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‘Re-conceptualising poverty’

The editorial “Re-conceptualising poverty” (The Hindu, September 2, 2008) says “… Indian estimates … held a bias towards calorific-computation … It also excluded important components of non-food expenditure.”

This is an incorrect description of the estimation method and does injustice to the intelligence of our early planners. Applying a calorie norm of 2200 per day in rural India gave a total (food plus all non-food) monthly expenditure of Rs.49 or Rs.1.63 per day in 1973-4, and this was the official poverty line spending which could not be reached by 56 per cent of rural population which was thus said to be poor. No component of non-food expenditure was ever excluded.

The problem is quite different. Directly applying the nutrition norm to get the current poverty line was later given up and instead the initial Rs.49 was simply updated with a price-index, which procedure followed every five years for three decades has produced an absurdly low official rural poverty line of Rs.12 per day by 2004-5, which is supposed to cover all food and non-food expenses but in reality would hardly have bought a kilo of open market rice. 28 per cent of the rural population spent less than Rs.12 per day, at which at most 1800 calories could be accessed.

If we directly apply the initial 2200 calories norm, however, the food plus non-food spending or poverty line is close to Rs.20 per day in 2004-5 which could not be reached by 70 per cent of the rural population. The nutrition-based poverty estimate, comparable to the initial 56 per cent, is thus much higher at 70 per cent by 2004-5 while the official figure is only 28 per cent because the official poverty line at Rs.12 per day is far too low, having given up applying the nutrition norm thirty years ago.

Though the robust nutrition norm method was given up in practice long ago by the Planning Commission, the real reason it is being criticised anew on incorrect grounds is because independent scholars applying it find a substantial rise in under-nutrition and hence in true poverty in countries undergoing economic reforms. This is not a palatable outcome to admit for authorities anywhere including in the U.N. system who would like to maintain the fiction that poverty percentages are declining.

C.P. Chandrasekhar while quoting Sanjay Reddy on how unrealistically low the World Bank’s $1.25 poverty line for 2005 is (“New light on global poverty?” Sept. 2) omits mentioning Reddy’s research showing that the Bank’s poverty line was based on the national currency rural poverty lines of countries like India and China. As long as these poverty lines do not get real, neither will the Bank’s poverty line.

Utsa Patnaik, Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi.

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