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Let’s not count the poor (seriously)

March 20, 2012

As someone recently commented on a Kafila post, we live in a post-fact world where there are no facts. Everyone believes what they want to. So depending on your  ideology, poverty in India has reduced or increased. But such is the debate on poverty that the definition of poverty itself is subject to debate. How poor do you have to be, so that the government will say you are poor? This poverty debate has been on around the same lines for about ten years now, with the economic left arguing that India isn’t shining, and the economic centre-right arguing that millions of people have been lifted out of poverty by India’s super-successful economic growth. The debate will go on forever, there will be no certainty in numbers, and perhaps there shouldn’t be – perhaps counting the poor cheapens the issue of poverty. Counting the poor leads us to ask, what about the only -slightly-better-than-the-poor? Counting the poor leads us to compare poverty numbers and give us relief. Ah, only 30% Indian poor now, as opposed to 50% in such and such decade, nice! Great job India! No, this is not what the poor deserve, whether they are 30% or 50%. Perhaps we should stop counting the poor.

The Planning Commission says 5 crore Indians have been lifted out of poverty.

…poverty across the country declined by 7.3 percentage points from 37.2% in 2004-05 to 29.8% in 2009-10. In absolute terms, there were 35.5 crore poor people in 2009-10 against 40.7 crore five years earlier.

This led to some hard chest-thumping on the internet and elsewhere yesterday. But the Times of India reveals the Planning Commission reached these figures by simply lowering the poverty benchmark – again!

The new estimates are based on a poverty line that averages Rs 672.8 per month (Rs 22.43 per day) in rural areas and Rs 859.6 per month (Rs 28.65 per day) in urban areas for 2009-10. In a state like Delhi, the urban poverty line translates to Rs 34.67 per person per day.

In the Supreme Court, the government had submitted that the updated poverty line was likely to be Rs 26 per day in rural areas and Rs 32 per day in the towns in June 2011. [Read the full article]

At this rate the Planning Commission will one day make he poverty benchmark in the negative, if that was possible.

Here’s a better benchmark of poverty figures, if we really need them. The mobile phone is today a necessity and when you travel in rural India you realise only the very poor don’t have a mobile phone. Recently, the 2011 Census of India (more trustworthy an organisation than the Planning Commission any day) revealed that 63.2% households (not individuals) have a phone, mobile or landline. Which means 36.8% people are too poor to have a mobile phone, a basic necessity today after roti, kapda makaan (food, clothes and housing).

By contrast, 53.1% households do not have a toilet – for the simple reason that it costs much more to build a toilet than to buy a mobile phone. Which is a comment on the opacity of poverty figures – forget the technical definitions, forget the ‘below’ and ‘above’ poverty line ration cards. In popular parlance, poverty figures give the impression that there are people who are poor and then there are people who are not poor.

So you could say nearly 37% Indian households are poor, not 30%, as the Planning Commission would have us believe. But then 53% Indian households don’t even have a toilet – so those among them who can afford  a phone, what use being thought of as non-poor?

It is because of the farcical nature of the debate over growth and poverty figures in India that we have a situation that despite high GDP growth rate in the much-celebrated state of Bihar, the official poverty decline there has been negligible and the state has been granted an increase in the number of people it can classify as poor.

End the farce. Forget poverty numbers, have universal PDS. Those who can afford better quality rice will not buy Rs. 2 a kg rice from a government ration shop. Just as you don’t ask people whether they have a Below Poverty Line ration card before giving them free healthcare, you don’t need to count them to give them subsidised foodgrain. That is essential to make sure that while poor Indians try to come out of poverty, they have food to eat. We should worry less about counting the poor and far more about delivering the services than can alleviate poverty.

And then let’s count how many Indians earn how much. Here’s a graphic from, again, the Times of India, that shows that only 1.2% of Indians have a household income (not individual income) of more than Rs 30,000 a month, and less than 10% have a household income of more than Rs. 10,000 a month. Thanks to Madhukar Shukla for pointing me towards this graphic.

25 Comments leave one →
  1. March 20, 2012 2:11 PM

    Very useful figures to have…

  2. dark lord permalink
    March 20, 2012 5:43 PM

    The 37% poverty in 2004-05 was based on consumption of around 14.5Rs percapita and 30% in 2009-10 was based on consumption of around 28.5Rs percapita. So planning commission has not reduced the numbers.

    Universal PDS votaries never provide any details on how much it will cost, who will bear the cost, how many private players will be eliminated because of government mandated monopoly, why the rich will not leverage on the 2rs/kg rice and sell it in open market.

  3. kimmi permalink
    March 20, 2012 5:56 PM

    more subsidies will only make the fiscal deficit worse. providing rice @2/kg isn’t the solution, employment to all is because if you get food so easily than there isn’t enough incentive for one to work harder …socialism is good but when it stifles the individual’s need to be better and compete to his full potential, then it gets difficult to get him out of a vicious circle…MNREGA is a right step but the relationship between the state government and rural authorities needs to be bettered

  4. March 20, 2012 6:29 PM

    Yawn. We heard the same arguments against NREGS some years ago. Why don’t you guys ask how much surplus cash the state would have if we didn’t have crony capitalism in the name of reforms? How much surplus cash the state would have if it wasn’t giving away for free civil aviation routes and telecom spectrum and mineral resources and do you even know the scale of a gas scam down south? Those billions that are lost in scams never make people like you worry about fiscal deficit. You worry about fiscal deficit only when it comes to the poor, have you noticed?

    And universal PDS will actually reduce corruption in PDS: when the same rice is available for Rs 2 why will I buy it from an open shop for Rs 8? And even if it is sold for Rs 8, the rich will still buy their basmati, right? Sell subsidised, nutritious food grains in packets with MRP through the private market. Works?

    • suresh permalink
      March 20, 2012 8:03 PM

      There is an inconsistency here. If you believe that the government is so corrupt that it tolerates crony capitalism and scams of various sorts, then you can hardly blame others for noting that corruption can be a serious problem with NREGA or PDS too.

      Unfortunately, this inconsistency is there on the other side too…if you believe that the government is so corrupt that it invalidates all social initiatives, then there is no reason to believe that it will run a capitalist (or for that matter, socialist) system in an honest manner either.

      I am not sure that this is the way to debate important issues but we seem to be stuck in this unproductive rut going through the same silly arguments again and again and again.

  5. March 20, 2012 9:10 PM

    There’s actually less corruption in NREGA than in many other government schemes. I don’t use crony capitalism to argue for a socialist state even though ‘kimmi’ above accuses me of being socialist, because s/he like binaries. But just as crony capitalism does not mean the only other alternative is socialism/communism, similarly, corruption in development schemes is no argument for not having development schemes. Headache needs a pill, not beheading.

    • Raghu permalink
      March 20, 2012 9:59 PM

      Then you have not heard of the “ghosts” in NREGA Muster Rolls of Maharashtra (not that there is no corruption in other states but this is the frist one that came to my mind). The average daily wage of a worker in Kerala is Rs. 400 to Rs. 500. How many workers can you find at Rs. 100 per day under NREGA in such a state?

  6. vallyettans permalink
    March 20, 2012 9:50 PM

    oh you beauty the planning commission is at it again-they just elevated five crore poors to non-poor in just one master stroke .every country must learn from our commission rather than going for silly reforms and populist measures. now since the bizarre census people told us that only 53 percent of our population has sanitation facility ,they will make it to 100 percent by rewriting what sanitation is meant for ,it is as simple as that ,this is manmohanomics-any question

    • suresh permalink
      March 20, 2012 11:40 PM

      The Wall Street Journal actually explains matters well. From a policy viewpoint, there are two questions:

      (i) At a given point in time (say 2012), who are the people who should be covered by welfare schemes?

      (ii) Over time (say between 2005-2012), how has the incidence of poverty changed?

      These are both important but nonetheless distinct questions. It is to be noted that the Planning Commission is talking about the second and not the first question. You might ask: so what? If the “wrong” estimate of poverty is being used, can one get an accurate picture of how poverty has changed over time.

      Actually, it is quite possible. Note that if you are using an “imprecise” measure, you are using it throughout. Thus, while the measure in 2005 might be wrong, so is the measure in 2012. So, effectively, the two wrong estimates cancel one another and the difference between the two can give an accurate picture of the “trend.” Of course, you can’t always do this but so long as the estimate is not “too wrong”, it might still work.

      I guess a lot of the fury is because the Planning Commission itself has not clarified matters. In particular, it should emphasize that the poverty estimates are not going to be used to decide who gets access to welfare; rather they are being used to get an understanding of how poverty has changed over time.

      The original article in the Wall Street Journal (by Tripti Lahiri) is here

      • vallyettans permalink
        March 21, 2012 8:09 AM

        i don’t get your idea that two wrongs will cancel each other and their difference may lead us to better figure-this is not about statistical analysis,what is at stake is human lives and we cannot afford to have make such blunders which can cause many a life.if our planning agencies can’t give us a rather realistic data then how are they going to plan the development of this country ,then whats the need for such an error prone organisation .the fact is that these organisations has lost touch with the needy and they are tolling our such horrendous yardsticks to make-believe that everything is going according to the PLAN.is that what we deserve .they have said that they wont limit the number of benificiaries by using these numbers ,then what else are they using.this is completely absurd and something has to be done and within no-time .because every second counts.
        and urther we cant trust a government which didnt give a single rupee to food security bill while giving in huge for an atrocious project like aadhar-the great indian tamasha

      • suresh permalink
        March 22, 2012 12:13 AM

        I expect you to respond with something totally tangential but here’s what I mean: Let us suppose that you are interested in knowing the reduction in poverty incidence between 2004-10. Suppose the “true” poverty estimate in 2004 was 70% but was incorrectly estimated as 55%. Suppose that the correct estimate in 2010 was 60% but was incorrectly estimated as 45%. Then, the reduction in poverty incidence over the six year period is 10% whether you use the correct estimate or the incorrect estimate. You get the correct answer either way.

        Admittedly, this is extreme but it makes the point. Imprecise estimates may still give useful information. Of course, one might ask why imprecise estimates are used when more precise estimates are available. The point is that when you change the methodology for estimating poverty, you have to go back and recompute the estimates for previous years too to ensure that you can make comparisons across different years. This is not only costly but in some cases may not even be possible. (The new methodology may use data which was not collected earlier, for example.)

        • vallyettans permalink
          March 22, 2012 8:09 AM

          what if the real figure then was 75 and now it is 70 .be logical -a different set of measuring standards may not maintain the same gap.even if agree with you that imprecise estimates still provide info,like the increased poverty incidence in some states inspite of these yawning yardsticks ,what is the use of these estimates if they can’t give you a more realistic picture.if it is not possible to have one,then do away with it rather than making farcical claims

  7. March 20, 2012 11:19 PM

    But just as crony capitalism does not mean the only other alternative is socialism/communism..

    Yes, the alternative to capitalism, crony or otherwise, is not socialism/communism. The socialists are far more astute than that. Kevin D Williamson, author of the brilliant Politically Incorrect Guide to Socialism observes:

    It is not hidden socialism that presently undermines our institutions, weakens our economy, and fritters away both present and future prosperity, but unhidden socialism…In the United States, we have an education system that already is socialized to a greater extent than Lenin managed for Soviet agriculture. We have a health-care system that is well more than half socialized. We have a mortgage market that is largely socialized. Not surprisingly, our schools, our health-care system, and our mortgage market are the three most prominent failures of major institutions in recent memory. That is not the fault of Barack Obama and his hidden socialism. That is the fault of longstanding American economic policy and its unhidden socialism

    That is, in a jurisdiction where people (or, at least a good number of them) understand the dangers of socialism and ‘socialism’ is in fact a dirty word, the socialists could get away with unhidden socialism. In India socialism never was a pejorative.

    NREGA, universal PDS… the socialists can never smell past statist, centrally planned solutions. It is refreshing that ‘less corrupt than other schemes’ is the justification for pork-barrelling these days! “How much surplus cash the state would have if it wasn’t giving away for free civil aviation routes and telecom spectrum and mineral resources and do you even know the scale of a gas scam down south” – that my friend, is the text book definition of socialism – government ‘allocating’ ‘resources’. That is the socialism hiding in plain sight.

    I am not sure that this is the way to debate important issues but we seem to be stuck in this unproductive rut going through the same silly arguments again and again and again.

    Agree with Suresh. We are tilting at windmills. During all those hours and hours of debate on the spectrum scam nobody bothered to ask the fundamental question: why should the government ‘own’ electromagnetic spectrum anymore than it should ‘own’ air (or vacuum)? The spectrum should have belonged to the companies who invested in the equipment to use it and set up services. Similarly, why should the government own the mineral resources under my property? In the US of olden times, if you hit oil under your property, you would become a millionaire. In India of today (and maybe the USSA too) you would be thrown out of your property and with any luck, would be shot by the state’s police!

    • vallyettans permalink
      March 21, 2012 8:12 AM

      government own it because they can sell it while air can’t be

  8. dark lord permalink
    March 21, 2012 8:46 AM

    Shivam,

    And you can see the impact that NREGS has on inflation. No one is for crony capitalism but equating reforms with crony capitalism is stretching it too far. Without reforms, the civil aviation routes and telecom licenses would have been given free to Indian Airlines and BSNL and air travel and telcom services would continues to be privy to the rich only. Mineral resources have to bid out.

    The real question is the cost of universal PDS. How much will it cost and who will you tax to raise the money?

  9. Rukmini permalink
    March 21, 2012 7:51 PM

    Great post Shivam, but one correction. The Planning Commission has not lowered the poverty line, nor does the TOI story say that. The affidavit filed in the SC gave the poverty line at June 2011 prices. The data released on Monday gave the poverty line as of 2009-10.

    So it is lower than what was cited in court, but it has not been “lowered”. It is an appallingly low, destitution line though.

    One more point that I think is relevant: a World Bank study of India’s welfare schemes that I wrote about (http://timesofindia.indiatimes.com/india/Schemes-that-dont-seek-to-identify-poor-cover-them-best/articleshow/8430757.cms) shows that the less targetted a scheme, the more likely it is to actually reach the poor, which in my view is a truly devastating argument against targetting/ counting the poor, and for universalisation.

    • Rukmini permalink
      March 21, 2012 7:54 PM

      Sorry, I see that it says “lowered benchmarks” in one place. That is inaccurate.

      • Rukmini permalink
        March 21, 2012 8:05 PM

        Last comment, I promise. I realised that the graphic doesn’t show up in the article I linked to, so here’s the link to a blog post I did on it, that in turn links to the original data. (Ignore the misleading url!)

        Another incredibly telling point is that the state in the country with the lowest leakage in PDS (as per Reetika Khera’s analysis) is, surprise, surprise – Tamil Nadu, the only state in the country with universal PDS.

  10. March 21, 2012 11:37 PM

    valyettans says:
    the fact is that these organisations has lost touch with the needy and they are tolling our such horrendous yardsticks to make-believe that everything is going according to the PLAN.

    You are onto something here – the fact that the PLAN never works and the planners find ingenious ways to hide their failure. However, let us not be unduly harsh on the Planning Commission – after all, those guys haven’t done anything that central planners haven’t done when the failure of the plan becomes evident, which in this case is to pluck numbers out of thin air. And much less horrific than what many central planners have done in the past. The failure of the plan has nothing to do with their integrity, competence and efficiency or lack thereof. The failure of central planning and by extension, socialism is not due to human nature nor political nor conventionally economic reasons. It is epistemic: socialism requires central planning; central planning requires central planners; and for central planners to succeed at their work, they require vast amounts of information they cannot conceivably acquire. The social knowledge embedded in market transactions and communicated through prices allows for the distributed coordination of unfathomably complex tasks, which is not available to central planners. Failure of the PLAN is inevitable.

    suresh says:
    if you believe that the government is so corrupt that it invalidates all social initiatives, then there is no reason to believe that it will run a capitalist (or for that matter, socialist) system in an honest manner either.

    A government run economic system by definition is socialistic. The worst thing the government can do is to ‘run’ a pseudo capitalist economy through fiat currency and monetary planning (central planning at the highest level in fact). This is what the Indian government is doing right now. And therein lies the root of most of our problems.

  11. Raghav O permalink
    March 22, 2012 6:30 AM

    Slight diversion from the topic at hand-

    I found the last graph showing distributions of incomes in India really interesting and it may be useful to me for some work I’m doing- could you point me in the direction of the source Shivam? I tried looking up the IRS 2011 Q4 on the internet but it seems unrelated to income distributions as far as I could see (probably a typo- the IRS is the readership survey in India?).

    Shivam/Madhukar- any clue where I can find such data on monthly income distribution in India/other countries?

  12. vallyettans permalink
    March 22, 2012 7:47 AM

    your bailing out of planning commission and central planners is unwarranted since they are the one the country look to ,growth , development et al.and if the failure of PLAN is inevitable then whats the need for a PLANning commission-is it some joke.your assertion that the commission is provided inadequate data is indeed the real problem but its them who overlook the facts and try to live in statistical granneries rather than getting down to the poor to know the real ground situation and they can do it using LSGs ,then what for we introduced DEMOCRATIC DECENTRALISATION. am not saying that a perfect solution exists for every problem but atleast there is scope for betterment and that is what these ridiculous stats overlook.the notion that nothing is going to succeed is a dangerous thing to have and its the root cause why millions of our fellow men rot.

  13. Nivedita Menon permalink*
    March 22, 2012 7:52 PM

    A few lines from a Bengali poem by Tarapada Ray “Poverty Line” translated by Antara Deb Sen:
    “This time, you have brought a blackboard with you,
    On it, with great care, and with some chalk,
    You have drawn a perfectly straight line;
    …Thank you for my deprivation,
    Thank you for my dispossession,
    And finally, thank you for that long and perfect line,
    Thank you for this bright and shining gift.”

  14. naveen jankar permalink
    March 23, 2012 7:18 PM

    the IRS data is only a distribution of the sample set of the Indian readership survey – which most likely means the survey designers decided that in advance of the study to achieve the desired data spread. how it is related to the actual distribution of income is unknown.

    • Raghav O permalink
      March 23, 2012 8:53 PM

      Ah thank you Naveen- that explains it. This data will not be very useful for my use then.

  15. sandeep permalink
    April 27, 2012 8:36 PM

    can you please give the link (of the TOI) from which the graphic was taken?
    is there comparable data / graphic for the year, say, 2001

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