People's Democracy

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


Vol. XXXIV

No. 01

January 03, 2010

 The Tendulkar Committee Report on Poverty Estimation

 Utsa Patnaik

THE Tendulkar Committee had been set up after the March 2009 National Development Council meeting, to look into the methodology for estimating poverty, because there was widespread criticism that the Planning Commission was producing unrealistically low poverty estimates. Further the government using the Commission’s estimates has been claiming large reduction in poverty in both rural and urban India under economic reforms, even though the unemployment situation was getting worse, food grain consumption and cloth consumption were falling, average calorie intake as well as protein intake showed decline and there was considerable agrarian distress.

 

These official claims of poverty reduction were based on an incorrect method of poverty estimation and in reality, poverty has been rising under reforms in both rural and urban areas, with the rural situation worsening more. By 2004-5 nearly two-thirds of urban persons were in poverty, unable to spend enough to obtain even a modest nutrition standard of 2100 calories energy daily while the rural population similarly was not able to afford the official rural nutrition norm of 2400 calories and the poverty had reached 87 percent, the highest ever in three decades.  Since some people think 2400 calories is ‘too high’ for a rural norm even though it is the official norm, we can consider also 2200 calories: 70 percent of rural persons were unable to reach this level compared to 59 percent in 1993-4, so poverty whatever the norm applied, has risen sharply. The official Planning Commission poverty estimates using the same consumption spending data however were very low, only 28.3 per cent rural and 25.7 per cent urban in 2004-5. The public was not informed that the Commission had quietly abandoned its own declared nutrition norms long ago in actual practice, and its low poverty estimates were possible only by taking such unrealistically low ‘poverty lines’ that the nutritional level it permitted by 2004-5 was only 1820 calories rural and 1795 calories urban, far below its own stated norms.   

 

Anyone can do away with poverty on paper simply by lowering the consumption standard against which poverty is measured, and if the lowering goes far enough, estimated poverty will become zero even though in reality it is high and rising. But this is neither an academically correct method nor is it an ethical method of estimating poverty. It is very unfortunate that academics have engaged themselves in such so-called ‘estimation’ procedures which violate logical principles. Suppose that it is claimed by a college that its academic performance has improved dramatically, because the percentage of students who fail the examination every year has reduced from say 40 per cent in 1973 to 15 per cent by 2005. On investigation it is found that the pass mark has been quietly and steadily lowered every five years, without anyone knowing it, from say 50 per cent in 1973 at which 40 per cent of students had failed, to 20 per cent by 2005 at which 15 per cent of students failed. However the real proportion of failures (those unable to get the 50 percent mark) has gone up. Clearly the claim of improved performance is false because we cannot validly compare figures over time when the standard itself is altered. Lowering the standard will produce automatic decline in the proportion of failures but this is a false decline. And no one can respect the people who follow such an illogical procedure, which becomes unethical to boot when improved performance is claimed on its basis.

 

Official poverty estimation suffers from exactly the same problem. While theoretically the definition of poverty line is that which observes total monthly spending on all goods and services whose food spending part allowes a person to obtain the nutrition norm, the actual practice of estimation by the Commission was different. It applied its own definition only once, for the year 1973-4 to calculate correct poverty lines, Rs 49 for rural India and Rs 56.4 for urban India at which the nutrition requirements were satisfied. After that it has never applied the correct definition so every poverty line and poverty percentage it gave from 1978 onwards has been incorrect. It calculated the later poverty lines by applying a rural and urban consumer price index to these sums, Rs 49 and Rs 56.4, to update them to later years the latest being 2004-5. But the consumer price index does not measure the cost of living correctly, as a result the poverty lines were more and more understated, and repeated lowering has taken place in the nutrition level which can be actually obtained at these more and more understated poverty lines.  The true poverty lines which I call the direct poverty lines at which the nutrition norms can be obtained, are more than double the official ones by 2004-5.

 

The reader can refer to the Tables to see that because the poverty lines were increasingly lower the calorie intake obtainable at these poverty lines has been lowered continuously from the original level to around 1800 by 2005. The lower the poverty line, the lower will be the percentage of persons falling below it. This is the reason for the official claim of ‘poverty decline’ which is not only spurious but is unethical. The process of underestimation has been going on for thirty years so by 2005 the official poverty lines have become nothing but a joke, at Rs 12 per day rural and Rs18 per day urban. They measure destitution, not poverty. But these increasingly underestimated poverty lines were very convenient for a government wishing to claim improved performance and poverty reduction under economic reforms even though the reality was the opposite. Continuously lowering the standard meant that automatically the proportion of persons below the altering standard, would decline by 10 percentage points every decade regardless of what was actually happening to poverty at the ground level. The official figures would always show decline even if actually poverty was rising as it has been when we measure it correctly by keeping the standard (the nutrition norms) constant. (Only the 1980s were relatively better and urban poverty in reality did see a very small decline).

 

The Tendulkar Committee had a golden opportunity to correct the estimation procedure and regain the ethical position the Commission has lost. But unfortunately it has chosen to throw away the opportunity and stay with the bogus procedure, which is fundamentally disloyal to the interests of the Indian people since it automatically produces false poverty reduction when the ground reality is the opposite.  The Committee has retained the existing grossly unrealistic urban poverty line of Rs 18 per day (by taking the mixed-recall-period  it is raised by Re1 per day but this does not affect nutrition since the extra spending is on non-food items).  It betrays the interests of the Indian people by explicitly justifying the lowering of the urban nutrition standard to 1795 calories actually obtainable at this poverty line, from the earlier 2100 calories norm, saying that the United Nations Food and Agriculture  Organisation has declared below 1800 calories to be an adequate norm for India. But 1800 calories  is much lower than the norm it had given earlier and much lower than the norms which continue to be applied to more developed countries. So, in effect we are being told by the Committee that Indians deserve hunger and should learn to live with it. But who is the FAO to dictate what an adequate nutrition standard for urban Indians should be? And why should the Planning Commission give up the 2100 calories norm which had been set after careful consideration by a nutrition expert group on the basis of the Indian Council for Medical Research recommendations?  This is simply trying to justify the unjustifiable, the steady lowering of the standard  which has produced the false urban poverty decline in the economic reforms period because the urban poverty line has been lowered to a level allowing below 1800 calories per day. In the states of Assam, Punjab and Kerala the official urban poverty lines are even lower than the average and allowed calorie intake of only 1485,1435 and 1300 calories respectively.  Can the Tendulkar Committee dare to justify these levels by appealing to FAO authority?  

 

The Tendulkar Committee’s only attempt to appease criticism is to raise the poverty line for rural India from just below Rs 12 per day to Rs13.8 per day on a comparable basis to the earlier poverty lines (on mixed recall basis it is  raised by  a further Re1 per day but this is not relevant for the nutrition standard since it is the extra recorded spending on non-food items). This raises the rural poverty percentage to 41.8 for 2004-5. It has reworked the poverty percentage for 1993-4 to be 50.1 thus obtaining the same order of ‘decline’ in poverty as before over the reforms period. Those who are hailing the rise in the rural poverty estimate to 41.8 as a positive move, do not realise that in a matter of a mere 12 to 15 months from now, when the results of the 66th Round data for 2009-10 become available, the Planning Commission will once more claim rural poverty reduction from its new 41.8 percent to, at an informed guess, around 35-36 percent.   In reality rural poverty would have risen in the last five years given the effects of world recession and of rapid food price inflation. But the Commission will estimate and claim poverty reduction nevertheless just as before, because it has retained fully the basic logical error in its estimation procedure. In fact the new method suggested by the Tendulkar Committee of calculating price indices with a lower weight for food is likely to understate the actual rise in the cost of living, to an even greater extent than earlier price indices did.

 

What is the task of the progressive movement?  First and foremost, its intellectuals  should try to consciously inoculate themselves against the virus of academic corruption – of accepting logically incorrect estimation methods uncritically and thereby betraying the interests of the mass of the Indian people, merely because those misguidedly engaged in making these incorrect estimates happen to be their own  peers, or their friends. What the hapless and increasing impoverished mass of our people need are organic intellectuals who are strong enough to think independently and rigorously, and not be hegemonised themselves by the pervasive intellectual dishonesty or contaminated by the  opportunism which is rampant in the corridors of state power.  Second, the objective conditions of rapid food price rise and loss of employment under global recession, is raising poverty and reducing further the access to basic necessities for the bulk of the population. Campaigns are necessary to grow more foodgrains, operate an expanded and universal public procurement and distribution system, curb price speculation, take measures to stabilise prices to grower and consumer, raise purchasing power through more thorough implementation of employment guarantee including urban employment schemes which are necessary given the continuing rise in urban poverty. 

Table 1

Rural Poverty in India, All-India 1983 to 2004-5 including revised estimates by Tendulkar Committee

NSS Round

38th

50th

61st

 

1983

1993-4

2004-5

1.Direct Poverty Line DPL,Rs. <2400 Kcal

120

326

800

2.Direct Poverty Ratio DPR, %

70              

74.5     

86.7

3a.Official Poverty Line OPL, Rs.

89.5           

206      

356

3b Revised OPL Tend. Com.

na

237*

415*

(ROPL)

na

255*(MRP)

446.7 (MRP)

4a.Official Poverty Ratio OPR, %

45.6

37.2

28.3

4b Revised Official Poverty Ratio

na

50.1

41.8

5a.Calorie Intake @ OPL

2060

1980

1820

5b. Calorie Intake at ROPL

na

2100

1930

6a. Deficit Calorie Intake at OPL

- 340

- 420

- 580

6b. Deficit Calorie Intake at ROPL

na

- 300

- 470

Note : The poverty lines marked with asterix, are comparable with other official poverty lines in the Table. These PLs correspond to the revised poverty percentages for 1993-4 and 2004-5 presented in the Tendulkar Report, and have been obtained by this author from the ogives for the two years.  The MRP poverty line for 1993-4 will be about Rs, 255. 

 

Table 2

Urban Poverty in India 1973-4 to 2004-5

Round No

38

50

61

 

1983

1993-94

2004-05

1.Direct Poverty line

 

 

 

DPL < 2100 calories

147

398

1,000

2.Direct Poverty Ratio

 

 

 

DPR %

58.5

57.0

64.5

3.Official Poverty

 

 

 

Line OPL Rs.

117.6

285

538.6

4. Official Poverty Ratio

 

 

 

OPR   %

42.2

32.6

25.7

5.Calorie intake   

 

 

 

at Official PL

1905

1885

1795

6.Deficit from

 

 

 

norm 2100 Kcal

- 195

- 215

-305

7.Ratio of DPL to OPL

1.25

1.40

1.86