Originally Published 2011-10-11 00:00:00 Published on Oct 11, 2011
Though the Planning Commission went by the Tendulkar formula, Rs 32 and Rs 24 look extremely low at today's prices and high inflation, and especially if we take into account that these amounts include other items of daily life like education and health.
Design Behind 'Counting' The Poor
The Planning Commission's Rs 32 absurdity was not a simple academic exercise, but smacked of Soviet-era hoodwinking. By keeping hundreds of millions out of the 'poverty zone', UPA-II hoped to reduce subsidies for the purpose of presenting a more 'balanced' Budget.

It is futile to count the poor or divide them into categories because in India all the people who are poor suffer from multiple deprivations. Yet this exercise of defining the poor by drawing a poverty line has been undertaken many times in the past and according to the last officially accepted count - the Suresh Tendulkar Committee report -37.2 per cent of the population is poor at 2004-05 prices. In a bid to reduce the number of poor who are eligible for State support in food and health, the Planning Commission has recently come up with a benchmark in its affidavit to the Supreme court which states that anyone earning `32 a day or above in a city is not to be regarded as poor and a rural person with a daily income of `24 is, likewise, not poor. The Supreme Court wanted to know the Planning Commission's response to a Public Interest Litigation moved by Peoples Union for Civil Liberties, which had wanted to make the thresholds higher for defining poverty, whether it applies caps (cut off points) in estimating the number of below-poverty-line households, and what was the rationale for such caps. Fortunately, this ridiculously low estimate will not be used in determining the eligibility for entitlements under various centrally-sponsored poverty alleviation schemes and the government is going to wait for the Socio-Economic caste data collected by the NSSO for identifying the poor.

Though the Planning Commission went by the Tendulkar formula, `32 and `24 look extremely low at today's prices and high inflation, and especially if we take into account that these amounts include other items of daily life like education and health . We also cannot say that someone is not poor just because he or she has a mobile phone, or has a few decent clothes, a small TV and is not actually starving. Today the poor are rather invisible in big cities because they usually do not live within the city prescient. They commute in buses, cycles or trains to cities and do menial jobs as domestic helps, construction workers, labourers and cleaners. They can be seen in buses and railway stations, in crowded bazaars and construction sites. Just because we cannot see them around us, it does not mean that there are fewer poor. They not only earn meager wages, they earn nothing when sick. Their children do not get regular schooling and if they are ill, they have to queue up in public hospitals for hours. In villages, the poor lead dreary, unbearably hard lives.

But one can understand why the government is so keen to proclaim that India is not a poor country and that extreme poverty is on the decline. This is because in the aftermath of the recent global financial crisis the main winners seem to be India and China. While China is lacking in democracy, India is still burdened with corruption and many shades of poverty and human deprivation. The economic reforms have made millions richer and have created a huge middle class in India. But they have not benefited the poorest of the poor. And millions of SC/ST and OBC population still belong to the deprived and poor category. That India still officially has nearly 400 million poor is a blot on India's growth story which is hard to explain and difficult to accept. China, on the other hand, has been able to reduce poverty drastically to 2.8 per cent and is able to give basic public goods and amenities to a vast majority of the population. It has almost 100 per cent literacy and its labour force is disciplined and skilled. All these crucial ingredients are lacking in India right now and could derail India's bid for global economic power.

Poverty is not just a lack of adequate daily cereal consumption which, incidentally, is also declining according to some noted economists. It is also about the low quality of food and protein intake which impairs body and brain development. Food inflation of the last few years is going to take a toll on the proteins consumed by the poor and this is going to further increase the number of malnourished children in the future. India has the highest number of malnourished children under the age of five in the world, much worse than sub-Saharan Africa.

Clearly for the government, malnutrition of children, and the growing inequality of income are sources of worry and fear. For years there have been poverty alleviation programmes and the government has given subsidies to the poor that have been termed as a drain on public expenditure. Subsidised food, fertilisers and healthcare never seemed to reach the real poor. Now the government is afraid of sovereign debt like in Greece, Spain and Ireland. It is interested in reducing subsidies and the fiscal deficit. Perhaps one of the reasons behind showing that India has less number of poor is the government's obsession with balancing the budget and it feels that if it could "prove" that there are fewer poor, it may be free to cut subsidies. Already the target for public expenditure has been exceeded and the fiscal deficit crossed 66 per cent of the yearly target in just five months of the current financial year. The government would have to go in for `528 billion in public borrowing. Also, after the financial crisis of 2008, the government first gave sops and incentives and stimulus packages. But when it led to inflation, it resorted to monetary and fiscal tightening. This has resulted in the recent industrial slowdown.

Monetary tightening has hit small enterprises hardest because interest rates have been raised 12 times in the past 18 months and has made loans very expensive. Many marginal farmers are facing serious problems because of high cost of farm inputs. Reeling under inflation many poor and marginal farmers are becoming poorer. There are 93 million people living in slums and have very poor quality of life. They have little access to clean drinking water, sanitation and sewage. They also spend a good part of their incomes on bribing public authorities. They would welcome subsidised food in order to save money for something else which is important to them like education of children and better private healthcare. Everyday some family or other is receding into poverty due to some unforeseen calamity or illness. One big illness can lead a family to below poverty line and 20 million people are becoming poor every year due to such illnesses. Even if it is only for academic reasons, setting absurdly low cut off points to demarcate the poor, the Planning Commission has undertaken an insensitive exercise.

(Dr. Jayshree Sengupta is a Senior is a Senior Fellow at Observer Research Foundation. She is now working on her next book, The Global Economic Crisis: Ramifications for India: Opportunities and Challenges)
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David Rusnok

David Rusnok

David Rusnok Researcher Strengthening National Climate Policy Implementation (SNAPFI) project DIW Germany

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