cent a year compared to 0.7% in the nineties.
“It is strongly likely though that actual poverty levels would be much less than even the 22% in the MRP method, as the NSS data uses only 48% of the consumption data used by the National Accounts Statistics.”
Bhalla has previously argued that poverty would be down to around 15%.
Pronab Sen, secretary, ministry of Statistics and Programme Implementation, says that “the poverty estimates based on the uniform recall period are more reliable” since the poverty line itself was based on data compiled by this method, and because the older surveys since 1972-73 have been based on the same URP method, making comparisons easier.
The lower numbers will also have an impact on the government’s public distribution system, which targets people living below the poverty line.
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First Published: Thu, Mar 22 2007. 12 42 AM IST
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