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India’s poverty level falls to record 22%: Planning Commission

25.7% of people in rural areas, 13.7% in urban areas, now live below poverty line, according to the plan panel
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First Published: Tue, Jul 23 2013. 02 35 PM IST
The number of poor is now estimated at 269.3 million, of which 216.5 million reside in rural India. Photo: Ramesh Pathania/Mint
The number of poor is now estimated at 269.3 million, of which 216.5 million reside in rural India. Photo: Ramesh Pathania/Mint
Updated: Mon, Jul 29 2013. 11 01 PM IST
New Delhi: Poverty in India declined to a record 22% in 2011-12, the Planning Commission disclosed on Tuesday.
Over the last decade, poverty has witnessed a consistent decline with the levels dropping from 37.2% in 2004-05 to 29.8% in 2009-10. The number of poor is now estimated at 269.3 million, of which 216.5 million reside in rural India.
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While the trend is not surprising, the extent of the decline has opened up a debate on the factors that have led to it. The numbers themselves may be debatable but they are reflective of a broader trend.
One theory is that this is the outcome of the trickle-down impact of the record growth witnessed in the first decade of the new millennium.
This growth, though, has not been accompanied by a commensurate rise in employment, implying that its benefits have not really trickled down. Still, the growth did result in higher tax revenue, enabling the government to fund a large social sector spending programme.
This programme, which included schemes such as the rural job guarantee one, played a significant part in reducing India’s poverty levels, an alternative theory says.
The seven-year period between 2004-05 and 2011-12 saw the development expenditure of the government trending upwards, with its share increasing from 38% in 2004-05 to 45% of total expenditure in 2011-12.
The two theories, in some way, mirror the ongoing debate between Nobel laureate Amartya Sen and Columbia University economist Jagdish Bhagwati. While Sen makes a case for integrating development expenditure with growth to combat poverty, Bhagwati argues that rapid growth should be the priority, with the resulting trickle-down taking care of the underprivileged.
According to the release from the Planning Commission, 25.7% of people in rural areas were below the so-called poverty line and 13.7% in urban areas. This is comparable with 33.8% and 20.9%, respectively, in 2009-10, and 42% and 25.5%, respectively, in 2004-05.
The poverty numbers are estimated on the basis of consumption expenditure captured in the five-year surveys undertaken by the National Sample Survey Office (NSSO). The decline in poverty numbers was first reported by The Hindu on 16 July.
The press release sought to show that the number of poor has declined faster in the period during which the Congress-led United Progressive Alliance was in power and that, in the same period, the monthly expenditure per person had increased more equitably, especially in rural areas. Nearly 20 million people were pulled out of poverty every year, the data showed.
While experts welcomed the decline in poverty, they flagged concerns such as the comparability of the numbers.
The fresh estimates released by the plan panel are based on the Tendulkar methodology, which was criticized for fixing poverty lines that were too low at Rs.22.42 per person per day in rural areas and Rs.28.65 in urban areas.
Following this, the government set up another committee under the chairman of the Prime Minister’s economic advisory council, C. Rangarajan, to look at a methodology for determining poverty lines and estimating poverty.
The plan panel release said that since the new committee’s report is expected in a year’s time, it followed the Tendulkar methodology to derive the current estimates.
The release showed there would still be a decline in the poverty rates from 2004-05 levels even if a poverty line other than that derived using the Tendulkar methodology was used to determine the poverty line.
Data from the NSSO consumption survey in 2009-10 has not been used for comparison as it was a drought year.
Experts said nobody could dispute the decline. However, some issues remained to be clarified.
“The government has yet to clarify the additional imputed value and its effect on change in poverty levels,” said Himanshu, a professor at Delhi’s Jawaharlal Nehru University and a Mint columnist. “Also, the data needs to be looked into for the sharp decline in Bihar and Andhra Pradesh in two years.”
Imputed spending for free meals from the mid-day meals programme and the Integrated Child Development Services scheme was included in calculation of monthly expenditure for the first time in the five-yearly surveys in 2009-10.
Separately, former principal adviser at the Planning Commission and present chairman of the National Statistical Commission, Pronab Sen, said the Tendulkar committee recommendations applied to data collected with a mixed recall period, which was introduced only in 1999-2000. This makes 1993-94 data less comparable to later years, he said.
The main opposition Bharatiya Janata Party (BJP) termed the Planning Commission’s calculations as statistical jugglery. “This a gimmick—let them explain that if this is the rate of poverty decline then when in 1971 they gave the slogan of gareebi hatao (eradicate poverty), even after 42 years why is poverty still a problem,” said Prakash Javadekar, spokesperson of the BJP. “And then the Congress party pats their back for reducing it by 22%.”
The Communist Party of India (Marxist) or CPM also said that the calculations were faulty.
“This calculation of the Planning Commission is not at all scientifically correct,” S. Ramachandran Pillai, senior leader of the CPM and its politburo member said. “It is a political calculation, an exercise just before the elections to show that the number of poor have decreased. There is no statistical backing to it.”
The Congress party said the criticism by the opposition parties was predictable and unjustified.
“The BJP and Left parties would never agree to our version because they have never believed in eradication of poverty,” said Bhakta Charan Das, Congress spokesperson. “It is only the Congress party which has provided entitlements like right to work, right to education, forest rights acts and several other programmes.”
Liz Mathew and Anuja also contributed to this story.
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First Published: Tue, Jul 23 2013. 02 35 PM IST
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