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KAUTILYA
A
New Round of Controversy
Rural
poverty is down, perhaps due to the change in the way it is calculated
By
Jairam Ramesh
The debate
on poverty numbers has just got murkier. So far, the Planning Commission
was saying that rural poverty had gone up in the 1990s. Its latest calculations
show exactly the opposite. Contrary to popular belief, there is no explicit
national poverty line. What we now have, instead, are state-specific poverty
lines from which an all-India poverty line is derived implicitly. The
rural poverty line is the monthly consumption expenditure of a person
so that he or she can get a daily intake of 2,400 kilocalories.
Every five
years, the government's National Sample Survey Organisation (NSSO) surveys
some 1,20,000 households across the country for getting data on consumption
expenditure. Based on these surveys, the poverty ratio, that is the proportion
living below the poverty line or the nutritionally minimum consumption
expenditure level, is estimated by the Planning Commission. The last such
full survey whose results have been officially published was in 1993-94.
In that year, the national rural poverty ratio was 37.3 per cent. For
subsequent years, however, we have only "thin" sample data covering
only 20,000 households. This is never used for deriving definitive conclusions.
Even so, the "thin" sample data reveals that the national rural
poverty ratio in January-June 1998 had increased to 42.5 per cent.
The NSSO
was to do a full sample survey in 1999-2000 (June-July). This has been
completed and the results for the first six months or for the first two
rounds have just been made public. Using these results for household consumption
expenditure, the Planning Commission estimates that the all-India rural
poverty ratio in 1999-2000 was between 24.5 per cent and 27.5 per cent,
a very sharp decline since 1993-94.
In 1993-94,
half the sampled households were asked for their consumption expenditure
based on a 30-day recall and the other half was asked based on a seven-day
recall. In 1993-94 and in subsequent years, consumption expenditure as
revealed by a seven-day recall was almost 16-17 per cent higher than that
revealed by a 30-day recall. This means that a seven-day recall survey
will show significantly lower poverty than a 30-day recall survey. Incidentally,
this 30-day reference period is used, perhaps, only in India and traces
its origin to a study done way back in 1954 in 76 West Bengal villages
covering 1,254 households. There was no difference in this survey between
data based on recall of a month and a week. It is only since 1993-94 that
the seven-day recall is also being experimented with.
In 1999-2000,
however, the same households were asked for consumption expenditure based
first on a seven-day recall and then based on a 30-day recall. Surprisingly,
the difference between the two instead of being significant as it was
in previous years, turns out to be just around 3-4 per cent. This is the
first puzzle. Then consider the fact that there has been an extraordinarily
sharp decline in rural poverty in Bihar, Uttar Pradesh and Rajasthan (see
table). This fall is counter-intuitive and needs a closer look. The figures
are also extraordinarily sensitive to the way price indices are constructed.
Angus Deaton of Princeton University shows that Andhra Pradesh's rural
poverty ratio in 1993-94 could be anywhere between 16 per cent and 34
per cent.
Pravin Visaria,
one of India's most respected economists who is also the chairman of the
NSSO's Governing Council, feels that the 1999-2000 survey is a step forward.
He also believes that it would be wrong to mechanically compare poverty
ratio data for different years and derive policy conclusions on whether
reforms have accentuated or alleviated poverty. He is right. We could
do without the political (ab)use of the poverty numbers. Some Planning
Commission pundits, however, feel that the 1999-2000 survey was contaminated
because the same household was asked the seven-day/30-day question in
that order.
When the
1987-88 quinquennial survey of the NSSO showed that poverty had reduced
significantly over 1983-84, there was an outcry. In response, the Planning
Commission set up an expert group in September 1989 under the chairmanship
of the noted economist D.T. Lakdawala to review the methodology for estimating
poverty. Now under similar circumstances when 1999-2000 shows lower poverty
numbers, the Planning Commission is setting up another expert group to
study the figures. The survey results for the full year 1999-2000 will
be available by March next year. They will provide a better picture on
poverty trends.
There is
really no mystery as to what it takes to reduce rural poverty: sustained
agricultural growth, low food prices and investments in physical and social
infrastructure. But the present structure of public expenditures at the
Centre and in states prevents this from happening.
(The
author is with the Congress party and is also the deputy chairman of the
Karnataka Planning Board. These are his personal views.)
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