India raises official poverty estimate

After a lot of deliberation, the Indian government has concluded that it has around 100 million more people living below the poverty line than in 2004. This was after the country’s top policy planning body raised its estimate of the nation’s official poverty rate to 37.2% of the population, from 27.5%, a key development as the government drafts legislation to give the poorest Indians a right to state-subsidised foodgrain.

The move by the Planning Commission, which wasn’t announced formally but was confirmed by a senior government official, pegs the number of Indians in poverty at around 410 million -- more than 100 million above the previous estimate.

The change comes after critics said the earlier poverty estimate left too many destitute households out of the government’s food entitlement programmes. But the new poverty figure is unlikely to please food activists and politicians who feel it still vastly underestimates the number of people in need of assistance.

The 37.2% poverty line is based on a new methodology recommended by a panel headed by former economic advisor Suresh Tendulkar, in a report submitted to Planning Commission Deputy Chairman Montek Singh Ahluwalia in December 2009. Although the report still has to be officially accepted, for the limited purposes of food security the Planning Commission agreed to Tendulkar’s recommendations at a recent meeting of its members.

The earlier definition of poverty was based on calorie intake, according to which only 27.5% of people were living below the poverty line and the number of BPL families was around 65 million. With the Plan panel accepting the Tendulkar methodology, 37.2% of the total population, or 81 million families, will be placed below the poverty line.

The new poverty estimate, which will reflect the impact of high growth recorded during the decade, will be available in 2011. Computation of the number of BPL families at this stage assumes significance in view of the government’s decision to enact a food security law under which 25 kg of foodgrain will be provided every month, at Rs 3 per kg, to every BPL family.

The Planning Commission, mandated by the empowered group of ministers, chaired by Finance Minister Pranab Mukherjee, to finalise the BPL numbers, will now meet the secretaries of food and expenditure to calculate the cost of providing food security to so many poor.

The burden on the central exchequer for implementing the food security law will depend on the number of BPL households and the quantity of subsidised foodgrain available with the government. Food subsidy stood at around Rs 72,000 crore in the last financial year.

“Two different poverty lines -- one for food security and the other for all other purposes -- for one country sounds odd. But this has been the most expedient solution for the time being,” said an official who did not wish to be named.

This will raise the number of those eligible for free food significantly -- but nobody’s sure how much. The widely quoted number is close to 10 crore families; some states put it at over 11 crore; the Planning Commission puts it somewhere between 7.5 and 8 crore. The worry is that it demonstrates, again, a dangerously halfhearted commitment to food security: dangerous because it will neither be abandoned nor effectively implemented, and the country could end up with a system that feeds too few and costs too much.

“This is a very low, suppressed poverty line. We reject it,” Kavita Srivastava, an activist who led a ‘right to food’ rally in the capital recently, said. “As far as we’re concerned, it still doesn’t tell us the real number of poor.”

Among the protesters at the rally was 50-year-old Kesar Sahu who lives in a slum in Rajasthan’s capital, Jaipur, and supports herself and two daughters by sweeping floors and cutting vegetables at schools. The Rs 1,000 she earns in a good month isn’t enough to make do, even with existing government subsidies, she said. “We’re only getting 35 kg (of foodgrain) now. We really need 50 kg to get by. Everyone should get that much.”

Though India’s economy emerged from the global downturn with a solid gross domestic product growth of 7.2% in the year ended March 31, the country’s poor are struggling to deal with year-on-year food inflation that is hovering around 17%. Even before rising food prices, India was struggling with high malnutrition rates.

Prime Minister Manmohan Singh’s government has pushed for legislation that will provide 25 kg of wheat and rice per month to households deemed officially below the poverty line. India already has a programme in place to distribute about 35 kg of subsidised foodgrain to poor households, but the rate is about 50% more expensive than what’s now being proposed.

Moreover, there is no law that guarantees food subsidies -- they are given at the central government’s discretion. And the current programme is plagued by corruption, with one-third of grain pilfered or rotting before it reaches needy households.

Experts say a third of the world’s poor are in India, living on less than $ 2 per day, worse than in many parts of sub-Saharan Africa.

Source: http://infochangeindia.org/201004198258/Poverty/News/India-raises-official-poverty-estimate.html

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