Modi govt likely to come out with new poverty line

To be different from Tendulkar and Rangarajan estimates

The Narendra Modi government may come out with a new poverty line after treading cautiously on the issue that had sparked a controversy during the previous United Progressive Alliance (UPA) regime.

A view is emerging within the National Institution for Transforming India (NITI) Aayog to come out with a line to define the poor based on the latest available household consumption expenditure survey by the National Sample Survey Office (NSSO). However, the new line will be different from those proposed earlier by economists Suresh Tendulkar and C Rangarajan, officials said. The latest survey pertains to 2011-12.

A committee of economists drawn from different sectors will be constituted soon for the purpose. It will be directed to submit its report in the next few months as the line will form part of the Aayog’s 15-year vision document that has replaced the Five-Year Plans of the erstwhile Planning Commission. The new line will be used to measure the impact of anti-poverty programmes and other government initiatives over a 7- or 15-year horizon, to be spelt out in the vision document or strategy papers. The papers, which replace the Five-Year Plans, will begin from 2017-18.

“The new line won’t be used to identify the poor and allocate resources under any programme. It will just be a tool for measurement,” an official working on the exercise said. A view is  emerging in the Aayog that a poverty line is needed to track the number of poor over a period of time even as entitlements to various schemes are decided separately.

A task force set up by the Aayog had earlier said four options could be considered for tracking the poor: continuing with the Tendulkar poverty line, switching to the Rangarajan or other higher rural and urban poverty lines, tracking progress of the bottom 30 per cent of the population over time, or tracking progress along specific components of poverty such as nutrition, housing, drinking water, sanitation, electricity and connectivity.  While the last two options could complement a poverty line, they could not substitute it, the task force had concluded.

The Planning Commission had come out with poverty lines at  Rs 4,950 a month a household in urban areas and Rs 4,050  in villages for 2011-12 on the basis of the Tendulkar committee recommendations. This stirred a controversy as it was taken to mean that anyone spending more than these levels would no longer be poor in 2011-12. For 2009-10, the poverty line was set at Rs 4,297.5 in urban areas and Rs 3,363 in villages.

Using these lines, the poverty rate declined by 7.8 percentage points to 22 per cent of the population in 2011-12 from 29.8 per cent in 2009-10.

Following an uproar, the government appointed a panel under Rangarajan to revisit the poverty line.  The Rangarajan panel raised the poverty line for 2011-12 to Rs 7,050 per household in a month in urban areas and Rs 4,800 in villages and for 2009-10 to Rs 6,000 and Rs 4,050, respectively.  As such, poverty fell to 29.5 per cent in 2011-12 from 38.2 per cent in 2009-10, but the poverty rate was much higher than what was found by the Tendulkar methodology. This also evoked criticism.  The task force has deliberated on these poverty estimation methods and found the Tendulkar line was too low. The counter-argument, however, is to set the poverty line at a level that allows households to get only two square meals a day and the basic necessities of life. If the poverty line was set high,  it would tell us little about what was happening to households in abject poverty, officials said.