The Planning Commission's laughable estimates of the ‘poverty line' 
follow from a mistake in method that it made 30 years ago and has clung 
to ever since.
The affidavit that the Planning Commission recently 
submitted before the Supreme Court stating that a person is to be 
considered ‘poor' only if his or her monthly spending is below Rs.781 
(Rs.26 a day) in the rural areas and Rs.965 (Rs.32 a day) in the urban 
areas, has exposed how unrealistic ‘poverty lines' are. Some television 
channels assumed that the figures covered food costs alone and showed 
how they could not meet minimal nutrition needs at today's prices. These
 paltry sums, however, are supposed to cover not only food but all 
non-food essentials, including clothing and footwear, cooking fuel, 
lighting, transport, education, medical costs and house rent. The total 
is divided into Rs.18 and Rs.14 for food and non-food items in towns, 
and into Rs.16 and Rs.10 in the rural areas, and includes the value of 
food that farmers produce and consume themselves.
Even
 a child knows that working health cannot be maintained, nor necessities
 obtained, by spending so little. Amazingly, however, 450 million 
Indians subsist below these levels. One cannot say that they ‘live' in 
any true sense: their energy and protein intake is far below normal, 
they are underweight, stunted, subject to a high sickness load but 
without the means to obtain adequate food or medical treatment. The 
majority belong to the Scheduled Castes and the Scheduled Tribes. The 
official poverty lines do not measure poverty any more; they measure destitution.
The
 outcry against calling these destitution lines ‘poverty lines,' is 
justified; for true poverty lines are much higher than these, and show 
75 per cent of all persons in India to be poor. Per head energy and 
protein intake has been falling for the last two decades as the majority
 of the population is unable to afford enough food. With 60 million 
tonnes of public food stocks, far in excess of the buffer norms, 
remaining piled up by mid-2011, the sensible policy is to do away with 
targeting and revert to a universal distribution system, combining it 
with an urban employment guarantee scheme. Unfortunately, the 
neo-liberal policymakers today ask the wrong question: “How can we 
reduce the food subsidy?” and not the right question: “How can we lift 
the masses of India from the current level of the lowest food 
consumption in the world, even lower than the least developed 
countries?”
Members of the Planning Commission and 
the Tendulkar Committee are experts, so how have such laughable figures 
of minimum cost of living emerged from their statistical labours? The 
fact is that over 30 years ago the Planning Commission made a mistake of
 method, and the present Commission stubbornly clings to that mistake 
despite the fact having been repeatedly pointed out by many people 
including this author (The Republic of Hunger, 2004). The mistake was to change the definition of the poverty line and delink it from nutrition standards.
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.
Yet,
 denying all experience and evidence, these economists assert that mere 
price-index adjustment is enough to obtain current poverty lines from 
those of 40 years ago. No wonder they have created a mess with their 
unrealistic estimates. An expressive, bucolic Bengali phrase is lyaje-gobare,
 or a ‘cow's tail smeared with dung' — this is a good description for 
official estimates. As time passed, the actual spending at which minimal
 nutrition could be accessed, the original definition accepted by the 
Commission, cumulatively diverged from the Commission's calculations 
based on its changed definition. By 2005, a rural person needed Rs.19 a 
day to access 2,200 calories, while at the official figure of Rs.12, she
 could obtain only 1,800 calories. (The Tendulkar Committee merely 
tinkered with the problem, raising the figure of Rs.12 to Rs.13.) An 
urban consumer needed Rs.33 a day in 2005 to meet 2,100 calories, 
whereas the official figure of Rs.18 permitted less than 1,800 calories.
 Today at the current official poverty lines of Rs.26 and Rs.32 for the 
rural and urban areas respectively, the minimal cost of living is even 
more seriously understated: the consumer can access even less food. 
State poverty lines vary, and in a number of States the energy intake 
the official poverty line can command is below 1,500 calories a day.
The
 claim that poverty has declined is not true because the method of 
indexation that is actually used has not kept constant the nutritional 
standard against which poverty is measured, but has lowered it 
continuously. China's official poverty lines are equally absurd, for the
 same reason. A nutrition norm was applied in 1984 to obtain a 200-yuan 
annual rural poverty line, which thereafter was merely indexed, giving 
1,067 yuan by 2007, or below three yuan a day. This is supposed to cover
 all living costs but would not have bought even a kilogram of the 
cheapest variety of rice, selling then at four yuan, according to 
information provided by China's residents. The actual extent of poverty 
in China is far higher than is claimed.
One wonders 
if we will ever see honest estimates from official sources anywhere, 
since, by now, hundreds of economists are closely imprecated within a 
vast global poverty-estimating structure with the World Bank at its 
apex, producing increasingly misleading estimates every year in glossy 
reports. The World Bank's global poverty line is an equally large 
underestimate, for it is derived using “purchasing power parity 
conversion” from local currencies to the U.S. dollar, of these very same
 absurdly low local-currency official rural poverty lines of developing 
countries.
What are the realistic poverty lines today
 based on officially accepted nutritional norms? The current poverty 
lines allowing nutrition norms of 2,200 or 2,100 calories in the rural 
or urban areas to be met, are at least Rs.1,085 a month (Rs.36 a day) 
and Rs.1,800 a month (Rs.60 a day) respectively. Since each full-time 
worker needs to support nearly two dependants, these correspond to a 
minimum daily wage of Rs.108 and Rs.180 respectively. But this is 
inadequate: no margin exists for medical emergencies, life cycle 
ceremonies, or old age. From the 2009-10 NSS data at least 75 per cent 
of the total population is in poverty on this basis. This high level of 
deprivation is the rationale for going back to a non-targeted, universal
 food distribution system, but that will not be enough. The purchasing 
power of the poor has to be raised at the same time through employment 
generation schemes. Ironically, there has been a rise in unemployment 
rates according to the latest surveys.
(Utsa Patnaik has been a Professor at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi.)
 
 

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