How Little can a Person Live on Today?

THE Planning Commission’s recent affidavit to the Supreme Court stating that a person is to be considered ‘poor’ only if his or her monthly spending is below Rs 781 (Rs 26 per day) in rural areas and Rs 965 (Rs 32 per day) in urban areas, has exposed how unrealistic ‘poverty lines’ are. Some television channels assumed that these figures covered food costs alone and showed how they could not meet even minimal nutrition needs at today’s prices. These paltry sums, however, are supposed to cover not only food but all non-food essentials including clothing and footwear, fuel for cooking and lighting, transport, education, medical costs and house rent. The total is divided Rs 18/Rs 14 for food and non-food items in towns and similarly Rs 16/Rs 10 in rural areas, and includes the value of food that farmers produce and consume themselves.

EXERCISE IN PREVARICATION

Even a school child knows that working health cannot be maintained, nor necessities obtained, by spending so little. Amazingly, however, 450 million Indians subsist below these levels. One cannot say that they ‘live’ in any true sense: their energy and protein intake is far below normal; they are underweight, stunted, subject to a high sickness load but without the means to obtain adequate food or medical treatment. The majority belong to the scheduled castes and scheduled tribes. The official poverty lines do not measure poverty any more; they measure destitution.

The present outcry against calling these destitution lines ‘poverty lines’ is justified, for true poverty lines are much higher than these, and show 75 per cent of all persons to be poor. Per head energy and protein intake has been falling for the last two decades as the majority of the population is unable to afford enough food. With 60 million tonnes of public food stocks, far in excess of buffer norms, piled up by mid-year, the sensible policy is to do away with targeting and revert to a universal public distribution system, combining it with an urban employment guarantee scheme. Unfortunately the neo-liberal policy makers today ask the wrong question: How can we reduce the food subsidy?, and not the right question: How can we lift the masses of India from the current level of the lowest food consumption in the world, even lower than the least developed countries?

On Tuesday, October 5, the Planning Commission members met the press to answer searching questions on its very low poverty lines. It turned out to be an exercise in prevarication, in misleading the public. To questions on what exactly was the income or spending cut-off above which benefits from various schemes would not be available, the answer was that benefits were not linked to the official poverty line; one member said that far larger numbers actually had BPL cards than the numbers below the Commission’s poverty line. He did not clarify the true state of affairs, that the central government determines not only food allocation from the central pool to the states on the basis of the Commission’s grossly underestimated state poverty lines and BPL percentages but financial allocations for all other schemes like RSBY (Rashtriya Swasthya Bima Yojana) as well. It is a totally different matter that individual state governments, finding the central government figures of poverty absurdly low, have squeezed funds out of state budgets to extend these schemes to cover larger numbers of the actually poor. Had they not done so there could be starvation and even greater distress in many states by now. So it is no thanks to either the Planning Commission’s ridiculous poverty percentages or the central government which accepts them, that these welfare schemes actually reach some more people.

MISTAKE OF METHOD

Members of the Planning Commission and the Tendulkar Committee are experts, so how have such laughable figures of the minimum cost of living emerged from their statistical labours? The fact is that over thirty years ago the then Planning Commission made a mistake of method, and the present Commission stubbornly continues to cling to that mistake despite its being repeatedly pointed out by many, including this author (The Republic of Hunger, 2004). The mistake was to change the definition of poverty line and delink it from nutrition standards.

The original definition of ‘poverty line’ was a sensible one, based on an Expert Committee recommendation in 1979. The National Sample Survey data on consumption spending give 12 groups of persons ranging from the poorest, smallest spenders to the richest, highest spenders. The definition was that particular observed level of total monthly spending per person is to be called the ‘poverty line,’ whose food spending part allowed a person to obtain 2400 kilocalories energy per day in rural and 2100 kilocalories energy per day in urban areas. Later the rural figure was scaled down to 2200 calories. Both nutrition norms are modest. The Commission accepted the Expert Committee’s nutrition based definition but applied it only once, to the 1973-74 data, to obtain correct monthly rural/urban poverty lines of Rs 49/Rs 56 at which 2200/2100 kilocalories were accessible, and found that 56 per cent of rural and 49 per cent of urban persons spent less than this, and so were poor.

Then the Commission, for reasons unknown, changed the definition in practice, and never again directly looked at the total monthly spending which permitted nutrition ‘norms’ to be maintained, even though every five years the required information on this for every spending level was available – the physical quantities of food intake, and the corresponding daily average energy, protein and fat. The definition the Commission actually adopted was that the 1973-74 poverty lines were to be adjusted for inflation using a price-index, regardless of whether the lines so obtained still allowed nutritional standards to be met. The 1993 Expert Committee opted to continue with this mistaken method. Price index adjustment is being followed for the last more than thirty years (including after the minor modifications to the rural poverty line suggested by the Tendulkar Committee) and has produced the present absurdity of Rs26/32 as rural/urban daily poverty lines.

UNREALISTIC ESTIMATES

Why these economists should have such faith in the ability of price indices to capture the rise in the cost of living is not clear. Price indices are needed for short period adjustment and are used for dearness allowance calculation, but they do not reflect the actual rise in the cost of living over longer periods of time. This fact is of great importance for all labour unions and occupational associations. As an example from personal experience, the starting gross monthly salary of an associate professor in a central university in 1973 was Rs 1,000 which was quite adequate, since ration cards could be used; on this income one could even run a car. Applying the Consumer Price Index for Urban Non-Manual Employees which has risen 17-fold by 2011, the equivalent monthly salary for an associate professor joining now should be Rs 17,000 on the Planning Commission’s logic. But this would not support the most modest middle-class life-style of four decades earlier. The newly appointed associate professor’s actual salary today is three times higher, thanks to the Pay Commissions which, every ten years, have hiked salary grades.

Yet denying all experience and evidence, these economists assert that mere price index adjustment is enough to obtain current poverty lines from those of 40 years ago. No wonder they have created such a mess with their unrealistic estimates. An expressive rustic Bengali phrase is ‘lyaje-gobare’ or a ‘cow’s tail smeared with dung,’ and this describes well the official estimates. As time passed, the actual spending at which minimal nutrition could be accessed, the original definition accepted by the Commission, cumulatively diverged upwards from the Commission’s calculations based on its changed definition. By 2005 a rural person needed Rs 19 per day spending on all items to access 2200 calories from its food spending part, while at the official Rs 12 per day poverty line, she could obtain only 1800 calories. (The Tendulkar Committee merely tinkered with the problem, raising the Rs 12 to Rs 13.80.) An urban consumer needed Rs 33 per day in 2005 to meet 2100 calories whereas the official Rs 18 permitted less than 1800 calories. Today at the current official poverty lines of Rs 26/32 rural/urban, the minimal cost of living is even more seriously understated: the consumer can access even less food. State poverty lines vary and in a number of states the energy intake the official poverty line can command, is below 1500 calories per day.

FALSE CLAIM

The claim that poverty has declined is false because the method of indexation actually used has not kept constant the nutritional standard against which poverty is measured, but has lowered it continuously and, by now, substantially. We cannot accept a claim by a school that the percentage of students failing has fallen over time if we discover that the pass mark has been lowered substantially, and at the original pass mark more people have actually failed. For any valid comparison the standard has to be held unchanged. The Deputy Chairman of the Planning Commission, in the October 5 press conference, referred to the calculation by a member using the ‘Tendulkar Committee methodology’ which showed decline in the poverty percentage between 2004-05 and 2009-10. This claim of decline in poverty over the last five years is as false as all previous claims by this and earlier Commissions that poverty had declined, because at its 2009-10 official poverty lines the same consumption standard is not maintained as at the 2004-05 poverty lines; a lowering of the standard is entailed. Actual poverty, measured by keeping the standard unchanged, far from declining, has increased and a much higher proportion of our population by 2009-10 was unable to reach the modest nutrition standard, compared to five years earlier. This is hardly surprising given the twin impact of global recession from 2008 and severe drought in 2009-10. Per capita food grains consumption for all uses in India by 2008 touched the lowest level in the world, lower than the average for Least Developed Countries.

China’s official poverty lines are equally absurd, and for the same reason as in India. A nutrition norm was applied in 1984 to obtain a correct 200 yuan annual rural poverty line which thereafter was merely indexed, giving 1067 yuan by 2007, or below 3 yuan per day. This is supposed to cover all living costs but would not have bought even a single kilogram of the cheapest rice, selling then at 4 yuan according to information provided by residents in China. Actual poverty in China is far higher than is officially claimed. One wonders if we will ever see honest estimates from official sources anywhere, since by now hundreds of economists are closely imbricated within a vast global poverty-estimating structure with the World Bank at its apex, producing increasingly misleading estimates every year in its glossy reports. The World Bank’s global poverty line is an equally large underestimate, for it is derived using “purchasing power parity conversion” from local currencies to US dollars, of these very same absurdly low local-currency official rural poverty lines of developing countries, including India and China.

The Planning Commission should not try to bluster its way out of its indefensible position, but should go back to the original nutrition based definition of poverty line it had accepted in 1979 and the method of directly observing what level of spending satisfies these modest norms. What are the realistic poverty lines in India today applying the officially accepted nutritional norms? The current poverty lines allowing nutrition norms of 2200/2100 calories rural/urban to be met, are at least Rs 1,085 per month (Rs 36/day) and Rs 1,800 per month (Rs 60/day). Since each full time worker needs to support nearly two more dependants, these correspond to a minimum daily wage/income of Rs 108 and Rs 180 respectively. But this is still inadequate: no margin exists for medical emergencies, life cycle ceremonies, or old age. From the 2009-10 NSS data, at least 75 per cent of the total population is in poverty on this basis. This high level of deprivation is the rationale for going back to a non-targeted, universal food distribution system, but this will not be enough. The purchasing power of the poor has to be raised at the same time through employment generation schemes. The proposed draft national Food Security Act, if it stays with the 46 per cent figure of total population to be covered on ‘priority basis,’ will be arbitrarily excluding from its ambit 350 million poor persons.


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Utsa Patnaik കടപ്പാട് : പീപ്പിൾസ് ഡെമോക്രസി