By Jayashree Jakhade

The worldover the belief is: do not trust the government. And, never trust the numbers revealed by the powers that be. India is worse off today than it was 11 years ago when the economy was opened up for liberalisation. However, liberalisation measures have not achieved much.In fact things appear to have moved backwards. Despite the country’s GDP being at eight per cent, the percentage of people living below the poverty line has remained static at 34-36 per cent for the past 10 years.

As far as the government is concerned, as is its wont, these figures are meant to be denied . But, who believes in what the government is saying? For, even if the government had not initiated the reforms process, anti-poverty trends would have continued at the rate of one per cent per year. And poverty levels would have fallen to 25 per cent by 1999.

But, today even after eleven years of liberalisation, we are nowhere close to that the figure. In fact, poverty is peaking at 36 per cent. So, instead of poverty declining by around one per cent per annum it has actually risen by the same percentage. It is obvious that the new economy has increased poverty by 10 per cent. So, is it then that Manmohanomics has failed?

Reforms gone haywire
It is very clear why the opposition Congress party has been stressing on conducting a review of the reforms process or discontinue it. For, reforms that add to the misery of the masses and breed the poor at the rate of one crore a year is hardly good. Liberalisation and computers have transformed the jobs scenario rendering millions unemployed. Small scale industries have shut down.

So, instead of improving the living conditions of the masses, the reforms have only benefited the industrially rich. Ironically, the reforms have benefitted the rich who were not the targets.

Singing the same tune
There is widespread consensus on reforms having not benefitted many and on the widening gulf between the urban and the rural. Even the World Bank has criticised the government’s way of functioning. It goes on to state that India was better off in its efforts to reduce poverty during the pre-reforms period.

Consider: poverty figures which had declined in 1972-73 and 1989-90 from 55 per cent to 34 per cent respectively, has actually gone up in the ensuing individual years. The gap between urban and rural poverty, which had decreased during the Seventies and the Eighties, has increased considerably during the Nineties. And, there exists a contradiction in the national figures. While on the one hand we have statistics that point at a robust overall economic growth, there are other contradictory figures that state that there has been an increase in the number of rural poor.

Jugglery of figures
In a bid to prove that the reforms process has helped in alleviation of poverty, the government has adopted a new calculation base wherein agricultural performance is shown as outsmarting other sectors. The puzzle is compounded because the new series of national income with 1993-94 as the base has not only upped the GDP estimates, but also points at a higher rate of growth than in the old series for both overall agricultural incomes.

Thus, the GDP estimate for 1993-94 is about nine per cent higher according to the new series than the old both for the economy as a whole and for agriculture. Also, between 1993-94 and 1997-98, agricultural GDP as per the new series rose by a total of 14.2 per cent as compared with 8.37 per cent as per the old series. Thus, going by the new series the agricultural sector has performed much better than what has been suggested by the old series.

Today, there is a widening gap between rural and urban incomes. World Bank estimates of real per capita consumption in rural areas from various NSS rounds are seen rising sharply between 1972-73 and 1986-87 with a further spurt in 1989-90. But these figures declined in the subsequent years with the trend having stagnated at best. This closely tracks the movement (in the opposite direction) of rural poverty.

Also, the urban real per capita consumption continued to be on an uptrend during the Nineties consistent with the continued fall in urban poverty.

In sum then, reforms have not achieved much where poverty efforts are concerned. Rural poverty levels continue to spiral and currently stands at around 35 per cent. As far as urban poverty is concerned, it has come down marginally. But, the growing income disparity in the cities is worrisome.

Persisting dichotomy
Take a look at poverty estimates for rural and urban India during the four years ending 1998. The welter of statistics clearly shows that the accounting standards used for measuring rural and urban poverty are not so accurate and reliable. For, the data which forms the bases for measuring poverty is related to monthly price cost estimates. This is just one base.

Different organisations use different bases for measuring poverty and these bases comprise data from varied sources. These sources could be either Planning Commission or the ministry of human resources or the National Sample Survey.

Thus, computing poverty based on GDP and per capita income statistics, which themselves have been worked out using various bases, can only be inconsistent and inaccurate. This is the real tragedy of poverty calculations in India.

Today, with the new base year 1993-94, one can see that agriculture has a lower weightage. This reflects in the rising levels of rural poverty. The expert group set up by the Planning Commission in 1961 which decided on the poverty lines for rural and urban areas and had assumed that states would provide primary healthcare as well as primary educational facilities at no cost to the people.

However, today people end up spending huge sums on healthcare provided by private medical institutions.

A large chunk of the monthly income is spent on education for their children.Thus, there is a case for revising the limit of the Indian poverty line upwards to make it realistic and relevant.

A look at the new series of national income statistics will show that the new series with 1993-94 as the base has not only upped the GDP estimates but also points to a higher rate of growth than in the old series for both overall and agricultural incomes. Thus, the GDP estimates for 1993-94 is about nine per cent higher according to the new series.

Also, between 1993-94 and 1997-98 agricultural GDP as per the new series rose by a total of 14.2 per cent as compared with 8.37 per cent according to the old series.Total GDP between these years increased by 31.3 per cent as per the new series as compared to 30.4 per cent in the old series with GDP in the secondary sector rising by 41.6 percent in both series and that in the tertiary sector by 37.4 in the new series against 38.6 per cent in old.

Thus, going by the new series, the agricultural sector has performed much better than suggested by the old series. This has widened the gap of correspondence between the growth in rural incomes and the trends in rural poverty.

Naturally, there exists a dichotomy between the trends in income growth and incidence of poverty. This is reflected either in increased inequalities or failure of per capita consumption.

As discussed earlier, the World Bank estimates of real per capital consumption in rural areas from the various NSS rounds are seen rising sharply between 1972-73 and 1986-87. This is a clear indication of a rise in rural poverty levels. Along similar lines, urban incomes too have risen and this reflects a decline in the percentage of the urban poor.

Much of the confusion today is because of the fact that the variables used in different poverty estimation standards are incomparable. Many argue that NSS failed to take into account the income growth and that rural poverty was higher not just because of higher inequality.

This is significant because it is known that NSS tends to underestimate overall consumption in the country resulting in a substantial divergence between estimates of total and per capita consumption as yielded by NSS samples.

Whether India is better off today than in the pre-reforms era, when the degree of poverty was much lower, is a question which may not elicit unanimous responses. For, computation of poverty levels in India is more a numbers game.