Poverty as an electoral weapon
Poverty in India reflects a sad state of affairs. Instead of removing this economic and social aberration, the political class has been using poverty as an electoral weapon. The recent poverty data touted by the government to virtually claim that the scourge has been all but conquered reveals only the UPA-II’s stunted state of mind, argues Veeraiah Konduri
The Planning Commission’s updated poverty estimates for the year 2011-12 basing on the National Sample Survey’s 68th round survey on monthly per capita expenditure (MPCE) throws new light on the trend of poverty reduction in India. The timing and comparative presentation of estimates turned out to be an occasion to unsettle the debate on poverty and its dynamics in India one again. Several economists and activists, including some politicians commented already. A crowning comment came from the future Prime Ministerial candidate, Rahul Gandhi, when he said, “ poverty is just a state of mind. It does not mean scarcity of food, money or material things.”
According to the revised estimates, the percentage of persons below the Poverty Line in 2011-12 has been estimated as 25.7 % in rural areas and 13.7 % in urban areas and 21.9 % for the country as a whole. The respective ratios for the rural and urban areas were 41.8% and 37.2% for the county as a whole in 2004-05. It was 50.1 % in rural areas and 31.8% in urban areas and 45.3% for the country as a whole in 1993- 94. In 2001-12, India had 270 million persons below the Tendulkar Poverty Line as compared to 407 million in 2004-05, that is reduction of 1327 million persons over the seven year period.
The press note issued by the Planning commission surmised its conclusions by saying, “ The decline in poverty flows from the increase in real per capita consumption. The clear inference is that ( a) the real monthly per capita expenditure increased by much more in the second period ( 2004-09 to 2011-12) as compared to the first (1993-94 and 2004-05), (b) that the increase was fairly well distributed across all deciles of the populations, and (c) the distribution was particularly equitable in rural areas.
The first national poverty line was computed by YK Alagh committee in 1978 followed by Lakdawala committee in 1993 and the last in that series is the Suresh Tendulkar committee which deviated from calorie norm while computing the poverty figures to compute the poverty line basket which includes expenditure on food, cloths and health and came out that a person who spends Rs 32/- in urban areas and R 25/- in rural areas can not be treated as poor. The Planning Commission which spent Rs 35 crores only to renovate two bathrooms in its building decided that a person can live with Rs 32/- in urban India !
Suresh TendulkarThe poverty estimates, beginning from 1970s are being revised and updated once in every five years basing on the NSSO’s household consumption and expenditure survey. Against this the UPA –II government ordered an interim survey stating that it can not base on 2009-10 survey results as it was sever drought year. Perhaps this is the first time for the Planning Commission, the premier policy guidance body of Indian establishment out rightly siding working to boost the government-of – the day’s prospects.
On the first reading of the estimates, one will get an impression that this magnitude of poverty reduction is only possible because of the economic reforms. And particularly the findings are designed to suit the UPA-II’s political objects as it is about to go on an electioneering in which these findings may be flanked as its achievements. Because of the seriousness of the criticism none other than the government’s chief statistician TCA Anant came out with a rejoinder denying this. The findings also wants us to believe that the economic reform induced growth finally trickled down and translated into increasing the per capita consumption of individuals. Also the pink press wrote editorials celebrating this decline and some even gone to the extent that the political establishment is worried because of poverty reductions.
On the other hand, the estimations met with such a stiff objections that the Planning Commission member has to come out in open to say that these poverty estimates are nothing to do with the allotment of entitlements which are under pipeline and even claimed that for the first time in India the poverty estimates and fixation of entitlements are delinked to serve the poor better.
The estimates are questionable on multiple grounds. The government is yet to come out with satisfactory explanation on the doubts raised over the Suresh Tendulkar formula of computing the poverty line, which basically deals with the methodological issues.
AnantThe reading of the figures doled out from the NSSO computations followed by the Planning Commissions conclusions confirms that the unprecedented, uninterrupted intensive growth that India undergone from 2004-05 to 2010-11 helped to uplift 137 million people above the poverty line. Even after such a tremendous achievements, India homes for 269.3 million which is nearly half of the total poor in the world. Several commentators including those from the Planning Commission attributed this achievements to the economic reforms, thus wish to justify the clamor for accelerated reforms or in Prime Minister’s own wards, “ further unleashing the animal spirits in the economy”.
According to the data, the rate of poverty reduction stood at 7.4 % per year during 2004-05 and 2009-10, when the average growth rate of economy stood at 8.5 % per year. The rate of poverty reduction increased to 7.9 % during 2009- 10 and 2011-12, when the average rate of growth of economy was reduced to less than 6 % ! That means the lower growth also leads to poverty reduction, according to the neo liberal argument !
The essence of the reformists’ argument is that the people are able spend more than the poverty line basket standards which implies that their incomes are looking up the sky. Some even went to comment on the changed food pattern with an inference to the increased cost of expenditure on account of fruits and milk. There is a fundamental problem with this assumption.
In any economy, the if the incomes of it’s people looking up the sky, they must be employed in income generating activities or the government is increasing its social welfare spending, which both are not facts in today’s Indian context. The poverty line basically considers the spending on food articles, so let us consider the social welfare spending, the Congress’ MPs themselves calculated that the during 2003-04 and 2013-13, the share of food subsidy decreased from 57 % of GDP to 39 %, a clear 22 % down from its 2003-04 levels. Hence the increase in the expenditure on food articles can not be attributed to welfare spending by the government.
According to the data, the rate of poverty reduction stood at 7.4 % per year during 2004-05 and 2009- 10, when the average growth rate of economy stood at 8.5 % per year. The rate of poverty reduction increased to 7.9 % during 2009-10 and 2011-12, when the average rate of growth of economy was reduced to less than 6 % That means the lower growth also leads to poverty reduction, according to the neo liberal argument !
Let us assume that the capacity to spend by aam aadmi went up as they are got gainful employment during this period. But the assumption is negated by none other than the NSSO surveys themselves. According to the latest NSSO survey on employment and unemployment, the man days generated reduced from 2.83 billion in 2009-10 to 2.16 billion in 2011-12 which means economy lost about 67 billion man days, there by the potential income generated by these man days. Not only that, according to Manas Chakravarty, the employment elasticity of Indian economy gone down from 0.44 in 1999-2000 and 2004-05 and to 0.01 during the period 2004-05 and 2009-10, ruling out the possibility of providing the gainful employment.
The employment elasticity of manufacturing sector gone down from 0.76 between 2000-2004 to negative growth of – 0.31 between 2004-09, which are the years of high average growth. During this decade, the 14 million farmers lost their source of income, land and turned joined the ranks of agricultural workers. For the better part of UPA regime, the employment potential of economic activity in rural India gone down enormously which forced the government to come up the MGNREGA to resume the basic economic activity. No same mind can think of these developments contributing to the income and expenditure by people.
Finally, a source of logic can be find in average rate of inflation. According to one analyst, average annual growth in inflation is at 12 % during this period which contributed to the rise in cost of living. A person who bought one liter toned milk for Rs.26/- in 2009 is now buying the same for Rs.32/- in 2013. Similar trend can be found in case of any other food articles. Still the people are buying as they have sustain their energies to live one more day. This does not mean that their incomes are rising that is why they are able to meet the ever galloping inflation burden. This can even be met through rising hand loans through non-formal channels, which means the rising expenditure on food articles and basic needs such as health and shelter are financed by debts rather than by increase in income.
We are only discussing the unidimensional aspect of poverty. Had we gone into multi-dimensional poverty, our standing will be on the lowest bottom as it reflected in the annual human development index. With out taking this into consideration, the policy makers are enthusiasm about showcasing the glory of globalization and economic reforms using the deflated poverty estimates reveals nothing more than the UPA-II’s stunted state of mind.
