Opinion
Poverty in India: Tracking it mustn’t become a casualty of politics
Summary
- We need to redefine poverty. A consensus on what it takes to live a life of dignity would help us resolve the country’s controversy over poverty as we near elections.
Elections in India seem to be incomplete these days without the background noise of a statistical controversy. Ahead of the 2019 Lok Sabha elections, the suppression of an unflattering employment report had ignited a controversy. At that time, two members of the National Statistical Commission (NSC), India’s apex statistical regulator, had resigned in protest. They were vindicated when the ministry of statistics and programme implementation (Mospi) released the report just after that year’s elections were concluded.
This time, the partial release of a rather flattering consumption expenditure survey has stirred a controversy. Niti Aayog’s chief executive was quick to claim that the survey shows an unprecedented decline in poverty over the past decade. Some economists lent support to the establishment view. Others have challenged such claims, since the new consumption survey of 2022-23 has been conducted using a different method, which makes its results incomparable with the past.
To make sense of the latest controversy, it is useful to understand the backstory first. The idea of a poverty line is as old as economics itself. Classical economists (such as David Ricardo and Thomas Malthus) held that workers were paid “subsistence wages"—just enough to buy the minimum quantity of food and clothing needed to survive. The first poverty line for British India, developed by nationalist thinker Dadabhai Naoroji, was also based on a similar idea.
Across ages and continents, most economists have held that a person must count as poor if she doesn’t have enough to eat. Most modern economists also agree that it is not enough just to eat adequate food; people also need access to basic services (education, health, shelter, etc). As long as there’s consensus on the minimum income (or expenditure) needed to maintain a life of dignity, and a reliable database of household income (or expenditure), estimating the number of poor households (those unable to afford a life of minimum dignity) is just a matter of simple arithmetic.
Unfortunately, there’s no consensus in India or globally on the basket of goods and services needed to maintain a life of dignity. The World Bank’s $1 a day or $2 a day poverty lines have been as contentious as the official poverty lines announced by India’s erstwhile Planning Commission. Recent changes in how India’s official consumption expenditure survey is conducted have polarized this debate further.
Over the past few decades, India’s consumption expenditure survey has faced criticism from economists for underestimating consumption expenditure. Mospi has tried to address those criticisms by tweaking the questionnaire to elicit better responses. Each time it has done so, it has ensured that a representative sub-sample is canvassed using the older questionnaire, so that it is possible to link back the new data with the older consumption database (based on a different pattern of questions).
In the 2022-23 survey, Mospi chose not to have a sub-sample based on the old pattern of questions. This means there is no direct way of comparing the 2022-23 figures with earlier rounds. Economists who pay attention to detail haven’t missed the fact that several big changes were introduced in the new survey without leaving any scope for precise comparisons with the past data. They are now crying foul.
This controversy was entirely preventable. When the survey was being rolled out, the then NSC team led by Bimal Roy had asked for a comparable sub-sample. However, the NSC went back on its decision since Mospi’s mandarins were not keen on canvassing a comparable sub-sample this time, according to a person with direct knowledge of the matter. The NSC chief, whose term was about to end, went along with Mospi’s view. The next NSC chief, Rajeeva Karandikar, has been at loggerheads with Mospi’s top bosses, according to the above-mentioned source, and has not approved any survey-related decisions so far. This may have given Mospi officials a pretext to release the latest consumption survey fact-sheet without consulting the NSC.
Some economists have suggested that a comparable sub-sample should be canvassed in the next consumption survey, so that the new database can be linked with the old consumer expenditure data. That would be the first step in resolving this controversy.
Going ahead, we need to rethink how we define poverty in the country. All official poverty lines in India have been pegged to a definition of poverty formulated by a Planning Commission task-force in 1979. That definition was based on the average calorie requirements in rural and urban India at that point of time. A lot has changed since then, such as social norms of what constitutes a life of dignity; also, consumption patterns. The average Indian has a less active life, meaning that calorie requirements have also changed considerably. The 1979 definition worked for a while in estimating extreme poverty. But it needs to be revisited.
We also need a new definition of not-so-extreme poverty that goes beyond food and nutrition. To arrive at this definition, we will need to forge a national consensus on what it means to live a life of dignity, and the kind of income (or expenditure basket) needed to sustain such a life. More maturity from our politicians and technocrats could help bring about such a consensus. Till then, any definition of poverty in India will remain deeply contentious.
