The expansion of poverty programmes in India has been spearheaded by Sonia Gandhi, and her National Advisory Council (NAC). She cannot ignore the fact that by expanding old-fashioned anti-poverty schemes, she is also increasing old-fashioned ?in the name of the poor? corruption. As old-fashioned as Indira Gandhi?s trump card of Garibi Hatao in 1971. This is 2011?does Ms Gandhi really believe that nothing has changed in India in 40 years? Are we that poor, that backward and that incompetent?
Why is the discussion on the politically charged, and politically correct, subject of poverty almost always one-sided? The Ayatollahs of poverty policy believe they cannot possibly do anything wrong because, after all, they are designing policies for the poor. When large leakages in poverty programmes are documented (ironically, as first asserted by Rajiv Gandhi in 1985), the refrain is: why are you so worried about leakage to the poor when there are leakages to major corporations?and scams against the poor?
If the telecom ministry can be corrupt, why not the ministry of rural development? Why do we cringe at the mere discussion that the ministry of consumer affairs (in charge of food distribution to the poor) may harbour corrupt practices? Do we really believe that the government of India has a special screening device whereby only honest people are recruited for programmes dealing with the poor? Do we really believe that political parties that talk the most about poverty removal, i.e., the Congress, are the least corrupt? Just because the Congress talks about, and introduces one ?in the name of the poor? Act after another (for example, the Right to Food Act), does it make it less corrupt? Or does it absolve it of its corruption in non-poor related areas? Is that why the politically correct NAC was formed?to deflect, and redeem, the acts done by non-NAC members of the Congress party?
In my previous article, I had documented examples of lies on poverty masquerading as informed analysis. I want to add to that list. In a document entitled The Right to Food in India, Biraj Patnaik , principal advisor to the Supreme Court Commissioners on the Right to Food Act, presents some carefully selected data. A graph (slide 20) entitled ?Net availability of foodgrains per capita per day in gms? presents data which ends in 2001; this graph shows a low level of foodgrains consumption in that year?416 grams per person per day. The report was written in 2007 and almost all the data presented in the report ends in 2006. The author could have noted, but did not, that in 2002 foodgrain consumption shot back to a close to historical high of 494 grams, and that average consumption during the five years 2002-2006 of 453 grams was close to the historical average since 1951!
Since Mr Patnaik is a major advisor to the Supreme Court, his views on who is poor and what constitutes poverty are particularly important. A minimum consumption level of R15 (rural) and R20 (urban) per person per day is too low; this is a ?a starvation line, not a poverty line?. Incidentally, in a plea for informed analysis, especially when present day consumption is compared to this poverty definition, the media should note that the official poverty line is in 2004-05 prices; today, in 2011, that same poverty line translates into a line approximating R28 for the average poor (R26 in rural and R33 in urban India).
And who does the Supreme Court advisor consider to be the poor? Well, a telephone booth owner could be poor, as well as a person owning a two-wheeler.
Is there an objective method of measuring poverty? Traditionally, in India (and the rest of the world) the poor are classified as such according to their survey income or consumption. The major source of such data, the National Sample Survey Organisation (NSSO), has tragically declined in its efficiency. The survey is still processed with unpardonable delays, and the primary information?what is a family?s total consumption?is way off the actual. One indication of how much way off is provided by the fact that the NSSO?s estimate of average consumption in 2009-10 was only about 43% of the consumption indicated by the national accounts.
Household surveys around the world generally capture less of national accounts consumption so the fact that the NSSO estimate is less than a 100% is just another dog bites man story. What is truly a man bites dog (or NSSO bites dust) story is the low, low, estimate of 43%. To put in perspective, among all consumer surveys done by mankind since 1950, the India NSSO 2009-10 ?performance? is among the five worst.
If the NSSO 2009-10 estimate of consumption were higher, more reasonable and more in line with comparable surveys in the 1960s, 1970s and 1980s, measured average consumption would be closer to 80% of the national accounts estimate, rather than 40%?and poverty levels to be half that ?documented? by the NSSO (Supreme Court please note). Is the Indian policymaker, and especially those belonging to the huge (and hugely corrupt?) poverty industry, ready to accept that poverty in India is approximately half that stated by the government?
Related to the level of poverty is an equally important policy variable?the amount of expenditure needed to remove poverty. Notwithstanding this importance (tax money is freely available for noble causes), the discussion on poverty removal in India never discusses the minimum expenditure needed to remove poverty. The average poor today need about 16% extra income to become non-poor, i.e., go above the poverty line of R28 per day. In today?s prices, that is an extra R4.5 per person per day. If there are 25% poor in India in 2011-12, then the cost of removing poverty in the entire population?R49,000 crore. With an estimate of 20% poor (200 million poor), the cost goes down to R39,000 crore.
No one claims, or should claim, that perfect targeting is possible; though everyone should believe that with today?s technology, anything more than 20% ?leakage? is pure poverty corruption. Given that we are spending R1,30,000 crore in 2011-12 on just food and NREGA poverty programmes, it is likely that poverty corruption is annually more than the once in decade 2G scam, and annually more than double the amount actually needed to remove absolute poverty.
The author is chairman of Oxus Investments, an emerging market advisory and fund management firm. Please visit http://www.oxusinvestments.com for an archive of articles; comments welcome at surjit.bhalla@oxusinvestments.com