Back in the 1980s when I was a post-graduate student pursuing economics at the Gokhale Institute in Pune, we were perhaps the last of the batch to listen to guest lectures by the late VM Dandekar. Dandekar pioneered the art of measuring poverty in India in 1971, and used 1960-61 official data. His calculations focused on calorie consumption, or rather food consumption, as the primary barometer that defined the poverty line based on variable estimates in urban and rural India. By the time we were listening to his lectures, this was replaced by suggestions from other committees.
The issue is relevant decades later because getting a fix on poverty levels is still a tricky one, and includes varied approaches. Recently, Kerala announced that it had eradicated extreme poverty in the state. Official and global figures clash about the number of poor people in the country, or other nations. No one knows for sure. Experts cherry-pick the data to suit their conclusions. So do the policy-makers to justify their actions and decisions. Poverty is one of the most contentious and debatable subjects.
During my student days, perhaps along with poverty measurement, figuring out the size of the black economy, or black money, in India was another intense academic exercise. Since the economic reforms, the black economy does figure in some studies, and a few official reports exist, but there is a consensus of sorts, rightly or wrongly, that it has reduced in the past three decades. in the country. Yet, the figures that emerge from scandals and scams seem unbelievable.
But poverty is another issue. The Lakhdawala committee improved upon what Dandekar did, and proposed items of consumption that needed to be included in the poverty basket. A year after the Harshad Mehta scandal in 1992, another committee was formed, but the focus remained on calorie intake. In the 2000s, the Suresh Tendulkar committee was appointed, which was followed by the Rangarajan committee (2014). Over a period of more than four decades, poverty measurement underwent a radical change.
While calorie intake was considered a sufficient, though not complete, way to capture poverty, economists argued that families or households, rich or poor, consumed other goods apart from food. These included crucial areas such as transportation, education, and other important requirements. Some of them were put in the expenditure basket of a household to estimate the minimum budget. This position was adopted by the World Bank, which started from a need of $1 a day, and increased it to $4.2 per capita.
Kerala added a twist with the mention of extreme poverty, which entails a different definition. The World Bank states that a per capita spend of $2.15 or less implies a situation of extreme poverty. The $4.2 figure we mentioned earlier is a measure for middle-income nations. countries. By the latter figure, the number of poor in India is close to a quarter of its population. It implies that anyone who cannot spend more than `375 a day is poor. Which seems adequate, or higher, and depends on which side of the ideology you swing towards.
A spend of `375 a day translates into more than `11,000 a month. Since it is a per-person cost, it means an income of at least `20,000 a month, if there are two earning members. Now, a complexity enters if there are 2-3-4 dependents. However, central and state governments continue to generate newspaper and TV headlines, with claims of successful elimination of poverty from some regions, a dramatic decrease in the levels, or that 500 million Indians escaped poverty over the last three decades, which has transformed the country into a successful middle-income one.
I personally prefer the measurement developed and proposed by the NITI Aayog in 2021, which is called the Multidimensional Poverty Index. It does account for expenditures. It considers other elements such as health, education, and nutrition. But there are at least eight other parameters, which are related to access to basic services or infrastructure such as housing, electricity, piped drinking water, and bank accounts. By this definition, by the end of 2023 only 11 per cent of Indians lived in poverty. The state-level range varied from virtually zero in Kerala, and 30 per cent in Bihar.
Unfortunately, NITI Aayog has not updated the index after 2023. One hopes that the exercise has not been abandoned for political or economic, or other reasons. India has changed over the decades. The poor, like the rich and middle-class, have new aspirations and dreams, and pursue them too. Recently, I heard a story about a family in Mumbai, where a poor butcher father, who lived in a chawl, graduated to being a bus conductor, took education loans to make his daughter an engineer, who now works in Europe, and built a seemingly-palatial house in the chawl. This family may be poor once, but its expenditure, or budget, was not typical of a poor family.
As of now, according to a website that caters to IAS aspirants, there are several global and Indian measurements. The Global Multidimensional Poverty Index is released by the United Nations, and Oxford Poverty and Human Development Initiative, and puts India’s poverty at just over 16 per cent in 2021. We have talked about the World Bank, and the NITI Aayog, apart from which the Indian Economic Survey constructs a Bare Necessities Index, which includes 26 indicators in five areas. Hence, what we have are different figures that are bandied around by interest groups to support their claims.
More importantly, as the pandemic proved, poverty is not static but a dynamic issue. Putting assumptions, which are updated after a few years does not help, when things change rapidly, and within days and weeks. Post-Covid, suddenly, the concept of the poor changes across the world, and especially in India. As employees lost jobs, and this was more prevalent among migrants and unorganised labour, incomes vanished. Even the middle-class families began to see themselves as poor, as they were unable to pay EMIs, or afford the normal goods and services that they took for granted.
Hence, there are biases that creep in inadvertently, or deliberately. For example, as per a recent article, poverty measures during Covid served two purposes: Tracking and treatment. Tracking was to count the numbers. Treatment was aimed to understand who qualified for the welfare schemes like free vaccination, and food rations. The latter leads to ‘false negative,’ when we “wrongly declare someone who truly needs assistance to be ineligible.” It results in ‘false positive,’ when we “give assistance to someone who in reality is not needy, even though the numbers seem to fit the official definition.”
The author has worked for leading media houses, authored two books, and is now Executive Director, C Voter Foundation; views are personal
