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Poverty lines

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A bit of news which appeared only in TOI and has been unfairly neglected by the rest of the media:

The Bombay Parsi Punchayet on Friday told the Bombay High Court that it considers a Parsi who earns under Rs 50,000 a month to be “poor” and hence eligible for allotment of a flat at subsidised rent.

A division bench of Justices P B Majmudar and Ramesh Dhanuka was hearing a petition filed by Rohinton Taraporewala against BPP’s president Dinshaw Mehta and other trustees.

This stands in stark contrast to the stand taken by the planning commission five months ago, that anyone with an earning of Rs. 25 a day in a village or Rs. 32 a day in a town is not poor. This was widely criticized, as reported then by TOI:

Aruna Roy and Harsh Mander, members of the Sonia Gandhi-led National Advisory Council, have joined Right to Food campaigners in demanding that Planning Commission deputy chairman Montek Singh Ahluwalia withdraw the poverty line affidavit filed by the panel before the Supreme Court or resign.

In an open letter by the two prominent members of the UPA think-tank National Advisory Council in their capacity as members of the Right To Food Campaign, they publicly blamed Ahluwalia particularly for the affidavit.

They wrote, “The affidavit filed by the Planning Commission in the Supreme Court skirted the two major issues that were raised by the highest court in the country: why there should be a poverty line that determines the BPL ‘caps’ and, a request by the bench to the Planning Commission to reconsider the poverty line. That the affidavit chose to repeat the stand taken by the Planning Commission in its last affidavit in May 2011 is, we believe, an affront to the poor of this country and also the Supreme Court.”

The absurdity of this definition was explored by a couple of techies who decided to test out the nature of life on Rs. 32 a day and blogged about it. Fortunately this definition was never operationalized. CNN then quoted:

“The official poverty lines do not measure poverty any more; they measure destitution,” writes Utsa Patnaik, professor at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi.

“The outcry against calling these destitution lines ‘poverty lines,’ is justified; for true poverty lines are much higher than these, and show 75 percent of all persons in India to be poor.”

Utsa Patnaik’s article in the Hindu was very well argued, and pointed out the flawed methods by which the white-haired-whiz-kids of the planning commission came to their patently absurd result:

The original definition of ‘poverty line’ was a sensible one, based on an expert committee recommendation in 1979: using National Sample Survey (NSS) data on consumption spending, that in particular observed that the level of total monthly spending per person is to be called the ‘poverty line.’ The food spending part of the figure allowed a person to obtain 2,400 kilocalories of energy a day in the rural areas and 2,100 kilocalories a day in the urban areas. Later the rural figure was scaled down to 2,200 calories. The Commission accepted the expert committee’s nutrition-based definition but applied it only once, to the 1973-74 data, to obtain the correct monthly rural and urban poverty lines of Rs.49 or Rs.56 at which 2,200 or 2,100 calories were accessible, and found that 56 per cent of the rural population and 49 per cent of the urban population spent less than this, and so were poor.

Then the Commission, for reasons unknown, changed the definition in practice, and never again directly looked at the total monthly spending which permitted nutrition ‘norms’ to be maintained. This despite the fact that every five years the required information on this for every spending level was available — the physical quantities of food intake, and the corresponding daily average energy, protein and fat. The definition that the Commission actually adopted was that the 1973-74 poverty lines were to be adjusted for inflation using a price-index, regardless of whether the lines so obtained still allowed nutritional standards to be met. Price index adjustment is being followed for the last 30 years, producing the present absurdity of Rs.26 or Rs.32 as the rural or urban daily poverty lines.

Why these economists should have such faith in the ability of price indices to capture the rise in the cost of living is not clear. Price indices are needed for short period adjustment and are used for dearness allowance calculation, but they do not capture the actual rise in the cost of living over longer periods of time. In 1973, the starting gross monthly salary of an Associate Professor in a Central University was about Rs.1,000. It was adequate, since ration cards could be used; on this income one could even use a car. Applying the Consumer Price Index for Urban Non-Manual Employees, which has risen 17-fold by 2011, the equivalent monthly salary for an Associate Professor joining now should be Rs.17,000, by the Planning Commission’s logic. But this would not support the most modest middle-class lifestyle of four decades earlier. A newly appointed Associate Professor’s actual salary today is three times that figure, thanks to successive Pay Commission recommendations.

The distinction between poverty and destitution is important. In the course of life every day we interact with many people who are poor but probably not destitute: the vegetable seller, the newspaper delivery man, the guy at the corner of the road who irons clothes, the waiters at the restaurants we drop in to, the annoying kid who calls you up to sell you insurance. They probably earn enough to just about make do, but have no savings worth the name. If any of these people had to deal with a medical emergency, they would go broke. Even by Utsa Patnaik’s more liberal measure, these people are not officially poor; however, their incomes “would not support the most modest middle-class lifestyle”. The Parsi panchayat is certainly taking a good clear-eyed view of the meaning of poverty.


Written by Arhopala Bazaloides

March 4, 2012 at 5:32 am

One Response

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  1. […] definition of the poverty line has been under challenge. However, the government has been claiming to use this definition consistently. An article in the […]

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