Inclusive growth has been talked about for a decade now. But all we get is new definitions of poverty.
By Amir Ullah Khan
India has been growing very fast in the recent past. In fact, there is no free market democracy that has grown faster than India in the last two decades. It is also true, on the other hand, that the world’s largest collection of abjectly poor people live in the same country. Even the most charitable estimate counts the very poor as constituting 20 per cent of the population, more than 200 million people.
The central question therefore is – what is poverty? How does one determine the number of poor people? Is poverty a function of income? In inflationary times, any increase in income is only notional, so obviously a strict income measure is not good enough. Is poverty a reflection of the absence of access to healthcare and education? Today poverty is only seen as a measure of access to staple food. In a country where the government takes it on itself to provide free healthcare and education to all, wouldn’t a new measure of poverty that includes health, education, drinking water and housing indict the state?
It is ironical, but these are the questions that the Deputy Chair of the Planning Commission, Montek Singh Ahluwalia, is asking yet again. He first raised this issue 30 years ago in a paper he wrote in 1978 in the Journal of Development Studies. Today when he asks for a revision in the definition of poverty, isn’t he pointing fingers at the same administration he has been part of for three decades now?
Compounding the problem is that most studies that we see today use data from the 2001 census. One can well imagine what this means, for in eight years there has been so much change in the country that any policy derived out of such ancient numbers will only be faulty.
It was in the 1960s that 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 the Indian economy was non-monetised 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 V.M. Dandekar and N. Rath laid the foundations for poverty calculations in India. According to this study, an annual household consumption of Rs 170 a year (or 45 paise a day) for rural and Rs 272 a year (or 75 paise a day) 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. Healthcare is almost entirely in the private sector, while public sector healthcare has failed miserably. Though now and then it performs remarkably well when tending to the bureaucrat or the politician who gets herself easily admitted into those large, well- equipped and overstaffed government hospitals in big cities.
Mr Ahluwalia’s call for making poverty measures inclusive of all access to basic amenities is a welcome sign of a caring government, certainly. But why did this have to wait for so long? We have heard two coalitions talk of inclusive growth for at least the last ten years. Anyone, and almost everyone now who is an expert on governance, will tell you about wasted and untargeted subsidies. If we do not know who and how many are the poor in the country, how have we been designing these big-ticket pro-poor programs? If we are underestimating poverty by a hundred million or more, on whom are we spending all that money? No wonder, we are still known internationally as much for our IT sector and Bollywood as for our abject poverty and the mess in Kashmir and the North-east.
It is also not surprising that we still have 65 per cent of students dropping out before reaching class 5 and nearly half the population suffering from malnutrition. We should indeed begin with accurate data and a new poverty index that includes food, clothing, shelter, health care and education. From someone like the Deputy Chairman of the Planning Commission, who started his academic career with counting the poor, we would have expected this step be taken at least ten years ago.
Amir Ullah Khan, a former IAS Officer, is a fellow with the India Development Foundation