Volume 7, No. 6, July-August, 2006

The Planning Commission of India has brought out misleading estimates claiming significant decline of about 10 per cent in poverty through indirect method by using data of the 55th Round of the National Sample Survey Organization (NSSO). Now on the basis of such manipulations, the Government of India confidently claims that Millennium Development Goal (to halve poverty from 36 per cent of 1993-94 to 18 per cent by 2015) is achievable with a so-called satisfactory growth performance of the Indian economy. Applying the Direct Method for estimating poverty from the same round of NSSO data for consumption and calorie intake suggests a staggering figure of under consumption and following the norm of 2400 kcal adopted by the Planning Commission for poverty in Rural India comes out to the level of about three fourth of its population. Instead of accepting this stark reality, official experts have manipulated the estimates extra ordinarily to bring down the poverty to the level of 26 per cent aimed at imposing their hypothetical arguments towards positive impacts of reforms and liberalization initiatives leading towards poverty reduction. They could hardly realize that they cannot conceal their data for long in the age of speedy technological development of information. It is the character of the comprador elements who have been adopting every possible alibi and pretension to create illusions and justify their bosses, as they are the beneficiary of the policies both directly and indirectly.

Official estimates of the Planning Commission reveal that poverty has declined to about 10 per cent between 1993-94 and 1999-2000. This is even in poor and backward states like Bihar, Rajasthan, and Uttar Pradesh. Many experts in the official line also do not agree among themselves (for example, Sen, 2001; Vaidyanathan, 2001; Kozel and Deaton, 2005). Consensus among them is that the present official estimates are not strictly comparable with earlier estimates without rationalization. Sen, Kozel and Deaton have tried to rationalize the indirect estimates of poverty in the framework of the ruling class. On the other hand, the superiority of the direct method has been pointed out by Nayyar (1991), Mehta and Venkatraman (2000) Patnaik (2004, 2005), Ram(2004). They have questioned the indirect method of poverty estimates and argued for direct methods of poverty estimates.

If one goes into the details of the development of methodology adopted by the official experts, one looks back to the All India Labour Conference1957, when the issues of identifying poverty line was raised. The Planning Commission of the Government of India constituted a Task Force of the Nutrition Expert Group in 1962 with a mandate to suggest desirable minimum consumption expenditure acceptable at the national level. In the light of the recommendation of the Nutrition Advisory Committee 1958 of the All India Council of Medical Research it was decided that minimum consumption expenditure should not be less than Rs.100 per household with five persons for a month at the price of 1960-61 to meet the calorie for minimum nutrition and non-food requirement. In other words, per capita consumption expenditure should not be less than Rs. 20. Rupees 25 was suggested for urban areas and Rs. 18.9 for rural areas (Gupta, Singh and Dutta, 1982:260). However, this estimate suffered from limitations, as it did not explain categorically the basis and difference for rural and urban areas. Another study was of Dandekar and Rath (1971), which considered a per capita requirement of 2250 calorie per diem for rural and urban areas. On the basis of NSSO data for consumption expenditure, Rs.170.8 per annum or Rs. 14.2 per month at 1960-61 prices for rural areas and Rs.271.4 per annum or Rs.22.6 per month for urban areas was considered sufficient. In order to weed out inconsistency in the estimates of the Planning Commission consumption expenditure was raised to Rs. 180 per annum or Rs. 15 per month for rural areas and Rs. 270 per annum or Rs. 22.5 per month for urban areas. Still this estimate ignored the variation in calorie requirement on the basis of age, sex, occupation, region, etc. Sukhatme (1965) estimated poverty on the basis of the recommendation of the Food and Agriculture Organization of the UNO and national Advisory Council but he rejected the criteria of average nutrition requirement later in his another exercise (1977) and estimated poverty on the basis of the minimum requirement of the reference person. However, in the absence of proper data and also because of official policy requirements average nutritional necessity remained at the centre stage.

Meanwhile, considering the criteria of the Task Force 1962 of the Planning Commission, regional estimates of poverty were brought out by Chatterji and Bhattacharya (1969), Bardhan (1971), Rudra (1974), and many others. Applying all India criteria for poverty estimates followed by Dandekar and Rath and using state price indices Rajkrishna worked out state level poverty estimates. He included public consumption expenditure for estimation of poverty and introduced a concept of augmented poverty line. Public consumption expenditure was kept in five subheads - health and family planning, water supply and sanitation, education, jail, police and judiciary administration, road and social welfare. Thus, per capita public consumption expenditure was included with per capita private expenditure in the 25th round of NSS (1970-71) and the poverty estimate was worked out for every state. This estimate also has serious limitation, as this assumed equal access to public facility for all classes and thereby underestimated poverty. The Planning Commission constituted another Task Force in 1977 to prepare a report on minimum needs and effective consumption demand. This Task Force in its report worked out daily calorie requirements on the mid value of monthly per capita consumption expenditure. On the recommendation of the Nutrition Expert Group 1968 considering variations in requirement by age, sex, specific occupation, worker and non-worker category, nature of work, status of women in general and pregnancy, child and adult, etc., 2400 calories for rural areas and 2100 calories for urban areas was fixed for poverty estimation. This was an effort to weed out inconsistencies in earlier estimates. On the basis of the data on per capita consumption expenditure including non-food consumption expenditure and corresponding calorie intake in the 28th Round (1973-74) of the NSS, Rs.49.09 for rural areas and Rs.56.64 for urban areas were fixed for poverty line expenditure (Gupta et. Al. 1982:264). But this also did not include the weight and physical efficiency (Tiwari, 1982:334). Needless to mention that estimating poverty through the wholesale index has the risk of over estimation and the consumer index has every possibility of under estimation because of limited coverage. Despite these limitations, the agriculture labour consumer index with the base year of 1960-61 price index and industrial labour consumer index with the base year of 1973-74 price index, poverty estimates have been worked out adjusting with inflation Thus, up dated poverty line expenditure is merely an adjustment of inflation with the old consumption basket of 1973-74. However, consumption expenditure data of NSS are available for corresponding rounds and one finds no cogent excuse for ignoring such data for estimating updated consumption expenditure and corresponding poverty estimates. Moreover, this is a head count poverty based on consumption and not income and therefore it is consumption poverty line, which includes consumption out of borrowing also. Therefore poverty estimates are misleading.

There are two sources for consumption expenditure to calculate poverty estimates- NSS and National Account Statistics (NAS). In case of NAS, consumption expenditure data are not collected separately, rather they are extracted from the data collected for NAS, whereas, NSSO collects consumption expenditure data separately. Consumption expenditure data of NAS increase faster by 1 per cent than that of NSS data, which create extra ordinary differences in poverty estimates (Minhas, 1988). Another study suggests that this difference increased from 5 per cent in 1957-58 to 38 per cent in 1993-94 (Kulshreshta and Kar, 2005). Consensus prevails that consumption expenditure data collected through NSSO are more reliable than NAS data (Sunderam and Tendulkar, 2001). NSS collected consumption expenditure data along with data of employment and unemployment till 1993-94 (50th round), which were discontinued in the 55th round (1999-2000). Now any analysis for relation between consumption and employment and unemployment needs a separate methodology. Moreover there has been a methodological shift in data collection of consumption expenditure. Conventionally data for consumption have been collected based on 30 day recall method but in 55th round 7 day, 30 day and 365 day recall method was adopted on the basis of specific commodity. Therefore consumption data between the 50th and 55th round are not comparable. Consumption expenditure data based on 7 day recall method are 23 per cent higher than the 30 day recall method but they are less inconsistent than the data based on large survey of thin sample. Moreover, it has been argued and substantiated that there is no apparent deficiencies in data based on 30 day recall method (Deaton and Kozel, 2005: 8-9). Therefore, the 30 day recall method appears better and acceptable for this purpose.

Official estimates of the Planning Commission indicate that poverty in India has declined from 36 per cent of 1993-94 to 26.1 per cent in 1999-2000. Earlier estimates available from the Planning Commission suggest that the level of poverty was 53.4 per cent in 1957-58 which came down to 49.1 per cent in 1963-64 but it further increased to 57.9 per cent in 1967-68. This was the highest official estimates of poverty in India. The NSSO has been bringing poverty estimates at regular intervals since 1973-74. The estimates reveal that poverty at the all India level has come down from 54.9 per cent in 1973-74 to 36 per cent in 1993-94. Poverty estimates for rural and urban India for the corresponding period were 56.4, 37.3 and 49 and 32.4 per cent respectively. Poverty estimates in 1999-2000 calculated by the Planning Commission of the government of India suggests a sharp decline in all India poverty to 26.1 per cent, in rural India 27.1 per cent and in urban India 23.4 per cent. However, methods adopted for the calculation of poverty in 1999-2000 are not comparable and remained controversial. Many experts in the official line also do not agree among themselves (for example, Sen, 2001; Vaidyanathan, 2001; Kozel and Deaton, 2005). Consensus among them is that present official estimates are not strictly comparable with earlier estimates without rationalization. Sen, Kozel and Deaton have tried to rationalize the indirect estimates of poverty but did not come out of the compulsions of manipulation in favour of the ruling class, which is not surprising. After all, the comprador has been working with a mandate to create illusions to promote the interest of capital and not of the poor. Despite all the efforts, they could not hide further that 74.25 per cent of the poor population have been living in the rural areas.

If the poverty has declined significantly, there must be enough ground to substantiate the basis for its declining. There is hardly any disagreement that the majority of the people stay in the rural areas and are dependant on agriculture for their livelihood. The rate of change in per capita rural income has declined from 3.1 per cent during one decade of pre reforms (1981-82 to 1990-91) to 2.8 per cent during one decade of post reform (1991-92 to 1999-2000). Estimates of the government of India reveal that compound growth rates of area, production, and productivity of food grains declined. Growth rates of the production and productivity of non-food grains declined and overall growth rates of production and productivity of major crops have also declined. Percentage public expenditure on agriculture registered significant decline from 5.8 per cent in seventh five year plan to 5.2 per cent in eighth five year plan and 3.96 per cent in the ninth five year plan. The Percentage of public expenditure on irrigation and flood control has also been declining in consecutive five year plans. Growth rate of industrial production for the period in reference has declined from 7.8 per cent to 5.7 per cent. Thus, material production of the Indian economy registered a sharp decline. If one looks at the employment scenario which is another source of income for the economy, growth rate of employment during 1983 to 1993-94 was 2.4 per cent whereas during 1993-94 to 1999-2000 was only 0.67 per cent. For the organized sector of agriculture growth rate was negative. Even the unorganized sector registered merely a 0.03 per cent growth rate in employment. Growth rate for Mining and Quarrying for the organized and unorganized sector remained negative. Employment elasticity for agriculture, which was 0.7 during 1983-93-94, turned to be almost zero during 1993-94 - 1999-00. If one takes the economy as a whole, employment elasticity for the pre reform period was 0.52, which declined to 0.16 in the post reform period. The Annual growth rates of employed workers have declined from 2.04 per cent to merely 0.98 per cent. Growth rate of total employment was 2.7 for the pre reform period, which declined to 1.3 per cent during the post reform period.

There was a sharp increase in the marginal workforce from 2.78 per cent to 11.96 per cent. The Participation rate in case of the main workforce has decreased from 0.18 to (-) 1.11 per cent but there is an increase in the participation of the marginal workforce from 0.61 per cent to 9.85 per cent. This indicates that casuali-sation has increased sharply. If we look at the NSS data, growth rate per annum of labour force, workforce and of unemployed persons, it is evident from data that during 1983 to 1993-94, rate of growth of workforce was higher than that of the labour force. The rate of growth of unemployed persons was almost negative. Unlike the 1980s during 1993-94 to 1999-2000 growth rate of work force was lower than that of labour force. The growth rate of the unemployed number of persons remained high. It was of utter inconsistency of estimates that in the situation of discouraging employment and rising unemployment from (-) 1.19 to 5.26 per cent, official estimates of poverty was reporting a decline in poverty. On the other hand payment of interest as a percentage of national income has increased from 0.93 to 1.72. The share of profit and other outflow increased from 0.89 per cent to 2.18 per cent. Thus total outflow increased by more than double from 1.82 per cent to 3.90 per cent. Domestic saving and total investment in the economy declined from 21 per cent to 18.4 per cent and 23.4 per cent to 21 per cent respectively. These are the figures from the Ministry of Finance published in the various issues of the Economic Survey.

The Human Development Report (HDR) 2005 reveals that incremental growth has negligible impact on poverty reduction. Moreover, poverty is concentrated in the rural areas of backward states like U.P., Bihar, M.P., etc. It may be mentioned that the Human Development Index with nominal improvement in the year 2005 (0.602) from the position of 2004 (0.595) remained at the same position, i.e., at the 127th ladder, which is worse than previous years. In 2003 it was at 126th and in 2001 at 124th. It is an important indicator that economic reforms and economic growth could not render benefit towards improving the HDI. In other words, there has been negligible progress in per capita income, literacy, and life expectancy in India in the recent years. These figures do not provide any basis for poverty reduction even later after 2000. Therefore, data relating to poverty need a careful scrutiny.

The NSS publishes data on distribution of persons for monthly per capita expenditure in rupees and also distribution of persons for calorie intake by monthly per capita expenditure. These data are available for rural and urban areas in the Report Nos. 471 and 454 of the 55th Round. These data do not need any expertise to understand the distribution of expenditure. In order to acquire 2400 calories intake in the rural areas and 2100 calories intake in the urban areas data suggest that persons of the respective areas there is a fall in expenditure group of rupees 525-615 and 575-665 respectively. In order to get exact figures if one draws on the ogive curve to find out the cumulative percentage of the people up to this level, the rural areas depict 74.5 per cent of the people below the 2400 calories intake. Similarly if one takes the urban areas for per capita monthly expenditure persons with 2100 calories intake there is a fall in the expenditure group of 575-665. Drawing the ogive curve for cumulative percentage it crosses 50 per cent.

We can find that official estimates have badly underestimated poverty. For example if one takes even for the rural India Planning Commission it has come out with 37.27 per cent of poor persons for which implied calories per capita per diem comes to 1970 only. For the 1999-2000 estimates indirect estimates of the Planning Commission brought rural poverty to 27.1 per cent with Rs. 327.56 per capita monthly expenditure with which an individual can acquire 1890 calories per diem. According to NSS data average expenditure for acquiring 2400 calories intake needs per capita monthly expenditure to the tune of Rs.565. If one goes by NSS data and compromise at 2200 calories intake which required per capita monthly expenditure to the tune of Rs. 455, the figure of percentage of poverty at this ceiling of calories are 58 per cent. Even with a 2000 calories intake, which require a Rs. 380 per capita monthly expenditure the figure for poverty can not be less than 40 per cent.

Interstate variations are alarming. As high as 94.5 per cent people of Tamil Nadu are with less than 2400 calories intake, for which they require Rs.970 against the calculation of per capita monthly expenditure of the Planning Commission which is merely Rs.307.64 and thereby only 20.55 per cent rural people are below the 2400 calorie intake norms. The second highest is rural Maharashtra with 92 per cent people with per capita monthly expenditure Rs. 870 to acquire 2400 calories against official estimates of Rs.318.63. With this amount they can hardly acquire more than 1760 calories intake. Third highest poverty stricken state is rural Assam with 91 per cent people below 2400 calories. Other states above 80 per cent rural people below 2400 calorie norms are: Orissa (80 per cent: average per capita monthly expenditure Rs. 475 against official estimates 323.92), West Bengal (81% with Rs. 575 against official estimates of Rs.350.17), Karnataka (82% with Rs650 against official estimates of Rs.309.59), Gujarat (83% with Rs735 against official estimates of Rs.318.94), A.P. (84% with Rs595 against official estimates of Rs.262.94), Kerala (82.5% with Rs 1105 against official estimates of Rs. 374.79). Similarly if one takes the estimates of other states, Bihar (77% with Rs455 against official estimates of Rs.33.07), M.P.(78.5% with Rs490 against official estimates of Rs.311.34), U.P. (61% with Rs455 against official estimates of Rs.336.88), Rajasthan (53.5% with Rs515 against official estimates of Rs.344.03), Punjab (58.5 % with Rs 715 against official estimates of Rs.362.68) and Haryana (47.5% with Rs.615 against official estimates of Rs.362.81). Thus, there is a huge under estimation of poverty. So long as calorie norms are accepted for poverty estimation one can hardly deny the ground reality of the score. However, official estimates have ignored the per capita monthly expenditure data with regards to calorie norms.

If this is the way to reduce poverty in order to achieve millennium development goals, this is a matter of serious concern. Under estimation of poverty has definite implications on policies and programmes. If the volume of poverty is reduced, budget allocations for poverty eradications and rural development will have weakened logic for state subsidies and special assistance. The grave danger posed by this approach is that it inevitably leads to misidentifying of the poor and subsequently to the adoption of targeting, monitoring, and evaluation criteria, which are equally narrow and thus, carrying the many blind spots in the concept of deprivation into the operational phase of interventions (Saith, EPW, October 22, 2005). By implication corporate governance will have a free hand to exploit and expand profit for capital against the interests of the poor. The comprador state leadership with a subservient bureaucracy has been facilitating their imperialsist masters. However, reducing the public exchequer will have another significant inherent implication also. The Comprador network of lackies, surviving on public expenditure leakages will have tough competition among them, which essentially aggravate continued infighting to expose each other.

There must not be an iota of doubt that these compradors occupying various positions from village to parliaments have been misleading the people in the name of poverty eradication. All the so-called efforts of poverty eradication from the beginning of land reforms, providing irrigation, creating infrastructures, so-called green revolution and diversification of agriculture, target oriented development programmes for poor, etc., failed because of the inherent dishonest policies and their framework of implementations.

The ruling classes have been busy in their nefarious design of creating illusions and framing contradictory policies. On the one hand they have been facilitating their imperial masters with concession after concessions in the name of reforms and narrowing down the base resources for the state exchequer and on the other hand they formulate popular policies for employment generation and poverty eradication. Financial crises are the obvious results leading to a cut in subsidies and disinvestments. Now agriculture, which has been the base of subsistence for the poor and middle peasantry, has been opened for MNCs and TNCs through contract farming and the WTO. Blind motivations for ‘modernization’ and ‘diversification’ of agriculture without proper infrastructure have resulted in policies that have led to suicides of the peasants even in the high growth regions of the country. The breakdown of the institutional credit system has been giving strength to moneylenders for extracting exorbitant rates of interest from the peasants. Inability to repay the loan because of crop failure and lack of effective insurance cover has been forcing them (peasants) to commit suicide, which is nothing but a series of cold-blooded murder. Therefore, the only option left before the people is to get organized and resist the systematic design of exploitation and murders adopted by the ruling compradors and their imperialist masters at various levels from local to the all-India, towards rebuilding a new world, free from exploitation and inequality.

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