Author: Shardul Oza
The Planning Commission has released new poverty estimates
for the country, showing that the percentage of people living below the
poverty line poor fell from from 37% to 29.8% from 2004-2005 to
2009-2010. According to the Commission, the fall is poverty in directly
attributable to the success of government welfare programs such as the National Rural Employment Guarantee Act, a government scheme that guarantees rural Indians 100 days of paid work.
The announcement received widespread media coverage, with many
outlets focusing on the standard that the government used to measure the
number of poor in the country. The government’s used a poverty line of
Rs. 22 a day for rural areas and Rs. 28 a day for urban areas. The
opposition party(ies) and numerous activists have criticized the
government, claiming that these estimates grossly underestimate the
number of people who are deprived (i.e. way more than 30% of the country
is poor). Crudely paraphrased their argument is as follows: How dare
the Commission say only those living below Rs. 28 or Rs. 22 a day are
poor, when many more people live in deprivation. And how dare they claim
success at reducing poverty based on such an arbitrary and stringent
standard?
However, those who argue that the line is too low miss several important points:
1) A poverty line is always going to be somewhat arbitrary
– If the government were to draw the poverty line at Rs. 50 per day
instead of Rs. 28, there would still be people just above the line who
are almost as deprived as those below the line and who are deprived in
some absolute sense. The point is that you have to draw the line based
on the dynamics you would like to understand. In this case, the
government is adhering to a high standard for who should be considered
poor.
2) A lower poverty line means greater focus on poorer
populations – Given that the government has finite resources, it has to
choose who will benefit from welfare schemes and who will not. Poverty
lines help the government focus its resources on those who may need them
the most (those who are relatively poorer). As Abhijit Banerjee,
director of MIT’s Poverty Action Lab, points out in this erudite piece in
The Hindustan Times, raising the poverty line does not magically
increase the resources that we have to deal with those who fall below
that line. The op-ed page editors of The Hindu, completely disregard
this fact when they call for the universalization of social programs to replace poverty-line guided targeting.
In general, the media should do a better job of explaining how
experts generate poverty measures and why they are useful. With all the
debate over the line, the media has neglected the main takeaway from the
estimates: using the government’s stringent definition of poverty, the
number of poor people in India has dropped.
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