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Plan commission to use Tendulkar approach for measuring poverty

Plan commission to use Tendulkar approach for measuring poverty
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First Published: Wed, Aug 08 2012. 12 34 AM IST

Updated: Wed, Aug 08 2012. 12 34 AM IST
New Delhi: The Planning Commission will use methodology devised by the late economist Suresh Tendulkar to calculate poverty numbers based on the latest consumption expenditure data for 2011-12, although the government has discarded this approach with the setting up of the Rangarajan panel, a senior Plan panel official said.
The latest poverty estimates released by the Planning Commission based on the Tendulkar methodology showed India almost doubled the pace at which it reduced poverty in the five years to 2009-10, thus moving 52 million people above the poverty line. However, the estimates, which are based on a Rs.22.40 per day poverty line for rural areas and a Rs 28.60 line for urban areas, have been widely criticized for being unacceptably low and derived from a so-called “destitution line”.
Following this, the government admitted in March that the Tendulkar approach wasn’t in line with the “ground reality” and said it would evolve a new approach.
In May, it constituted a new five-member poverty panel headed by the chairman of the Prime Minister’s Economic Advisory Council, C. Rangarajan, to review the way poverty is estimated and examine whether the poverty line should be fixed solely in terms of a consumption basket.
“Unless the Rangarajan panel recommends a new methodology for measuring poverty, in which case poverty percentages would be computed based on both the methodologies, the government would follow the methodology suggested by the Tendulkar committee,” said the Planning Commission official cited above, who spoke on condition of anonymity.
The latest provisional consumption expenditure data released on Tuesday based on a household survey carried out in 2011-12 showed rural monthly per capital consumption expenditure (MPCE) rose from Rs 927.70 in 2009-10 to Rs 1,281.45 in 2011-12 , while urban MPCE increased from Rs.1,781.81 to Rs 2,401.68 in the same period.
India’s chief statistician T.C.A. Anant said the statistics department would try and release the data by June next year.
The Plan panel official said poverty was a multi-dimensional concept and linking entitlements to a solely consumption-based poverty line did not make sense. He said the only important thing about a poverty line was to measure the change in the percentage of people living below an income level and different government programmes need to have different indicators for identifying those deprived of entitlements.
If the Rangarajan panel recommended the scrapping of a consumption-based poverty line and drew up an index that captured deprivations such as lack of clean drinking water and sanitation, even that would be considered, the official added.
When asked about this, Rangarajan said, “The committee just had its first meeting recently. It will take some time to submit the report.”
It’s sensible to use the Tendulkar as well as any new methodology because it’s always good to have alternative numbers that better reflect income trends and aspirations in the backdrop of high growth, especially when the purpose is to get a general picture of the macroeconomy, said Y.K. Alagh, former Planning Commission member and head of the 1977 expert group on poverty.
“But if the Rangarajan panel follows a consultative process to identify a new poverty estimation methodology, rather than merely tinkering with the old ones, it will need more than a year at least,” he added.
The methodology for estimating poverty has been reviewed from time to time. Aside from the Alagh committee (formed in 1977), past poverty estimation panels include the D.T. Lakdawala panel (1989) and the Tendulkar committee (2005), which submitted its recommendations in December 2009.
The Tendulkar panel moved away from the Alagh panel’s calorie intake-based approach to poverty and included consumption expenditure on health and education.
Consumption expenditure data, available once in five years from the National Sample Survey Organization (NSSO,) is used to arrive at poverty figures in the absence of household income surveys. Provisional 68th round data showed rural incomes were growing faster between 2010 and 2012 than they did between 2004 and 2010, when the last consumption survey was conducted. However, 2009-10 was a drought year and could have led to this outcome.
Asit Ranjan Mishra contributed to this story.
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First Published: Wed, Aug 08 2012. 12 34 AM IST