Poverty Line Estimates Blurred?

April 26, 2012 at 7:59 am 2 comments

In our last post we spoke about how India is trading up. In contrast to that, this week we will look at the absolute low end of the income pyramid – the low poverty line threshold (and the controversy surrounding it) has also been extensively in the news recently.

Late last year the Planning Commission submitted provisional figures of Rs. 32 per day in urban areas and Rs. 26 per day for rural areas as the poverty line threshold. The revised and final numbers suggest an even lower figure – a poverty line that averages Rs.859.60 per month (Rs.28.65 per day) in urban areas and Rs.672.80 per month (Rs.22.43 per day) in rural areas in 2009-10. The poverty line thresholds from the previous five-year plans are in the table below:
Despite the poverty line having moved up from the 2004-05 levels, the question still remains whether this increase is sufficient – whether it takes into account the inflation and increasing prices of essentials. This seems especially low given that the common international poverty threshold has been $1/day which got revised in 2008 to $1.25/ day.

The earlier calculation (i.e. up to 2004-05) of India’s poverty was based on daily calorie intake, according to which 27.5% of people were living below the poverty line in 2005. The Tendulkar Committee, in 2009, recommended including expenditure on clothing& footwear, utilities, education and health, in addition to food, for the calculation of the poverty line. Applying the new methodology for estimating poverty levels and using data from NSSO expenditure survey in 2005, the BPL proportion for 2005 was re-calculated to 37.2%.

Given the updated poverty line threshold for 2010 using the Tendulkar Committee methodology, all-India BPL proportion declined from 37.2% in 2005 to 29.8% in 2010 (where rural India experienced a greater decline in BPL proportion as compared to urban areas). This implies that the BPL population in India has declined from 40.72 crore in 2004-05 to 34.47 crore in 2009-10. However, the poverty picture is extremely patchy – some states saw sharp reductions in the proportion of people living below the poverty line, while many others saw little or no change and others saw an increase in the poverty levels.

The poverty lines threshold figures are important as it’s those below the poverty line that get to avail of numerous subsidies from the government. Erroneously redrawing the poverty line would leave out many households that need government assistance. Therefore the question arises – Are these figures really practical? Can people really survive on such a low sum per day?

Rather than just discuss and debate the issue, a young duo, Matthew Cherian & Tushar Vashisht, decided to put this to test by experiencing this income level themselves, through a month long experiment. Matthew Cherian is a graduate of MIT (Massachusetts Institute of Technology) and Tushar Vashisht is a graduate of UPenn (University of Pennsylvania) and an Investment Banker in the US. Both decided to move back to India and joined the Bangalore-based UIDAI (Unique Identification Authority of India) where they met and became close friends. They’ve documented their day-to-day experiences in their blog-Rs.100aday & through their Facebook page  – it makes for a very interesting read.

As the initial part of this month long experiment, they lived on Rs.100 a day (after discounting 30% for rent) for 3 weeks in Bangalore. They moved into their housemaid’s room and just a few days into their new life, they suffered the effects of malnutrition and exhaustion. Their diet had to be carbohydrate-loaded as proteins were too expensive. Meeting the target of 2500 calories per day for healthy living for men was impossible to achieve. They also discovered that life had to be conducted within a five mile radius – which explains why so many of the extremely poor typically end up living in pathetic conditions just so they can live close to their place of work. Public transportation was not affordable, so walking or cycling were the only viable options to get anywhere. Any additions like unexpected medical expense or drinking, smoking would just throw the budget off-track.

For the last week of the experiment, they decided to move to Matthew’s ancestral village in Kerala and decided to live on Rs.32 per day. Not having to spend on rent, education, healthcare, clothes, etc., which account for Rs.7 in the budget set by the Planning Commission, they were left with Rs.25 a day of which they spent Rs.17 on food, leaving them with Rs.8 for other expenses such as toiletries, gas, electricity, transportation, etc. They ate parboiled rice, a tuber, banana and Parle-G biscuits and drank black tea: a balanced diet was impossible within this budget. They typically ended up walking long distances, shared bathing soap, saved money even on soap to wash their clothes, minimized their mobile phone expenses, could not afford internet at all and it would have been disastrous if they fell ill.  As we’ve seen earlier, from other sources of information, even those just above the poverty line typically fall below it when an unexpected health-related emergency occurs.

This just shows that the current poverty threshold does not include adequate provisions for basic amenities and emergency expenses, leaving out many that need government assistance.

 

Sources: Secondary research, News articles, Planning Commission 5-year plans

 

By,

Roshni Jhaveri.

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Entry filed under: Evolving India. Tags: , , , , , , .

India Trades Up! Organic – But Naturally!

2 Comments Add your own

  • 1. Rahul Jhaveri  |  April 28, 2012 at 7:12 am

    Really liked what Matthew Cherian & Tushar Vashisht did – experiments are always more effective in proving a point than statistics and models. Very proactive and puts the points across. No one can argue with it.

    Like

    Reply
    • 2. escapevelocityblog  |  April 30, 2012 at 5:32 am

      Hi Rahul,
      Glad that you read and liked their blog. A really worthwhile experiment, wasn’t it ?
      Regards,
      Zenobia

      Like

      Reply

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