Economists divided over poverty decline claims by SBI, Niti Aayog

Following the release of the Household Consumption Expenditure Survey (HCES) report after 11 years, the debate on the poverty line estimates has gained ground after the Niti Aayog and the State Bank of India (SBI) claimed a significant decline in the headline poverty rate.

While the SBI report claimed that the poverty rate stands at between 4.5 and 5 per cent in 2022-23, NITI Aayog chief executive officer (CEO) BVR Subrahmanyam on Sunday told reporters that the survey findings indicate the poverty rate in India is below five per cent now.

The SBI report estimated the new poverty line at Rs 1,622 for rural areas and Rs 1,929 for urban areas. The study showed that rural poverty declined to 7.2 per cent in 2022-23 from 25.7 per cent in 2011-12, while urban poverty dipped to 4.6 per cent from 13.7 per cent during the same period.

 

TCA Anant, adjunct professor at Tata Institute of Social Sciences and former chief statistician of India, says the SBI seems to have updated the poverty line estimates by imputing inflation figures for the past 10 years onto the poverty line that was estimated by the Tendulkar committee for the year 2011-12. 

“All over the world, poverty lines are usually estimated by basing them on certain developmental norms. Methodologically, the exercise undertaken by SBI based on the Tendulkar report is a fair exercise. However, over the years, the poverty norms certainly require updating and ideally we should ideate towards updating our conceptions of poverty,” he explained. 

The erstwhile Planning Commission has computed a poverty line of Rs 816 for rural and Rs 1,000 for urban areas for the year 2011-12, based on the recommendations of an expert group headed by economist Suresh Tendulkar.

Meanwhile, Pronob Sen, chairperson of the newly revamped Standing Committee on Statistics expressed scepticism about using the ‘Tendulkar poverty line’ to calculate the poverty in 2022-23 using the latest HCES data, as the two datasets are not comparable due to the change in data collection techniques. 

“The HCES data has not been released fully. Thus, applying the old poverty line to this dataset is not appropriate till the unit-level data is not released. There is no doubt that poverty has been reduced, but the question is the extent to which it has happened. Also, the changes in the canvassing of data which requires multiple visits seem faulty as one cannot be sure of the consistency in answers provided during these multiple visits,” he told India Today television channel. 

In HCES 2022-23, the sampling methodology has undergone a significant change.

For example, second stage stratum classification is now made on the basis of land for rural areas and car availability for urban areas, unlike the previous survey where the divisions were made based on household status and household activity for rural areas and monthly per-capita income for urban areas

Santosh Mehrotra, a visiting professor at the University of Bath, says such a sampling frame gives disproportionate representation to affluent sections of society, thereby resulting in higher consumption expenditure.

“How can poverty have fallen when job growth and real wages have come down? Nearly 190 million workers (2021-22) in India are earning just up to Rs 100 per day (in real terms at 2010 prices) which can be categorised as absolutely poor, as compared to just 106.1 million workers in 2011-12. Similarly, nearly 144 million workers are earning between Rs 100 and Rs 200 in 2021-22. This indicates the need for interrogating labour market conditions in India, before jumping to the conclusion that India has been able to end poverty,” he added.