There is an urgent requirement to release the consumer expenditure survey data as soon as possible for new poverty estimates if actionable models are to be made
The reliability of official statistics systems and availability of macro-economic data have been widely debated in recent times. On many occasions, the absence of most recent and credible statistics has put the National Democratic Alliance (NDA) government in a sticky situation. In particular, macro-economic indicators such as economic growth, job numbers and number of poor people were at the centre of discussions during the recently-concluded parliamentary elections. The re-elected NDA government has recognised the concern as its all-out efforts to address the issue of investment and employment have ended with disappointing results. As India’s Gross Domestic Product (GDP) estimate for the first quarter of the financial year 2018-19 has been recorded at 5.8 per cent, it happens to be the lowest growth rate in the past five financial years. On the other hand, the annual report of the Period Labour Force Survey (PLFS) showed that the unemployment rate was highest in the country at 6.1 per cent in 2017-18.
Just after resuming his second term in the office, Prime Minister Modi has constituted two high-level Cabinet committees to address economic challenges and the low growth spurt. He also held a meeting on June 22 with leading economists to review the macro-economic situation of the country and to deliberate upon the economic policy roadmap for boosting growth and generating employment.
The provision of monetary benefits to the poor is another important issue as committed in the Bharatiya Janata Party (BJP) manifesto. The Congress party had promised a minimum income guarantee to the poorest 20 per cent, while the BJP had outlined plans for pulling people out of poverty by promising proper housing for those living in mud huts or lacking shelter, and piped water connections to every village household by the next four to five years. The ruling party has also pledged to upgrade rural roads and improve connectivity between India’s villages and cities. The former Finance Minister of the NDA government, Arun Jaitley, stressed that the number of Indians who live in poverty would drop to below 15 per cent over the next three years and to a negligible level in the 10 years after that. However, all these promises have been made without any base value of the number of poor people or plan to identify poor families as beneficiaries.
In India, policy-makers and the government use various methods to estimate the number of poor in the country. Since Independence, the poverty line is based on the minimum level of consumption requirement to decide the eligibility criteria for those who can avail government welfare schemes. The identification of eligible families is crucial as the welfare schemes should only benefit the deserving while also ensuring that people in need should not be excluded. The latest poverty line is based on the Tendulkar Committee methodology that includes the poverty line basket of both food and non-food items, which was estimated at Rs 4,050 a month for a five-member household in rural areas and Rs 4,950 in urban areas for the year 2011-12. The committee estimated 21.9 per cent poor people (270 million) in the country from the consumer expenditure survey data collected by the National Sample Survey Organisation (NSSO) in 2011-12. These estimates had faced many criticisms with the main complaint being that the line was too low. In response, a new committee chaired by C. Rangarajan was constituted in 2012 to recalculate the poverty line. The committee submitted its report in July 2014. According to it, the new poverty line was estimated at Rs 4,800 a month for a five-member household in rural areas and Rs 7,050 in urban areas for the year 2011-12. The revised estimate increased the poverty level in the country to 29.5 per cent and the number of poor people to 363 million. However, the revised estimate of the committee was not discussed much by the government and the Tendulkar poverty line is still in use to estimate the poverty in the country.
The NDA government had started using a new approach based on household level socio-economic and caste census (SECC) survey data collected in 2011 to identify beneficiaries for many welfare schemes such as the PM Ujjwala Yojna. The households are ranked in three stages in this approach as (i) households meeting exclusion criteria (like motorised vehicle, kisan credit card etc) are automatically excluded; (ii) households satisfying inclusion criteria are included (manual scavengers, households without shelter etc.) and (iii) the remaining households are identified through a seven-item binary scoring criteria using deprivation indicators like households with only one room, female-headed households with no adult male member between 16 to 69 years of age. Though there is no specific indicator (like income or consumption) available in SECC data that suggests a family is BPL, there is no single number that captures all of India’s poor. Rather, households are categorised according to multi-dimensional deprivation indicators like not having a proper roof.
This allows welfare schemes to be targetted for each of the inclusion criteria of deprivation indicators. But the SECC data had many serious drawbacks, like not factoring in updates year on year with people complaining that they were either left out in the survey or entrants falling under the margin in the years that passed by. Due to these problems, the government has changed its identification mechanism now.
This indicates that there is a serious gap in poverty estimates in the country, which is grossly neglected by both policy makers and government. Apart from some anecdotal evidence, only latest poverty estimates are provided by the 2018 global multi-dimensional poverty index (MPI) published by the United Nations Development Programme (UNDP).
The Oxford Poverty and Human Development Initiative (OPHI) noted that India had made remarkable progress in tackling poverty as its rate has reduced drastically from 55 per cent in 2005-06 to 28 per cent in 2015-16. However, India still had 364 million poor in 2015-16, the largest for any country, although it is down from 635 million in 2005-06. The MPI looks at how people are being left behind across three key dimensions — namely health, education and living standards — lacking such things as clean water, sanitation, adequate nutrition or primary education. However, the multi-dimensional approach always has many drawbacks as discussed earlier in the case of SECC data.
The outdated Tendulkar poverty estimates based on NSSO consumption survey for 2011-12 still remain the last measure of poverty, which is used as a benchmark for most welfare schemes and other fiscal transfers in the country.
Therefore, the consumer expenditure survey is not only a crucial database on which poverty is estimated but also the only database for estimating inequality. Unfortunately, unlike the employment-unemployment survey, there is not much discussion on availability of data as per the latest consumption expenditure survey of NSSO, which was completed last year, around July 2018. Without the availability of reliable database after 2011-12, the latest poverty estimates could not be done.
The re-elected Modi government is planning to launch many new welfare programmes for the poor, which would be identified only from at least nine-year-old data. There is an urgent requirement to release the consumer expenditure survey data as soon as possible with new poverty estimates. This will not only help in policy-making but also provide a true picture of important poverty numbers and status of inequality in India.
(The writer is Fellow at the Institute for Human Development, Delhi)
Writer: Balwant Singh Mehta
Courtesy: The Pioneer