India’s current poverty metrics, rooted in the decade-old Tendulkar Committee’s criteria, are increasingly seen as outdated and inadequate. These criteria set the poverty line at Rs 33 per day in urban areas and Rs 27 per day in rural areas, failing to reflect current economic realities, inflation, and consumption patterns.
Need for a New Poverty Line
Bibek Debroy’s Perspective:
Bibek Debroy, chairman of the Economic Advisory Council to the Prime Minister, advocates for revising the poverty line to better align with present-day costs and consumption behaviors. He suggests leveraging the Household Consumption Expenditure Survey (HCES) data to establish a more accurate poverty line. This data is crucial not only for measuring poverty and inequality but also for designing and implementing effective government programs.
Multidimensional Poverty Index (MDPI):
Debroy emphasizes that while the MDPI offers valuable insights into the various dimensions of poverty, it should not replace traditional poverty lines. The MDPI, which considers factors such as health, education, and living standards, provides a comprehensive view of deprivation. However, Debroy argues that these factors are causes of poverty rather than poverty itself.
Challenges in Measuring Poverty
Lack of Recent Data:
India has not conducted National Sample Survey Office (NSSO) surveys on consumption expenditure since 2011-12, leading to a significant data gap. This gap hampers the accurate assessment of poverty and the formulation of effective policy interventions.
Methodological Discrepancies:
Discrepancies between different surveys, such as household consumption expenditure surveys and national income accounts, highlight the need for consistent and accurate data collection methods. Addressing these inconsistencies is crucial for obtaining a clearer picture of poverty and inequality in India.
Recent Trends and Regional Variations
UNDP Report Findings:
A UNDP report noted that 415 million people moved out of poverty between 2005-06 and 2019-21, with the poverty incidence dropping from 55.1% to 16.4%. However, approximately 15% of India’s population still lives in poverty. States like Bihar, Madhya Pradesh, Odisha, and Rajasthan have seen the fastest reductions in poverty rates between 2015-16 and 2019-21.
State-Level Successes:
- Bihar: Poverty reduced from 37.7% to 33.8%.
- Madhya Pradesh: Poverty fell from 37.7% to 20.6%.
- Odisha: Poverty rate dropped to 15.7%.
- Rajasthan: Poverty rate reached 15.3%.
These reductions are largely attributed to improved implementation of government schemes like Awas Yojana, Jal Jeevan Mission, and Swachh Bharat, particularly in rural areas.
Moving Forward
Raising the Poverty Line:
Surjit S. Bhalla, Karan Bhasin, and Arvind Virmani have argued for raising India’s poverty line from $1.90 per day to $3.20 per day, reflecting the shift from absolute to relative poverty as the country grows economically. This would better align with the lower-middle-income (LMI) poverty line, marking a 68% increase from the current definition.
Tailored Poverty Reduction Programs:
Effective poverty alleviation requires region-specific strategies that consider the socio-economic dynamics of different states. Tailoring programs to local contexts can enhance their effectiveness and sustainability.
Conclusion
India’s poverty line criteria need urgent revision to reflect current economic conditions and consumption patterns. A more accurate poverty line, combined with consistent and comprehensive data collection, is essential for effective policy-making and poverty alleviation. Moving towards a multidimensional approach can help address the root causes of poverty, ensuring more targeted and sustainable interventions.
