How did we calculate poverty in pre-liberalization India ?


With a population of 1.3 billion people, India, is a thwarted tale of two societies, “the haves” and the “have-nots”. This startling tale of disproportionate income distribution and wealth accretion has been at its lurid best ever since the Coronavirus pandemic lay siege on Indian shores. The nonchalance of the “haves” coupled with the poignant tales of suffering of the “have not’s” who were coerced to leave for their home state has been extensively bellowed out by the Indian media. Poverty rather the estimation of it is the premise of this article.

What has added to the limbo and discomfiture of the poor migrant workers, ever since the Prime Minister’s address requesting for hasty clamping down of borders in order to initiate a complete lockdown of the Indian state, was its disregard for the ramifications that it may have on India’s poor. Similarly, the ham-handed doling out of precautionary measures by the government that earmarked a minuscule 1 percent of its GDP to deal with the beleaguered poor manifests the country’s inability to gauge the severity of the crisis. This partial amnesia towards to the grievances of the poor is made evident through the calorific norms and Indirect method of Consumption basket calculations. 

The break neck speed at which the lock down was initiated has left millions of migrant workers stranded across India’s metropolitan cities. On finding agriculture and its allied sectors untenable in rural India, a substantial portion of its population sought refuge in India’s cities, where they plied their trade and engaged in menial labour. Being denied a viable source of income in their home towns, India’s poor had to migrate to its cities.

The Multidimensional Poverty Index published in 2018 illustrated that “India has nearly halved its number of multidimensional poor” and calls it “a massive gain.” The primrose picture of declining poverty coupled with promises of completely eradicating it often bolsters the image of the nation for a hyper nationalist whose brain is addled with myths of the golden age, but crumbles when put under scrutiny. India underplays the magnitude of its poverty by basing its Poverty Line on an estimate of minimal calorific consumption. This line of argument was first gesticulated by the likes of V.M. Dandekar and Neelkanth Rath. The things that eludes this measure of poverty estimation which is strictly based on calorific consumption are provisions for healthcare, education and sanitation. The expenses incurred to procure the consumption basket defined the poverty line and monetary provisions for a family’s healthcare, sanitation and the children’s education did not fare in these calculations. Hence the bare minimum amount that was stipulated based on the calorific consumption of an individual was taken as the indicator for the poverty line. This process ensured that the poverty line was misrepresented and hence poverty was severely undercounted in India.

In India ,the measurement of poverty always occurs in absolute terms and has been correlated with income levels since the early seventies. Dandekar and Rath stipulated the method of expressing the minimum nutrition level in terms of the daily calorie and energy intake. The duo suggested that 2250 kilocalories per person per day would be adequate for proper functioning of the body. Since Dandekar and Rath’s breakthrough discovery, the Indian administration figured ways to implement the method through the Perspective Planning Division.

 The PPD set up the Task Force on Minimum Needs in 1979 which in turn proposed separate calorific norms for the rural and the urban population. 2400 kilocalories per capita per day was postulated to be the requisite measure for the rural population who were embroiled in physical labour of agriculture, carpentry etc. Similarly, 2100 kilocalories per capita per day was set as the norm for the urban population. Hence it was from this that the per capita expenditure was adjusted and people who could afford this bare minimum were placed above the Poverty Line.

The 1979 poverty estimation programme across India undertaken by the Planning Commission gauged that the poverty line estimate in monetary terms for the year 1973 was Rupees 49 per capita per month for rural and rupees for 56.64 per capita per month for urban. This amount ensured that the calorie consumption demands of an individual per month would be satiated and hence the individual was not poor. This also came to be known as the Alagh Committee Report and was undertaken by the Perspective Planning Division.

Professor K. Nagaraj in his book “Poverty Matters” substantiates that not much has changed much in the 50 years since the calculation of poverty based on calorific consumption method was devised.

The concept of calculation of the Poverty line based on calorific consumption was first introduced by the Planning Commission of 1962.The 1962 committee estimated the poverty line at Rupees twenty for an individual residing in rural India and Rupees twenty-five for Urban citizens per capita per month in terms of 1960-1961 prices.

The Poverty line was regularly updated by adjusting the prices or as Professor Nagaraj states “all it did was blow up the poverty line by compensating for changes in prices to get a new poverty line and estimate the number of people below the poverty line.” This method is commonly referred to as the Indirect method of calculating poverty.

The poverty line for the 1978-79 was devised by readjusting the Consumer Price Index for Agricultural Labourers in accordance with the initial 1973-1974 estimate. The revised Poverty Line for 1978-79 for urban areas stood at Rupees 56 and for rural it was 49.5, it was further revised in 1983,1993-94,1999 and 2003-2004. The poverty line as of 2003-04 stood at Rupees 356.3.

Similarly, the number of people mired in poverty has been sinking over the years. 53.1 percent of India’s population were impoverished in the year 1977-78. The Poverty line during this year stood at Rupees 56. Similarly, in 1983 the poverty line was Rs 86 per capita per month and the percentage of India’s population grovelling in poverty was 45.7. When the poverty line income was raised to Rupees 206 in 1993-94 after adjusting for the hike in prices, the percentage of poverty in the nation was still at a staggering high of 37.3. Similarly, the percentage of people below the poverty line in 1999-2000 was 27.4 and there was a rise in the percentage of India’s population under poverty in 2003-04 when percentage of Indian population under poverty rose to 29.5%.  

It must also be noted that with a flux in the Poverty line estimation the per calorie consumption declined rapidly over a period of forty years. While 1973-74 the requisite calorific estimate stood at 2250, in the subsequent estimates a drop was observed, as in 1977-78 an individual earning the poverty line income, had recourse to 2170 calories per day. This further witnessed a staggering drop to 2060 calories in 1983, to 1990 in 1993-94 and 1890 in 1999-2000. In 2004-05 Poverty line estimates suggested that calorific consumption per individual per day had fallen to an abysmal low of 1820. This drop in Calorific consumption is integral for our discussion on Poverty as the poverty line in India only accounts for only bare minimum calorie intake and does not make requisite adjustments for a proper diet including the right balance of calories, proteins and vitamins.

In 1989 The Lakdawal Committee was formed which submitted its report in 1993.The Lakdawala committee report however propagated the same modes of Poverty line estimation as used by the Alagh committee of 1979.However it promulgated state-specific poverty lines. However, the committee merely updated the state specific poverty line of the base year 1973-74 by taking recourse to the Consumer Price Index for Agricultural Labours from people residing in rural areas. Similarly, for residents in Urban areas the Poverty line of the base year 1973-74 was adjusted by using Consumer Price Index for Industrial Workers.

Poverty Line calculations continued to be undertaken following the Lakdawal method which grossly underestimated poverty in India and hence the formulation of a new method became evident by the turn of the century.

Categories: Economy

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