Poverty Line in India

Poverty Line

Poverty line is the minimum level of income deemed adequate in a given country. The common international poverty line has in the past been roughly $1 a day. In 2008 the World Bank came out with a revised figure of $1.25 a day at 2005 purchasing power parity. In India many scholars attempted to define the poverty. We are not in a position to name all of them. Some of the earlier efforts were made in 1970s by the scholars such as Dandekar and Rath (D&R), Bardhan, Minhas, Ojha who wrote on the dimensions of poverty in India. Two of them Bardhan (1970) and Minhas (1970) started with the national minimum recommended by the Planning Commission working group in 1962. Ojha attempted a normative basis for fixing the minimum level. All household and their members with less than this quantity were characterized as poor. In 1971 D&R in their book “Poverty in India” made an effort at fixing a minimum income which was referred as Poverty Line. They wrote, “For a low income country like India a level of income (or total expenditure) that was just able to ensure “adequate food” to every member of the household during the year may be considered as such a minimum income and all households with less income than this may, therefore, be called poor. In order to translate adequate food into some measurable quantitative form D&R used calories provided by the food used in the household. Thus the poverty line as defined in India may be referred as the Absolute Poverty as it is based on the minimum food required to survive. The absolute poverty is sometimes called extreme poverty.

Sukhatme (1965) had reported that according to the nutrition experts (Nutrition Advisory Committee 1958) an average Indian – average of age, sex, occupation as well as geographic location- needed food at the retail level in the household that would give him 2250 K. Calorie  per day. This norm was used as equivalent of “adequate food”. The minimum protein requirement was not considered separately, since given the usual Indian diet the food that gave adequate calorie also provided the minimum protein requirement, no separate norms were considered for the non food requirements of the household. Using the NSSO data for the Consumer Expenditure survey for the year 1960-61 and 1961-62 D&R calculated that income of about Rs. 170/- per capita per year was necessary to achieve the 2250 k. calories per day target. The population below this level of per capita annual expenditure could therefore considered poor. Looking at the expenditure in urban India D&R fixed poverty line for rural India as a whole Rs. 180/- per capita per year. 

Rao (1996) criticised the calorie based measurement of poverty line and said, “A balanced diet approach is --- preferable to the calorie intake approach”. Surely this is good but there are different balanced diets for different food habits (vegetarian and non-vegetarian) of persons. Further D& R had no mention for expenditure on non-food items. It seems that Rao was somewhat confused between poverty and nutrition. The task force set up by the Planning Commission accepted the fact that the calorie requirement differ for specific age, sex, and activities. After detailed analysis they suggested norms for the average rural and urban Indian at 2435 and 2095 k. calories respectively. A subsequent Planning Commission committee rounded these off to 2400 and 2100 calories respectively.

Thus, Indian Poverty line has been based solely upon the ability to purchase the above mentioned daily calorie diet where 70% of the population lives. It did not consider nutrition but only satiation of hunger. Poverty did not take into account the provision for shelter, health care, education, etc. Essentially it meant that as long as you consume the required calorie you are not poor even if, you have no shelter, live in a slum or foot path, can’t see a doctor, and can’t send children school. Therefore, scholars also refer it as Starvation line rather than poverty line. According to a UN declaration that resulted from the World Summit on Social Development in Copenhagen in 1995, absolute poverty is "a condition characterised by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to services.

David Gordon's paper, "Indicators of Poverty & Hunger", for the United Nations, further defines absolute poverty as the absence of any two of the following eight basic needs[1]:

• Food: Body Mass Index must be above 16.
• Safe drinking water: Water must not come solely from rivers and ponds, and must be available nearby (less than 15 minutes' walk each way).
• Sanitation facilities: Toilets or latrines must be accessible in or near the home.
• Health: Treatment must be received for serious illnesses and pregnancy.
• Shelter: Homes must have fewer than four people living in each room. Floors must not be made of dirt, mud, or clay.
• Education: Everyone must attend school or otherwise learn to read.
• Information: Everyone must have access to newspapers, radios, televisions, computers, or telephones at home.
• Access to services: This item is undefined.

Thus, poverty can be defined in many ways. Today, most economists and social workers use two ways in defining poverty, "absolute poverty" and "relative poverty". In the end, I believe it is a combination of both that best defines poverty. When trying to define poverty there are many issues and causes of how so many people in today's society are in poverty. In every country the poverty line is set to measure poverty in accordance to the expectations of what it costs to meet the basic human needs. For example,   "Russia also has an absolute poverty line, but it is much lower than that in the United States, because expectations about general living standards and minimum necessary to meet basic human needs, are much higher in the United States. In this sense absolute poverty lines are very relevant. The difference is that in any particular country, absolute poverty lines do not change from year to year or even decade to decade[2]". When defining poverty in a relative terms, "people are in poverty when they fall behind, by more than a certain degree, from the average income and life style enjoyed by the rest of the society in which one lives". People living in "relative poverty" are placed in poverty because the income in which they live under is below a certain income threshold. There are people and families living in poverty in relative terms, but have all the basic necessities to live a healthy lifestyle. I do not believe this is an accurate way of measuring poverty, mainly in part because the poverty threshold is different in every country. In "relative poverty" people are placed in poverty, because they may not meet the national minimum standards. Poverty is a complex issue and cannot be understood through any one definition. Some of the leading causes of poverty are crime, natural disasters, substance abuse, overpopulation, lack of education, health, housing, geographic factors, disease, and mental illness.There are many more causes of poverty and there will always be poverty in this world. There are many ways to define poverty. But, I believe that poverty should be defined in absolute terms so that we may comapre the figures at international level.

Revised Calorie Norm

The poverty lines have been criticized for being too low, and for focusing exclusively on food consumption norms, with no allowance being made for expenditure on, inter alia, health, education, and other basic needs (for example, Saith, 2005)[3].

 Recently, there was a big debate when the Planning Commission accepted the Suresh Tendulkar Committee’s recommendations of calculating poverty that went by Food and Agriculture Commission[4] norm that 1800 calories were enough for one to sustain[i]. The best-known outcome of the Report of the Tendulkar Committee is that the poverty line that it has proposed is higher than the current poverty line for rural areas, and has resulted in a dramatic increase in the proportion of the rural poor in India. The major contribution of the Report is a total revision in the methodology used to construct price indices to compare rural and urban prices in different states and the state-level prices indices with the all-India price indices. ‘New’ or revised poverty lines are proposed for the rural areas of all the states as well as for the country on the basis of the use of new price indices with the existing urban poverty line.

The revised all-India rural poverty line is higher than the earlier poverty line. Consequently, at the all-India level, the Report estimates that 41.8 per cent of the rural households were below the poverty line in 2004-05, as compared to the current estimate of 28.3 per cent of rural households. The poverty line that it proposes actually depends on reduced calorie consumption, and fails to provide for reasonable household expenditures on schooling and health. The proposed poverty line is not based on a new consumer survey or revised method of computation. The new poverty line for rural and urban areas is simply the old poverty line for urban areas in 2004-05. The simple argument for accepting the urban poverty line is that the urban poverty line is generally less controversial than rural poverty line. The new poverty line is reasonable because it happens to simultaneously ensure satisfactory nutrition, health, and education outcomes. On this basis the new poverty line when indexed with inflation for June, 2011 gives monthly per capita expenditure on food at Rs. 18 for urban and Rs. 16/- for rural areas. Daily expenditure on non-food item were added to this gave a poverty line of Rs. 32/- for urban areas and Rs. 26/- for rural areas. On this basis it was estimated that 37.5% of the population was below the poverty line. Government has also accepted a broader poverty line which considers expenditure on health care and education given by committee. As a result the number of officially poor increased to 405 million in March, 2011 compared with 370 million in 2005. Based on some other norms we have some recent data on the population below poverty line:

Table: 1 Population below Poverty line

Estimated by                                     Percentage of Population                            Norm

World Bank                                                   42                                                           ($ 1.25)

ADB                                                             55                                                           ($1.35)

Planning Commission                                     27                                                           (Calorie)

Kelkar                                                          32.5                                                    (Calorie+)

World Bank                                                  75                                                           ($2.00)

All these estimates only give the head count and one gets no idea of the nature and suffering of the population. How many poor are suffering from hunger, malnutrition, underweight, and illiteracy?  These statistics do not accurately measure what poverty is and how do they survive.

Multinational Nature of Poverty:

The poverty can only be better understood if we take into account the multinational nature of the problem. There are many independent agencies working on this issue. Some of them have worked out various indices which they claim better understands poverty and its sufferings.

UN Human Poverty Index:

The UN Human Poverty Index is a widely used poverty indicator. It is based on three basic dimensions of poverty:

Longevity;

Knowledge; and

Standard of Living.

Out of the 182 countries India was ranked at 134 position much behind the China at 92 and USA at 13^th UK at 21, with Norway, Australia and Iceland on the top positions.

Composite Poverty Indices:

Income based approach do not reveal the nature of poverty and the human sufferings. Poverty is basically denial of a range of material needs such as nutritious food, shelter, health care, education, drinking water etc.  It is based on cost of subsistence in a given country. Worldwide approximately one billion people live on less than US $1.00 a day.

Multidimensional Poverty Index

From the year2010 the HPI index has been replaced by a better and more comprehensive poverty measure the multidimensional poverty index (MPI) which goes beyond income poverty and gives a better understanding of different types of deprivation the poor may face. It incorporates 10 weighted indicators:

Table: 2 Weights assigned to various indicators

Serial No.		Indicator	Weight	Serial No.	Indicator	Weight
1	Years of Schooling		1/6	6	Flooring	1/18
2	Child enrollment		1/6	7	Drinking Water	1/18
3	Child mortality		1/6	8	Sanitation	1/18
4	Nutrition		1/6	9	Cooking Fuel	1/18
5	Electricity		1/18	10	Assets	1/18

The MPI reflects both the extent of poverty and its intensity and throws up some new light on Indian poverty. A person is poor in this index if he is deprived on at least 30% weighted indicators. By this definition 55% of India is poor twice the official figure released by Planning Commission based on revised calorie norm.

Global Hunger Index:   

Poverty causes hunger and malnutrition the two biggest enemies of poor.  The Global Hunger Index (GHI) is focused on the following criteria gives a better understanding of the problem:

·         Proportion of people who are Under Nourished;

·         Proportion of people under five who are Under Weight; and

·         Child Mortality Rate

In the recent Global Hunger Index 2011 India has been ranked 67 out of 81 countries way below the several nations of the sub saharan Africa and the neighboring countries like China at 15, Sri Lanka at 39, Pakistan at 52, and Nepal at 56. It is therefore, necessary to understand the concept of hunger along with the poverty.

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[1] David Gordon, (2005)Indicators of Poverty and Hunger, UN headquarters New York

[2] Volkov, Vladimir and Deneburg, Julia. "Wealth and Poverty in Modern Russia." March
   11,2005. October 1,2006.

[3] Saith, A.(2005), “Of Calories and Things: Reflections on Nutritional Norms, Poverty Lines and

  Consumption Behaviour in India”, Economic and Political Weekly, Vol. 40, No. 43, October 22-28,

  pp. 4611-18.

[4] Food and Agricultural Organization (FAO) (2004), Human Energy Requirements, FAO Food and

  Nutrition, Technical Report Series 1. 

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[i] On calorie requirement, the Report says: “…the revised minimum calorie norm for India recommended by the Food and Agricultural Organization (FAO) is currently around 1800 calories per capita per day, which is very close to the average calorie intake of those near the poverty line in urban areas (1776 calories per capita).”

 

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