Dear Govt, Welfare Schemes Will Work When Poverty Data Is Reliable

Sadly, there’s no single up-to-date method, that will provide the accurate number of poor people in the country.

PM Modi’s second term in office has already had the dark cloud of rising unemployment and poverty statistics cast over it. Thus, sensing an urgency, the government has constituted a high-level Cabinet Committee on Employment and Skill Development.

While this is an important step in the right direction, the targeting of eligible beneficiaries and the provision of monetary benefits, or direct benefit transfer to the poor households, continues to be an issue. It is unfortunate that there is no official single up-to-date method, that will provide the accurate number of poor people in the country.

The Poverty Estimates Conundrum

The estimation of the poverty line has been done on the basis of the minimum level of consumption, wherein those below this line are eligible for the majority of the government welfare schemes.

The policy makers and the government have used different methods to estimate the number of poor households in the country. 

It is evident from the 2019 election manifestos of two major national political parties:

While the BJP manifesto outlined plans for poverty alleviation by promising proper housing for those living in mud huts or lacking shelter, and piped water connections to every village household within the next four to five years, the Congress promised a minimum income guarantee to the poorest 20 percent households.

Furthermore, the former finance minister of the NDA government stressed that the number of Indians living in poverty would drop to below 15 percent over the next three years, and to a negligible level in the 10 years after that. However, these promises and predictions appear to have been made without any base value of the number of poor, and without any plan to identify poor families as beneficiaries.

Why Is ‘Tendulkar Poverty Line’ Still In Use?

There is no naysaying that the identification of eligible families is crucial, as the welfare schemes should benefit the deserving population, and that people in need must not be excluded. The latest available poverty line is based on the Tendulkar Committee methodology, that includes the poverty line basket of both food and non-food items, which was estimated at Rs 4,050 a month for a five-member household in rural areas, and Rs 4,950 in urban areas for the year 2011-12.

The Committee estimated 21.9 percent poor people (270 million) in the country from consumer expenditure survey data collected by National Sample Survey Organisation (NSSO) in 2011-12. These estimates were faced with widespread criticism that the line was too low.

In response, a new committee, chaired by C Rangarajan, was constituted in 2012 to recalculate the poverty line, which submitted its report in July 2014. This report estimated the new poverty line for the year 2011-12 as Rs 4,800 a month for a five-member household in rural areas, and Rs 7,050 in urban areas.

The revised estimate increased the poverty level in the country to 29.5 percent, and the number of poor people to 363 million, which was 93 million more than what the Tendulkar Committee estimates.

However, the revised estimate of the committee was neither accepted nor discussed much by the government, and the Tendulkar poverty line is still in use to estimate the poverty in the country.

Ranking Of Households

The last NDA government used a new approach based on household-level Socio-Economic and Caste Census (SECC) survey data collected in 2011, to identify beneficiaries for many welfare schemes such as the PM Ujjwala Yojna, Pradhan Mantri Awas Yojana, etc.

The households are ranked in three stages in this approach:

• Households meeting the exclusion criteria (like motorised vehicle, Kisan Credit Card, etc.) are automatically excluded
• Households satisfying the inclusion criteria are included (manual scavengers, households without shelter etc.)
• The remaining households are identified through a seven-item binary scoring criteria, using deprivation indicators like households with only one room, women-led households with no adult male member between 16 to 69 years of age.

Need for Updated Poverty Estimates

It must be underscored that since there is no specific indicator (like income or consumption) available in the SECC data that suggests that a family comes under the BPL category, therefore, there is no single number that captures all of India’s poor. Rather, households are categorised according to multi-dimensional deprivation indicators like not having a proper roof. This allows welfare schemes to be targeted for each of the inclusion criteria of the deprivation indicators.

There are some major drawbacks in estimating poverty from the SECC data:

• it is old and not up-to-date
• several genuine beneficiaries were left out in the survey
• new claimants now fall under the margin after the data was released

Due to these problems, the government has now changed their identification mechanism.

“Remarkable Progress” Made By India In Tackling Poverty?

Apart from some anecdotal evidences, only the latest poverty estimates are provided by the 2018 global Multidimensional Poverty Index (MPI), published by the United Nations Development Program (UNDP) and the Oxford Poverty and Human Development Initiative (OPHI). These noted that remarkable progress had been made by India in tackling poverty.

The poverty rate has reduced drastically from 55 percent in 2005-06 to 28 percent in 2015-16. However, India still had 364 million poor in 2015-16, the largest for any country, although it is down from 635 million in 2005-06.

The MPI looks at how people are being left behind across three key dimensions, namely, health, education, and living standards such as having access to clean water, sanitation, adequate nutrition, and primary education. 

Thus, this only validates the point that the multi-dimensional approach has many drawbacks as mentioned above in the case of SECC data.

Modi Govt 2.0 All Set To Use Poverty Data from 8-9 Years Ago

The outdated Tendulkar poverty estimates based on NSSO consumption expenditure survey for 2011-12 continues to remain the basis for the last estimate of poverty, which is used as a reliable benchmark for most of welfare schemes and other fiscal transfers in the country, as well as for international comparisons (based upon recommended global poverty).

Therefore, the consumer expenditure survey is not only a crucial database on which poverty is estimated, but also the only database for estimating inequality. Unfortunately, unlike the employment-unemployment survey, there is very little discussion on the availability of data (as per the latest consumption expenditure survey of NSSO, which was completed in July 2018) used for estimating the number of poor.

The re-elected Modi government is planning to launch many new welfare programmes for the poor, which will be identified from data that is from 8-9 years ago.

Considering the prevailing conundrum and the need to identify the target population who would have assured access to the welfare schemes, there is an urgent call to release the consumer expenditure survey data as soon as possible, with the new poverty estimates.

These will not only help in regional and important analysis, planning and policy-making, but also provide a true picture of poverty and inequality in the country. In turn, it will contribute towards evidence-based action towards achieving the vision of ‘New India’, and Sustainable Development Goals 2030.

(The authors are associated with the Institute for Human Development (IHD), Delhi and Impact and Policy Research Institute (IMPRI), New Delhi. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)