Mar 22, 2011

How to Keep Poverty Low

In a significant move, the Supreme Court in India has questioned the very basis of counting the poor in the country. Realising that the poverty line is a gross underestimation, the Supreme Court has done what economists had failed to see all these years.

By deliberately keeping the poverty line low, economists and planners had actually betrayed the poor. These faulty poverty estimates became the foundation of the entire development strategies and programmes. No wonder, 64 years after independence, poverty continues to be robustly sustainable. 

On top of it, there are so many estimates floating around that I have lost count. Most of these estimates are actually drawn on the same faulty assessment criteria, and therefore have failed to make any appreciable impact on mitigating poverty and inequality.

Now take a look. The Planning Commission had worked out poverty at 27.5 per cent in 2004-05. An expert group set up by the Planning Commission again in 2009 to review the methodology for poverty estimates for the same year (2004-05) upped it to 37.2 per cent, which means a mere statistical readjustment added another 100 million people to the count. And if we go by the international poverty norms of people living on less than $ 1.25 per day than over 456 million Indians live in poverty. But if we go by the Arjun Sengupta commiteee report, which I am discussing later, even this estimate may turn out to be too short.

The National Advisory Council simply pegs poverty at 50 per cent. As if this is not enough, we now have the new Multi-dimensional Poverty Index (MPI) developed by the Oxford Poverty and Human Development Initiative for the United Nations Development Programme (UNDP) which pegs poverty in India at 55 per cent. It has added another ten indicators, including child mortality, school enrolment, drinking water, and sanitation.

Before you get lost, let me decipher the criteria that are used to first gauge the prevailing level of food insecurity and hunger. Previously poverty estimates were done using the calorie norms provided by the Indian Council for Medical Research. Accordingly, 2400 kcal in rural areas and 2100 kcal in urban areas formed the basis of the poverty estimates. This was the basis of earlier Planning Commission poverty estimates. I don't know why the UN Food and Agricultural Organisation (FAO) uses lower per capita calories consumption cut-off of 1770 kcal.

By keeping the food consumption norms low, the FAO probably succeeds in hiding its own inefficiencies in reducing global hunger. That is why I have always found the Millennium Development Goals action plan to achieve the eight-point poverty goals to be built on a shaky foundation. Current estimate of global poverty by the FAO for instance at 925 million is in itself an underestimation. A realistic poverty estimate for India alone would be around what the FAO projects. According to Arjun Sengupta committee report, 836 million people in India are unable to spend more than 50 US cents a day, and I am sure no one would disagree that these people are not living in poverty.

Read the full article: How to Keep Poverty Low, Huffington Post, Mar 22, 2011

1 comment:

witan said...

Please see: in 1990–– IMF insisted that India change to free market capitalism––What followed has been an almost total dismantling of the economy
“...[Prime Minister] has taken pride in the spectacular GDP growth India has been achieving in recent years and that it has about $272 billion foreign exchange in the kitty, thanks, supposedly, to the ongoing structural adjustments. He should be legitimately proud of India’s growth trajectory. Equally, he should be ashamed of its flip side: how this has benefited only a small section and neglected the other ~ the majority ~ section of the people. The foreign exchange reserve is a problem, not a solution...” etc.