Accurate measurement of poverty is a critically important issue for a country like India. For one, it gives us an important indicator of how we are doing economically?growth, after all, should result in falling poverty. But perhaps even more important, credible poverty numbers are required to better target the ambitious welfare schemes of UPA-2?indiscriminate spending will bust the budget without necessarily making poor people better off. Until now, at least according to Planning Commission numbers, India was doing a fair job of reducing poverty?from around 35% in 1993-94, poverty was estimated to have fallen to just over 25% in 2004-05. Now a number of weighty committees have revised this figure to levels well above what the Planning Commission had estimated for the early 1990s, the time when we first climbed to a high growth trajectory. The latest estimate comes from Suresh Tendulkar, the former chief of the PMs economic advisory council. This says that 38% of India?s population is below the poverty line. Still, it seems more conservative than the Arjun Sengupta Commission?s 77% estimate or the NC Sexena Committee?s 50% estimate. If any of these numbers are true, we should expect a huge rise in welfare payments and subsidies, not to mention worrying about our real progress on the ground.
However, there are reasons to believe that some of these measures may be over-estimates. A lot depends on the measure of poverty used?the Planning Commission has traditionally used basic nutritional intake (by calories) as an indicator of poverty. Now, an increasing number of studies are using income measures, a trend perhaps made popular by the World Bank?s $1-a-day measure of poverty. The Tendulkar-EAC estimate was mandated to account for the new nutritional requirements of the poor, thereby raising the bar, which perhaps explains the rise from 25% to 38%. By some World Bank measures ($2 a day), Arjun Sengupta?s estimates sound reasonable. But these are statistical exercises, and each of them can be debated. And remember that there is vested interest in showing high poverty numbers?a pressure tactic that some states, for example, are now using to corner more resources ahead of the recommendations of the 13th Finance Commission. What we need now is one accurate measure of poverty calculated without the shadow of any vested interest. For too long, undeserving people find their way into the ring of welfare schemes thereby depriving those who really need welfare of critical funds. We have to sort this issue out before the issuing of unique ID cards. Or else we may end up with a lot of poor on paper, without actually improving the lot of the really poor on the ground.