New Delhi: In the absence of any current government data to rely on, the World Bank’s latest assessment has added to the confusion surrounding India’s poverty levels rather than simplifying it. Using a relatively new method, the World Bank estimates that 5.6 crore Indians were pushed into poverty during the Covid-19 pandemic.
The assessment flies in the face of a paper published earlier this year by the International Monetary Fund (IMF) suggesting that India has ‘eliminated’ extreme poverty.
Officially, the Government of India determines poverty on the basis of consumption expenditure. For this purpose, the National Sample Survey (NSS) organisation — now merged with the National Statistical Office (NSO) — conducts Consumption Expenditure Surveys (CES) every five years. The survey was last conducted in 2017-18 but the government junked its results citing “quality” concerns. As a result, data from the 2011-12 CES is the only available consumption tool to calculate official poverty estimates.
Essentially, the survey estimates how many people in each state are ‘poor’ and its findings are used for allocation of government aid for poverty alleviation programmes.
“Those who have entered poverty are being deprived and those who have exited continue to benefit from schemes no longer meant for them. There is a resource misallocation problem here, but we don’t know its magnitude in the absence of concrete data,” Pronab Sen, India’s former chief statistician, told ThePrint.
This paucity of recent poverty data has led researchers to rely on different methods and datasets to estimate poverty levels, arriving at varying results — none of which paint an accurate picture of how many Indians are ‘poor’.
‘21.9% Indians under poverty line’
In 2009, a committee headed by Suresh Tendulkar, former chief of National Statistical Commission, relied on consumption data from FY 2004-05 pertaining to various goods to classify Indians who spend less than Rs 32 per day in urban areas and Rs 26 per day in rural areas as being under the poverty line.
But the findings were met with skepticism and another panel was formed under former RBI chief C. Rangarajan, which submitted in 2014 that people earning below Rs 47 per day in urban, and below Rs 32 in rural areas could be classified as ‘poor’.
However, while the Rangarajan committee was working on its estimate, the Planning Commission in 2013 went ahead and, using the Tendulkar Methodology, pegged the number of Indians under the poverty line in 2011-12 as 26.98 crore, or 21.9 per cent of the population.
Going by the Rangarajan panel’s methodology, though, 29.5 per cent of Indians were below the poverty line at the time. But the panel’s report, tabled in June 2014 — shortly after the Bharatiya Janata Party-led National Democratic Alliance (NDA) rode to power at the Centre — was never officially accepted by the Government of India.
According to a working paper published by the Ministry of Rural Development in 2020, the erstwhile Planning Commission had been releasing data on the number of people below the poverty line every five-six years since 1973-74. This means that this is the first time in 50 years that India has not revised its official poverty estimates in almost a decade.
Hence, the Government of India still uses the Tendulkar committee’s findings (21.9 per cent) as the official estimate of the number of Indians who are below the poverty line.
Why has India not revised its poverty estimates? Sen believes one reason is the transition post-2014, when the Planning Commission was scrapped.
“When the government moved from the Planning Commission to NITI Aayog, it didn’t delegate the latter the authority to define and estimate poverty. Earlier, releasing poverty estimates was the Planning Commission’s job, but it’s no longer the case with the new NITI Aayog,” he told ThePrint.
Upper ceiling, extreme poverty
In June 2019, World Bank economist David Newhouse and Ahmedabad University professor Pallavi Vyas — in a working paper based on NSSO’s 2015 CES — claimed that about 14.6 per cent of Indians lived below the international poverty line ($1.9 per day) in 2014-15.
Another approach by the World Bank was to rely on findings of the Centre for Monitoring Indian Economy’s (CMIE) quarterly Consumer Pyramid Household Survey. Using this data, scholars Sutirtha Sinha Roy and Roy Weide estimated that about 10.2 per cent of Indians lived below the international poverty line in the pre-pandemic year 2019. Their working paper, released in April this year, served as the foundation for the methodology the World Bank relied on to estimate the pandemic’s impact on poverty levels in India.
In addition, starting 2017-18, the government has been conducting the Periodic Labour Force Survey (PLFS) which seeks to gauge unemployment in the country.
Using a limited portion of this consumption-related survey, Santosh Mehrotra, a visiting professor at the University of Bath, and Hyderabad University professor Jajati K. Parida in 2021 pegged the upper ceiling of poverty in India at 25.9 per cent.
These estimates differ significantly from estimates made in an IMF paper released earlier this year by economists Surjit Bhalla, Karan Bhasin and Arvind Virmani. The authors employed an unconventional approach of using 2011-12 CES data and combining it with changes in per capita private final consumption expenditure — how much the average Indian spends on goods and services in a year — released annually alongside National Accounts data.
Their estimates suggested that poverty in India was grossly overestimated as most poverty indicators do not account for in-kind transfers, such as free food grain. Based on their calculation, extreme poverty (below $1.9 per person per day) in the country had declined to less than 1 per cent in 2020.
Like all other non-governmental poverty estimates in India, this too was widely criticised.
Last year, the NITI Aayog had released its Multidimensional Poverty Index (MPI), which said that about one in every four Indians (25 per cent) was living in poverty. Unlike estimates mentioned earlier that focused largely on consumption expenditure, the MPI takes into account factors such as sanitation, schooling, access to drinking water, cleaner fuel etc.
How many Indians moved out of poverty?
The NSO, which conducts the crucial CES, falls under the purview of the Ministry of Statistics and Programme Implementation (MoSPI). According to a Press Information Bureau (PIB) release from earlier this year, year-long field work for the 2022-23 consumption expenditure survey was initiated by the central government in July.
The central government also conducts the Socio-Economic and Caste Census (SECC), through which it defines beneficiaries of poverty alleviation schemes.
However, India does not have up-to-date data for either of these surveys.
ThePrint reached MoSPI via phone and email for a response on when results of the latest CES will be published, but did not receive a response at the time of publication. This report will be updated when a response is received.
“Both the SECC and CES [latest data] are more than 10 years old, so, as of today, we do not know how many Indians have entered poverty and how many have moved out,” said Sen.
Human development economist Santosh Mehrotra added that consumption expenditure survey “has been used consistently for decades while revising poverty estimates and absence of this data means the government is denying itself an exact count on how many people are poor in this country”.
“I don’t think the results of the survey will be out before the 2024 elections. It could be consequential for the government as increase in poverty tarnishes its image of being effective in providing for the poor. In 2019, CES was leaked and then junked because it showed this government in poor light,” he told ThePrint.
Mehrotra also said that absence of poverty data may not impact the government’s policy decisions about programmes aimed at poverty reduction.
“This government’s policy decisions are dependent on political objectives. It keeps denying itself the actual poverty numbers and keeps reintroducing its free food grain scheme as elections near. I doubt if the absence of data is any hindrance in its public policy since it doesn’t want to believe in real data.”
(Edited by Amrtansh Arora)