Poverty is not just a numbers game for those stuck below the bread line

Prashun Bhaumik |

The politics of poverty is characterised by the poverty of politics. And although poverty is the overwhelming fact of our national life, it is hardly the theme of our politics.

By Amir Ullah Khan

The Planning Commission has now said that poverty in the country came down by 7.3 percentage points in the last few years. However, while on one hand Sikhs have the lowest poverty level in rural areas (11.9%), it is the Christians (12.9%) who have the lowest poverty rate in urban areas. Muslims are the poorest in both rural and urban areas, with almost one in three in urban areas living below the poverty line. Scheduled castes and tribes are in a similar state. Agricultural workers in rural areas are very poor with 50% below poverty line and casual labourers in urban areas are just as badly off.

This time the Commission has used different definitions for different states and have used multiple indicators. When these are converted to rupee values, the all-India rural poverty line is Rs 673 per month (at Rs 22.4 per day) and the urban poverty line is Rs 859.6 per month (at Rs28.6 per day). Using these definition what we have is that in India, the poverty rate has reduced at double the pace at which it has been reducing poverty in rural areas in five years from 2004-05 to 2009-10.A total of 47 million people have moved above the poverty line. It is not surprising that these five years are when the country grew the fastest in any five-year period in the past, at an average of 8.7%.

According to the new data, poverty in urban India declined to 20.9% of the total population in 2009-10 from 25.7% in 2004-05. In rural India, it declined to 33.8% from 41.8% in the earlier estimate. At the all-India level, poverty declined to 29.8% from 37.2% in 2004-05. The poverty ratio in states such as Himachal Pradesh, Madhya Pradesh, Maharashtra, Orissa, Sikkim, Tamil Nadu, Karnataka and Uttarakhand has declined the most, by at least 10 percentage points.  However, it has increased in the five north-eastern states of Assam, Meghalaya, Manipur, Mizoram and Nagaland. Some of the bigger states such as Bihar, Chhattisgarh and Uttar Pradesh have shown only a marginal decline in the poverty ratio, particularly in rural areas.

Orissa, which had the highest percentage of poor in 1993-94 at 57.2%, now has 37% of its population living below the poverty line. Similarly, Madhya Pradesh has reduced its poverty level from 48.6% in 1993-94 to 36.7% in 2009-10. This data also fits in well with figures that were earlier given by the World Bank. The World Bank website provides Indian data for 2010. This data shows that around 67 million Indians were pulled out of poverty in the five years after 2005. However this is not a major cause for celebration as the proportion of Indians living below the global poverty line of $1.25 a day is higher than in neighbouring countries such as Pakistan and Nepal.

Nearly fifty years ago, we started counting the poor in India. While the world accepted the dollar a day income definition of poverty, India refused to. Much of this was because the dollar a day definition would put India to shame. It was also because much of Indian economy was non monetized and therefore cash incomes were rare. We therefore started using consumption figures to calculate poverty. The first expert group in 1961 decided that poverty be defined as monthly consumption expenditure less than Rs 25 a month for urban areas and Rs 20 a month for rural areas. In 1971, another famous study by Dandekar and Ruth laid the foundations for poverty calculations in India. According to this study, an annual household consumption of Rs 170 for rural and Rs 272 for urban areas would provide people with enough resources to consume 2250 calories each day and therefore escape poverty. Since then, this calorific value became the norm of measuring poverty.

It was argued that if people could consume close to two square meals a day, they could be classified as non poor. While a number of people debated the issues of expenditure on health and education, poverty came to be defined narrowly as the inability to consume a certain amount of food every day. This continued despite the fact that several studies showed how expenditure on health was often the primary reason for chronic poverty. Even today the basket of commodities that are used are the same ones fixed in 1973, even as occupation structures have changed, demographics have altered and consumption baskets been revamped. Expenditure on education has gone up, and even the very poor have started enrolling in schools. Health care is almost entirely in the private sector, while the public sector health care has failed miserably.

What we have seen in the last six to seven years is a concerted attempt to reach the poor through various schemes designed to help them access basic rights. We have the Employment Guarantee Act that promises around Rs 100 a day for 100 days a year for one person from a poor household. There is the rural health insurance scheme that covers expenditure on health up to Rs 30000 a year. Also kerosene and cooking gas had been subsidized for a number of years to reach the poor. These are a few examples of what the Central government has been doing. At the state level, we have Tamil Nadu giving TVs and mixers to the poor, the Bihar government distributing cycles to the girl child and the list goes on. The Right to Education will guarantee schools to the poor; the food security act will provide food and so on. All this will require expenditures of thousands of crores every year.

Inclusive growth is an idea that is based strongly on both the pace and pattern of growth. It implies a strong focus on economic growth as a necessary condition for poverty reduction. Inclusion is something that has a long-term perspective and is concerned with sustenance of growth. It necessarily is broad based, concerns growth across sectors. It must include a large part of the country’s labor force, places emphasis on productive employment. Inclusive growth is something that cannot be confused with mere redistribution of incomes through taxes or charitable acts. It is, on the other hand, fuelled by market-based activities where the government plays a facilitating role.

To make growth inclusive, it is important to identify areas and pockets of deprivation, and these are indeed areas where Muslims, Scheduled Caste and Scheduled Tribes live. It is important to estimate the spread of vulnerability and risk and target interventions where the threat of exclusion is the highest. There is enough being said about how it is critical to estimate what results in the maximum impact per dollar of expenditure, determine low cost solutions that can be implemented and evaluated and prevent leakages and wastages through constant monitoring and feedback

In the country, there are areas where deprivation is obvious and well known, but there are pockets of acute poverty that are often hidden. These are missed by centralized policy making that depends on aggregated data. Modern technology and data analysis allows for clear identification of even very small habitations that are excluded. Geographical remote sensing and geographical position systems enable the drawing of maps with minute details. Techniques such as Small Area Estimates allow developmental interventionist to target their investments clearly. This is essential if development must be inclusive. Lessons learnt from various parts of the developing world give us some indications that are noteworthy. There have been successful attempts at inclusion in Mexico, Brazil, Kenya, India, China, Indonesia and Malaysia among other countries. These have ranged for deliberate affirmative action to large scale cash transfers. There have been some studies that have documented these interventions and these have identified the major challenges and the opportunities that each approach provides an insight into.