People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)

Vol. XXX

No. 45

November 05, 2006

Robbery In The Name Of BPL


Brinda Karat


THE importance of poverty estimates has grown in the last decade and a half of neo-liberal policies, since these estimates are used to decide allocations for poverty alleviation programmes. Further, since targeting is an increasingly used method to cut government subsidies for the poor, the issue of who is poor and their identification has become a matter of life and death for millions of people. There has been much debate on and criticism of the methodologies used to define and identify the poor in India. But unravelling the various aspects of the BPL system exposes a shameful story of deceit and political convenience with little to do with ground realities. 


Campaigns and struggles of the Party have raised the demand of universalisation of the public distribution system (PDS). Government policies do not limit targeting only to the PDS. Even the Rural Guarantee Employment Act was initially designed only for the BPL and it was only after united opposition from the Left and concerned groups and mass organisations that this was prevented and made universal. But in many other government schemes the system of targeting forms the core. To give a few examples, the benefits, if any, of the Rural Health Mission in the form of subsidised diagnostic tests or medicines are to be targeted to BPL families. Loans or subsidies to women’s self-help groups are targeted to BPL card holders. The SGRY and the Indira Awaas Yojana are also primarily for BPL families. Financial assistance for the Total Sanitation Campaign is available mainly for BPL families. Thus access to a BPL card is critical to the poor not only for foodgrains but for access to almost every sphere of welfare measures that are available.


However, large numbers of the poor have been excluded from BPL category and have been denied cards. This is not only because of corruption or mistaken identification of the poor as non-poor (and in some instances, the reverse is also true) but basically because of the different methods used for identification of the poor and deciding the poverty line by the policy establishment. Thus it is equally important today to question the whole methodology of the BPL estimates and identification. 




The latest Planning Commission estimates that poverty has gone down further by 4 per cent from 26 per cent in 1999-2000 requires careful scrutiny. It is common sense that when the foundation of a structure is faulty, the stability of the structure itself is questionable. So it is with these poverty estimates. The earlier estimates which brought down poverty by an unbelievable 10 per cent in just five years, were severely critiqued as being contaminated, putting the Planning Commission on the defensive but not enough to shift its methods. Therefore these latest estimates will hold little credibility even though these figures do puncture the great claim of poverty reduction linked to growth rates, since the rate of reduction of poverty has come down from 10 per cent to 4 per cent when growth rates have supposedly gone up!


According to these estimates the fastest rates of poverty reduction were Assam (nearly 4 per cent per year), Jharkhand (2.5 per cent), Chattisgarh (2.15 per cent). In other words the poorest states have reduced poverty fastest. Decision makers in some of the states may sometimes mistakenly think that these figures actually do reflect the reality of decreasing poverty estimates in their states. A look at the manipulated twists and turns of poverty estimation and identification leave little scope for such illusions. This is not to say that government policies in some states have not made a dent in poverty. But that assessment needs to be made independently of the current official BPL figures.




There are two important anomalies in the estimation of BPL families. The first relates to the divergence between the two central government agencies which are directly involved in poverty estimates and identification of BPL families –– the Planning Commission and the Ministry of Rural Development (MoRD). Both use different methodologies and therefore come up with different assessments. For example, according to the MoRD BPL census of 1992, the percentage of rural BPL families was 52 per cent as opposed to 37 per cent estimated by the Planning Commission. There was again a 10 per cent difference between the two estimates in 1997. Yet without any scientific criteria these two separate yardsticks and assessments are “linked” together to decide state-wise allocations for below the poverty line families in government schemes. 


The second anomaly is that the poverty estimates or BPL census conducted by the Planning Commission and the MoRD respectively are not comparable to the earlier ones made/conducted by them. Both the Planning Commission and the MoRD have changed their own methodologies three times since 1992. Moreover, the MoRD BPL census guidelines have asked the states to decide their own cut-offs for demarcating the poor from the non-poor. Thus there is no uniform criterion to determine who is poor and who is not.




The Planning Commission estimates the number of poor in the country based on a set of indicators decided by the Expert Group on Estimation of Proportion and Number of Poor constituted by the Planning Commission. This was chaired by Professor Lakdawala and submitted its report in 1993 and was accepted by the government in 1997. The Lakdawala Committee used the same measurement criteria for poverty decided in 1979 by the Task Force on Projections of Minimum Needs and Effective Consumption Demand. The Task Force had defined poverty in terms of per capita monthly expenditure corresponding to per capita daily requirement of 2400 calories in rural areas and 2100 in urban areas. The poverty line defined covered expenditure on food and certain non-food items (such as fuel, clothing, housing, health etc.) On the basis of this definition, poverty was to be estimated from the consumer expenditure survey data of the NSSO which covers expenditure on food and certain non-food items. 


The major difference in the Lakdawala recommendations from that of the Task Force was that whereas the Task Force had used an all India price index to decide the level of expenditure required to buy the items in a specified consumption list, the Lakdawala Committee changed the index base to a region-specific base since the price index for different states differed. In some states where a separate price index was not available, the index for neighbouring states was used. Thus, for example, the Assam price index was used for all north east states. State specific poverty lines were thus worked out.


Economists, including some within the Planning Commission, have critiqued the methodology on several points. The main criticism is that the consumption basket of 1973 which was retained by the Lakdawala Committee was outdated even by 1993 when it submitted its report. It goes without saying that it is completely outdated today. Nor is the weightage given to different items in the consumption basket in conformity with the needs of a family today. To take just one example, recent surveys show that family expenditure on health has increased enormously being one of the important factors in rural debt. This is due to the privatisation of health care, the worsening public health services and the corresponding increase in health related expenditure. But this is obviously not captured in current poverty estimates since it is based on the consumption basket and needs of a family over thirty years ago.


The current average national poverty line according to the Planning Commission is only around 327 rupees per capita per month for rural areas and 454 rupees for urban areas. The state level rural poverty lines linked to the state price index ranges from 262 rupees per adult per month in Andhra Pradesh to 318 rupees in Maharashtra, 336 rupees in Uttar Pradesh, 350 rupees in West Bengal, 365 rupees for the north east and 374 rupees in Kerala. The national poverty line has now been reportedly updated by the Planning Commission to around 400 rupees per adult per month and the state poverty lines will also change accordingly. But even with the updated figure, these are clearly not poverty but destitution levels. 


State-Specific Poverty Lines in 1999-2000
(Rs per capita per month)







Andhra Pradesh




















Himachal Pradesh












Madhya Pradesh




















Tamil Nadu




Uttar Pradesh




West Bengal









Basing itself on these grossly underestimated calculations of what constitutes poverty, the Planning Commission then mandates “quotas” to the states for BPL cards and funds using populations projections of the Registrar-General of India.




According to the expert committee (Lakdawala Committee) estimate using a region-based price index the percentage of below poverty line families in India was calculated by the Planning Commission to be 35.97 per cent in 1993-94. There was a dramatic decrease in calculation of below poverty line families in some of the states. However, for the same period, that is 1993-94, the Task Force on the basis of the all India price index had a different estimate. For example, in Andhra Pradesh there was a scheme for giving rice at two rupees a kilo in the public distribution system. Thus the price index was lower than other states. This became the main reason behind the almost 50 per cent reduction of BPL families in the estimates of the Expert Committee. Whereas for the same period the Task Force calculated the share of poverty in Andhra Pradesh at 6.6 per cent of national poverty, the Expert Committee calculation brought it down to 3.25 per cent. For West Bengal it was the reverse. The Expert Committee estimated the share of Bengal in national poverty at 8.6 per cent around three per cent higher than the Task Force estimates. The states where the changed methodology showed a substantial reduction in poverty were Andhra Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Orissa. A marginal decrease in the proportion of population below the poverty line was estimated for Tamilnadu, Bihar and Uttar Pradesh.


Since the states shares in national poverty determine the percentage of allocation of the states shares in all central government poverty alleviation programmes it meant a huge reduction in allocations to the “affected” states. 


Not even the most ardent supporters of neo-liberal policies could imagine that poverty in Andhra Pradesh could be halved in five years. Andhra Pradesh along with other states whose share of allocations in central poverty alleviation programmes was being cut on the basis of the Expert Group methodology protested vociferously. At the same time several economists sympathetic to the needs of the poor, also expressed scepticism over the new poverty estimates.


Thus for a variety of reasons a formula to bridge the differences between the two estimates was made so as to “adjust” the shares of the states in central allocations.




The adjustment of shares undertaken in this background had little to do with actual poverty estimates and more to do with political and ground level realities. Therefore the Planning Commission itself undertook an exercise to evolve a “suitable criterion so as to ensure the loss to any state does not exceed 15 per cent of the share based on the poverty ratios for 1993-94 as per Task Force methodology.’ In other words if the difference in the two assessments was over 15 per cent, the adjusted share allowed a 15 per cent addition. In fact there was no real criteria. Where did the 15 per cent figure come from? Why not 10 per cent or 20 per cent or even 50 per cent? It was a figure literally taken out of the air. This arbitrarily determined margin of adjustment was then used to revise the state wise poverty estimates. Thus while the share of states where poverty had ostensibly come down was increased by 15 per cent of the Expert Group estimates, those where the decline was less than 15 per cent retained the estimates made by the Expert Group. These “adjusted’ state shares decided without a scientific criteria in 1997 continue till today and are the basis for allocation of central funds to states in poverty alleviation programmes.

(To be continued)