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Planning Commission and poverty estimates

Brinda Karat

The entire process of poverty estimation by the Planning Commission is characterised by arbitrariness and manipulations.

THE REPORTS that there is a view in the Planning Commission that poverty has come down by 4 percentage points from the estimate in 1999-2000 should set alarm bells ringing for those concerned with the rights and entitlements of the poor. The importance of poverty estimates has grown in the last decade and a half of neo-liberal policies, since these estimates are used to decide financial allocations for poverty alleviation programmes. Lower estimates become the instrument to bully State Governments into accepting a smaller share of national resources for poverty alleviation. Even as the number of Indian millionaires and billionaires increases, the poverty line decided by a faulty methodology adopted by the Planning Commission is pegged at just Rs.327 a month for an adult living in rural India.

The methodology followed by the Planning Commission to estimate poverty underwent a change in the 1990s following the recommendations of the Lakdawala Committee. While poverty continued to be defined in terms of per capita monthly expenditure corresponding to per capita daily requirement of 2400 calories in rural areas and 2100 calories in urban areas, the price index used to calculate the level of expenditure corresponding to the specified calorie intake was changed from an all-India price index to State-specific ones. But the committee retained an outdated consumption basket based on the needs of families calculated more than 30 years earlier. Following the adoption of this new methodology in 1997, there was a dramatic decrease in the number of below the poverty line (BPL) families in a large number of States compared to the poverty estimates based on the earlier Task Force methodology. In Andhra Pradesh, poverty estimates went down by as much as 50 per cent because the price index was much lower than other States due to the Rs.2 per kg rice supplied through ration shops. Poverty estimates in Karnataka, Madhya Pradesh, Maharashtra, and Orissa were also lowered. These States, whose share of allocation in Central poverty alleviation programmes was being cut on the basis of the lower estimates of poverty, vociferously protested. In response, the Planning Commission worked out a formula to "adjust" the shares of the "affected" States in Central allocations to the extent of 15 per cent of the difference between the estimates of the Task Force and the Lakdawala Committee. The 15 per cent figure was literally taken out of the air and is used even today to decide State-wise allocations.

In 1999-2000, the Planning Commission came out with new poverty estimates (55th round of the NSS), which showed that the rural BPL population was down to 27 per cent, implying an unprecedented 10 percentage point decline in poverty over a five-year period. As is well documented, these poverty estimates met with a wave of criticism since they were gross underestimations based on contaminated data. The Standing Committee on Food, Civil Supplies and Public Distribution in its 24th Report commented: "The Committee notes that when the modalities for both the surveys (1993-94 and 1999-2000) are not the same the Government should not compare these two figures and should not claim a reduction in poverty levels in the country. The Committee therefore desires that the data ... should not be taken into account to give a wrong picture of the poverty situation in the country which in turn can negatively affect the poverty alleviation programme."

The Planning Commission's response to this was to "arrange" another poverty estimate for allocations of foodgrains and rural development schemes. In actual numbers, its 1999-2000 poverty estimates of 27 per cent of the latest rural population translated into 386.48 lakh families. The method devised to meet the criticism of gross underestimation of poverty was to go back to the 37 per cent rural poverty estimates of 1993-94 but without taking into account the increased population during this period. While the use of old population figures to decide upon Government programmes meant for the existing BPL population was clearly unjust, this was adopted as a "middle path" between contending claims. This "middle path" translated into an actual figure of 488.05 lakh families, which was higher than the Planning Commission estimates by around 100 lakh. Although it may have addressed the immediate problems of the States for funds, it once again shows how the entire process of poverty estimation by the Planning Commission is characterised by arbitrariness and manipulations.

The only other central agency that makes poverty estimates is the Ministry for Rural Development (MoRD). The BPL estimates of the MoRD surveys in 1992 and 1997 were much higher than those of the Planning Commission. Unlike the Planning Commission estimates which are based on sample surveys, those of the MoRD are based on a house to house survey with 100 per cent coverage and therefore have the potential, provided the criteria is comprehensive, to correctly reflect ground realities. But the problem is that the criteria are far from being comprehensive. Changing its methodology for the third time under the prodding of the Planning Commission because its estimates were considered too high, the MoRD BPL census is now based on a schedule with 13 parameters with four sets of answers that carry points (between 1 and 4) for which each family is given an aggregate score. The maximum aggregate score is 52 (13 X 4). The family with the lowest score is identified as the poorest. However, the ways in which the questions have been framed expose the gaps in the schedule. On the issue of food security a family gets a 0 score only if it eats "less than one square meal a day." But a family that eats twice a day even if it "faces occasional shortages" gets the second highest score of 3. Shockingly, a family where two adults, male and female, work gets a high score of 4 regardless of the level of income earned. The fluctuating incomes of the mass of the rural working people are not factored in. There are other such examples.

The worst part of this exercise in doctoring the numbers of the poor is that the MoRD does not adopt a uniform measure of poverty as it did earlier. Even though the schedule for all the States is the same, there is no common cut-off score to decide the poverty line, which at present may be fixed by the State Government and can vary even from village to village. Thus different cut-off scores may be determined by entirely extraneous factors little to do with poverty measurement. A political party in power may choose to punish or alternatively reward areas by awarding them a lower cut-off mark leading to less funds or a higher cut-off mark to include more families and therefore more funds.

In fact. the so-called flexibility to the States is only within the iron lakshman rekha of the poverty estimates fixed by the Planning Commission. A September 2002 circular from the Economic Adviser to the MoRD states that while States have the flexibility in deciding cut-off scores in no case could those scores cross the prescribed limit of the poverty estimates made by the Planning Commission.

Thus a completely artificial linkage is made between the dubious estimates of the Planning Commission and those of the MoRD even though the methodologies of the two surveys are entirely different. The consequence is a range of differing cut-off scores across India — 20 in Bihar, 16 in Madhya Pradesh, 14 in Karnataka, 13 in Rajasthan — all presumably determined by the numbers of poor "prescribed" by the Planning Commission. Maharashtra has no cut-off but has divided the numbers "allotted" by the Planning Commission equally among districts.

If this utterly irrational, unscientific, and unjust "linking" has escaped public attention, it may be because the BPL 2002 survey was in cold storage due to the earlier Supreme Court stay order. A fresh BPL census is to be conducted in 2007 to coincide with the Eleventh Five Year Plan. The Planning Commission has also set up a committee to revisit the methodology of poverty estimation.

This is, therefore, an appropriate time for all those interested in the welfare and rights of the poor to campaign on issues of BPL estimates and identification and question the unscientific links between the Planning Commission estimates and those of the MoRD for the identification of the poor and allocation of funds.

(The writer is a member of the Rajya Sabha and of the Polit Bureau of the Communist Party of India-Marxist.)

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