Sep 9, 2014

The Poverty Game. World Bank, Asian Development Bank and India's Planning Commission comes out with three magical figures.

Does it really matter if these children earn an equivalent of $ 1.51 or $ 1.25 or less than that per day? 
Picture Ankesh Kothari (from web)

The magicians are out on the stage. The challenge before them is to compute poverty. performing the vanishing trick, and that too without any compassion, they perform the statistical jugglery. Leading the pack is the World Bank. In its latest poverty vanishing trick the World Bank revisits its Purchasing Power Parity (PPP) index, and in one stroke it reduces India’s poverty from over 402 million in 2005 to a very impressive 98 million in 2010.

On the other hand, the Asian Development Bank has revised its poverty line to $ 1.51 per person (from the existing $1.25), and India's poverty in 2010 rises to 584 million or 47.7 per cent of the population. The gap between 584 million and 98 million is so huge that one is forced to dismiss both the estimates as unreal.

Here comes the third magician. An expert committee under Prof C Rangarajan, a former economic advisor to the Prime Minister, submitted its report to India's Planning Commission in July this year. By revising the poverty line to Rs 32 in rural areas and Rs 47 in urban areas, Rangarajan committee actually added another 93.7 million thereby raising the number of total poor to 363 million or 29.5 per cent of the population. 

So now we have three estimates: 98 million, 363 million and 584 million.

Isn’t this shocking? While not many Indians will believe that Rangarajan committee’s estimates are anywhere near the reality, and in fact is a gross underestimation of the extent of poverty in India, the World Bank’s latest estimates only shows that poverty does not require Millennium Development Goals (MDGs) targets to be achieved or any real effort to combat poverty and squalor. All it needs is a few economists who can play around with statistics. These economists can perform the vanishing trick much better than the Indian rope trick.

According to the World Bank’s latest estimates, global poverty has come down overnight from 1.2 billion to 571 million.

The earlier poverty line figure in India was Rs 27 for rural areas and Rs 33 for urban areas as computed by the Tendulkar committee a year back. This had raised a storm over the faulty and impractical estimates necessitating the setting up of yet another committee under C Rangarajan. And if the recommendations of the Rangarajan committee are to be believed, it tells us that there is something dubiously wrong with the way India is trying to deliberately keep poverty low. In all fairness, the new poverty line is nothing but a starvation line. It only tells us how many people need emergency food aid.

World Bank’s projections are still worse. In order to justify economic liberalization, it has been trying to fiddle around with social indicators as well as the poverty line to establish that the market mantra is working. World Bank’s chief economist Kaushik Basu defends the exercise by saying: “In case a dollar in Ghana can buy three times what it can but in the United States, then a person who earns 1,000 dollar each month in Ghana is said to earn 3,000 in terms of PPP-adjusted dollars”. But the reality is that even in the United States, despite being a privatized economy, hunger has shattered 25 years record. A record 49 million people, one in seven, depend upon food coupons to meet their daily food needs. One in four lives in poverty in America.

The World Bank is wrong. In case of India, with or without the new PPP index of the World Bank, I would like to know what can a poor with a daily income of Rs 47 in urban areas buy three times more than what he can buy in America with the same money. It therefore tells us that economists are no different from the famed Indian magicians. They too can perform the vanishing magic trick with alacrity. 

Global empirical evidence is now emerging challenging the World Bank's deliberate underestimation of poverty. Recent studies (ECLAC 2002, 2011) have conclusively shown that in Latin America for instance actual poverty rates are twice than what the World Bank had projected. More recently, on April 11, 2014, a study by the University of Bristol published in the Journal of Sociology concludes that the World Bank is painting a 'rosy' picture by keeping poverty too low due to its narrow definition. Dr Christopher Deeming of the Bristol University's School of Geographical Sciences is quoted as saying: "Our findings suggest that the current international poverty line of a dollar a day seriously underestimates global poverty."

In India too, the entire effort of policy planners as well as the numerous expert committees constituted over time to estimate poverty have simply tried to brush the realities under the carpet. While Rangarajan Committee tabulates a new poverty line, way back in 2007, Arjun Sengupta committee report had estimated that 77 per cent of the population or 834 million people were unable to spend more than Rs 20 a day. But more recently, the consumer expenditure data presented by the National Sample Survey Organisation (NSSO) 2011-12 paints before us the grim realities.

Accordingly, if you are spending more than Rs 2,886 per month in the rural areas and Rs 6,383 in the urban areas you are part of the top 5 per cent of the country’s population. In other words, those spending more than Rs 6383 in urban areas are in the same category as Mukesh Ambani, Ratan Tata, Nandan Nilekani et al. For the rest 95 per cent, roughly 118-crore people, life in any case remains tough. With or without the growth trajectory, their life hasn’t changed. In fact, with the aggressive pitching by the corporate-controlled media, the growing social divide is getting completely ignored. Poor have simply disappeared from the economic radar screen.  

Another estimate exposes the glaring inequalities. The economic wealth of 56 people is equal to the economic wealth of 600 million people. No wonder when we take averages like the rising average income, it hides the rapidly growing inequalities. The mainline economic thinking is that the 600 million would benefit from a trickle-down impact. Now with the number of absolute poor being reduced with a magic stroke, the World Bank will succeed in painting a rosy picture by brushing the poor under the carpet in one single sweep hides the truth. With the passage of time, these unchallenged statistics will be repeatedly used and get accepted over time.

Unless the World Bank makes an immediate correction, all projections of removing 'extreme poverty' by 2030 would be as farcical as the new poverty estimates are. But I doubt if there would be an international uproar forcing the World Bank to redraw the poverty line. At this rate, in the next five years when the World Bank will revise its PPP index, poverty in India on paper will disappear. The poor in India will one day suddenly wake up to find themselves bracketed with those living in opulence. That’s the power of statistical jugglery. #

Painting a rosy picture, Deccan Herald, Sept 9, 2014.

गरीबी पर आंकड़ों का खेल Dainik Jagran, Sept 6, 2014


Anonymous said...

There are a number of nonsensical or pretentious intellectual exercises happening in our country today, one of which is this number-crunching business which reduces even human poverty and suffering to statistical figures. Uprooting people out of their traditional occupations under the suicidally myopic attitude of "being in tune with the times" and then suggesting even worse prescriptions like BPL entitlements etc. to solve their problems! Strictly speaking in the same token, do these statisticians merit the amount of salaries they are being paid for the kind of work they are doing? Not exactly! Should'nt they also be paid acc. to the usefulness of their work just like they calculate PPP or BPL for aam aadmi!! Instead of wasting their time on such West-aping academic pursuits, they had better spend their talent on thinking how to generate livelihoods to the unemployed through sustainable ways like protection of the "desi cows" & their grazing pastures (Go-paalan is said to be a best form of employment for the poor and the unskilled in the Rig Veda), organic farming, water resources management (using appropriate technologies), revival of traditional handicrafts and household articles made out of eco-friendly natural materials(and thereby eliminate the toxic Chinese rubbish flooding the markets) etc.

It is in building a firm self-sufficient economic base of villages and society in general based on Indian requirements, realities and philosophy in which the poor have a level-playing field(not by competing with others for industrial jobs but by doing their traditional ones in which they are comfortable with) - that the future of a happy, sustainable and prosperous India lies. The sooner this truth is grasped and internalised by our policy-makers, the better for our country. Otherwise only chaos, appalling income disparities and misery will prevail for the poor, while the well-off continue to lead a happy life ignorant of the surrounding suffering and destruction not willing to forgo any of their disproportionate privileges and benefits. That's all!

Hail Charles Darwin! Hail "Survival-of-the-fittest" ideology !! Welcome to the new Jungle Economy based on numbers!!

Anonymous said...

Dear Devinderji, a very good view on the merchants of measurements. Similarly, over the last three years I find that our retail price data by government agencies is an under-estimate of the typical prices found in kirana shops, let alone the big bazaar sort of supermarkets. This is the other part of the 'poverty line' where it is connected to food price indices that are also untrue. We must have independent price collection in towns and district HQs. Regards, Rahul Goswami

Vaanbhatt said...

Number game is usual for the economic and funding agencies...

Addison Conroy said...

The constantly changing fashionable take on poverty development india demonstrates the depth of the subject. Indispensable to homosapians today, it is impossible to overestimate its impact on modern thought. Crossing many cultural barriers it still draws remarks such as 'I wouldn't touch it with a barge pole' and 'i'd rather eat wasps' from those most reliant on technology, who are likely to form a major stronghold in the inevitable battle for hearts and minds. Here begins my indepth analysis of the glourious subject of poverty development india.