The dominant reality of India being a country of large absolute and relative deprivation should sober people who think that the country is in an inexorable march to become a super power, and issues such as poverty are side shows that will be taken care of as we go along. Even for the cognoscenti who believe that infinitely more urgent action is necessary for poverty eradication, the cacophony surrounding R32 per day per capita is extremely confusing at the very minimum. Embedded in the misunderstanding is what is the poverty line and how the poor are identified on one hand and the righteous indignation of right to food activists on the other. The latter is despite the findings by Abhijit Banerjee and Esther Duflo of MIT-Poverty Action Lab that subsidised food does not mean that the poor eat enough calories as it may lead to either ?flight to quality? in food consumption or other expenditures, not necessarily crucial to their productivity.
Any definition of poverty will have an element of arbitrariness. The poverty line is the chosen level of income below which people are defined impoverished. In India, it has always been defined based on consumption and it does the headcount of people whose income falls below this consumption poverty line. Underlying this poverty line is the poverty line basket of household goods and services consumed by those households at the borderline separating the poor from the non-poor. The latest method of poverty line computation is an improvement on the earlier calorie-anchored poverty line as it includes private household expenditure on health and education now. The shift to mixed recall period for all consumptions, i.e., 365 days for low frequency items such as clothing, dwelling, education and health and 30 days for all remaining items, is an improvement. Currently, the poverty estimate is based on the revised minimum calorie norm indicated by FAO at 1,800 calorie per capita per day, reduced from the earlier 2,400 calorie per capita per day in the rural areas and 2,100 calorie per capita per day in the urban areas.
All the furore about the affidavit filed by the Planning Commission can at best be a case of inaccurate language used. As per the World Bank, an income of less than $1.25 per day per head by purchasing power parity is defined as extreme poverty. As per this definition, nearly 40% of Indians are probably extremely poor. The poverty line in India defines the bare minimum income for basic food and other necessities in India for a person. In the US, poverty is fixed in terms of family income. The poverty line indicates the percentage of people below and above the benchmark line, whether the country has done well or badly in terms of poverty alleviation over a period of time and the magnitude of the problems remaining to be handled.
While poverty line is defined per capita, earning is estimated per family, which is the basis of BPL families. Hence, thinking that the poverty line figure will provide the basis for identification of the BPL can be very misleading. Nevertheless, it is a fairly good predictor of the ability to consume, at least at a bare minimum level and for headcounts below the line.
The BPL census, which is currently under way, instead identifies poor on the basis of 13 automatic exclusion factors, four automatic inclusion criteria and seven deprivation indicators. Families with less scores arising out of deprivation indicators are less likely to be poor whereas families with higher scores will get priority for inclusion in the coverage under welfare schemes after compulsorily included households. Wherever universal coverage is not possible, higher ranked households in the deprivation indicator will be included first. Hence, per capita income, though a benchmark, will not be the defining aspect of identification of poor and poverty deprivation and vulnerability will be captured by strong proxies.
The World Bank?s report Social Protection for a Changing India discovers that the earlier BPL method did not reflect good practice in the design of proxy means testing mechanisms and the poor design misidentifies almost half the poor as non-poor and conversely almost half the non-poor as poor. The current BPL survey is expected to get over this problem. Any attempt to broaden the spectrum in terms of per capita income will mean the poor will be in competition with the non-poor, with the inevitable result of the poor being edged out. A question can be asked about the ethicality of not covering all the poor while following a poverty line (and the resultant cap). Precisely because of the problem indicated above, it is necessary to identify the real poor rather than keeping a nebulous category, which makes targeting difficult. Even 37.2% is a huge number and they are desperately poorer than the people who will be left out. A cap of 37.2% is methodologically not as weak as it appears. Covering the most poor who are more than one-third of the population on a priority basis is not an incoherent and illogical approach, given the enormity of the problem.
Admittedly, there still will be vulnerable people over and above this and they can slip into extreme poverty with one or two exogenous shocks. While the need for some safety net for them will be in order, the lowest one-third requires ropes and ladders, which is possible only when we concentrate, and which, in turn, is possible with benchmark line and capping. Even if we accept for a while that the current poverty line does not capture all the poor, it will still be wise to stick with it rather than questioning it ab initio and creating a fertile ground for all non-deserving non-poor to edge their way into the targeted poor group. In that event, the inevitable result will be the poor being elbowed out as an unintended consequence.
The author is a civil servant. These are his personal views