New Delhi: A committee headed by C. Rangarajan, former chairman of Prime Minister’s Economic Advisory Council, has confirmed, like the previous expert panel but using a different yard stick, that poverty has declined in the country.

This is significant as it is consistent with the visible material trading up, captured in the 2011 Census data, and also implies that the thrust of policy interventions should now extend to alleviating relative poverty levels and not concentrate on reducing absolute poverty alone.

The Rangarajan committee differs with the Tendulkar panel on the level of poverty, pegging it at 29.5% in 2011-12 compared with the previous estimate of 21.9% of the population.

Rangarajan committee estimates that India’s poverty ratio declined from 38.2% in 2009-10 to 29.5% in 2011-12. The Tendulkar committee had estimated that India’s poverty had declined from 29.8% in 2009-10 to 21.9% in 2011-12.

The absolute number of poor estimated by Rangarajan panel in India is higher by 93 million at 363 million, compared with 270 million estimated by the Tendulkar committee. “Totally, 91.6 million individuals were lifted out of poverty during this period (between 2009-10 and 2011-12)," the report said.

The poverty lines estimated by the Rangarajan panel are higher on account of the panel adopting a different methodology of using a household’s ability to save as a criteria to determine poverty instead of the earlier approach of using consumption expenditure. “Estimations of the poverty line made for the Expert Group (Rangarajan) based on an independent large survey of households by CMIE and using a different methodology wherein a household is considered poor if it is unable to save, yields results that are remarkably close to those derived using the NSSO (National Sample Survey Office) data, the report said."

CMIE refers to the Centre for Monitoring Indian Economy.

The panel estimates that the 30.9% of the rural population and 26.4% of the urban population were below the poverty line in 2011-12.

The report pegs the new poverty line to monthly per capita consumption expenditure of 972 in rural areas and 1,407 in urban areas in 2011-12. For a family of five, this translates into a monthly consumption expenditure of 4,860 in rural areas and 7,035 in urban areas, said the report.

The panel also revised the average energy requirements to 2,155 kilocalorie (kcal) per person per day in rural areas and 2,090 kcal per person per day in urban areas computed on the basis of “the average requirements of calories, proteins and fats based on ICMR (Indian Council of Medical Research) norms differentiated by age, gender and activity for all-India rural and urban regions to derive the normative levels of nourishment".

The government formed a five-member technical group in May 2012, headed by Rangarajan, to review the way poverty is estimated after its earlier poverty numbers drew criticism. It subsequently junked the two-year-old methodology devised by the late economist Suresh Tendulkar. Based on the Tendulkar methodology, the Planning Commission had said that people with a daily consumption expenditure of 28.60 in cities and 22.40 in villages were above the poverty line, inviting criticism from opposition parties and activists, which claimed the numbers were unrealistically low.

Consumption expenditure data, available once in five years from NSSO, is used to arrive at poverty figures in the absence of household income surveys.

The Rangarajan panel was mandated to suggest a methodology to update the consumption-based poverty line using the new consumer price indices launched by the Central Statistics Office, review alternative methods of estimating poverty and recommend how it should be linked to eligibility for drawing benefits from the government’s public welfare programmes.

Other members of the panel are Mahendra Dev, director of the Indira Gandhi Institute of Development Research; K. Sundaram, formerly of the Delhi School of Economics; Mahesh Vyas of CMIE; and K.L. Datta, ex-adviser to the Planning Commission.

The methodology for estimating poverty has been reviewed from time to time. It was reviewed by the Alagh committee (formed in 1977) and the Lakdawala panel (1989), apart from the Tendulkar committee (2005), which submitted its recommendations in December 2009.

Y.K. Alagh, former Planning Commission member and head of the 1977 expert group on poverty, said the Rangarajan committee seems to have only tinkered around with the Alagh committee report while what was needed was to define the requirements of poor Indians in 2014.

“If you don’t handle that issue, you are only dodging the real issue," he added.

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