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A Fragmentary Account of the

State and Nature of Poverty in India

Ratna Anjan Jena

Director, (Planning Commission)

PRELUDE

• Poverty is among the worst of calamities that every country and the world economy as a whole are faced with

• The painful experience of poverty, which the poor undergo, has been of late receiving the world-wide attention

• Growth per se has been not sufficient enough to wipe out poverty and related deprivations of the people suffering from it.

• Growth induced poverty reduction is not sufficient

• Role of the state and institutions of national and international governance are of prime importance

• They play a strategic role for reduction of poverty through series of programmes

CONTEMPORARY VIEW

• Empirical research of poverty, human deprivation and destitution has exploded in recent times

• Poverty can be said to exist in a given society when individuals/households do not attain a level of material well being deemed to constitute a reasonable minimum by the standards of that society.

• Poverty is a phenomenon with multiplicity of dimensions that resist all attempts at capturing it in a single definition applicable to all societies and regions at all times.

• It is a challenge to conceptualize and measurements of the deprivations so that one can have the magnitude and dimensions of poverty

• HPI of UNDP have emphasized the need to comprehend alternative indicators of deprivations, which take account of access to education, health, drinking water, sanitation, of gender inequality etc.

• Attempts to quantify the incidence of poverty naturally presuppose the study of level and pattern of individuals’ consumption as well as their access to provisions being extended by the state and its subsidiary institutions.

Measurements of poverty-Reference to practice in India

• The major data base to estimate poverty is generally provided by the household consumer expenditure survey conducted by the National Sample Survey Organisation.

• The first major issue was the choice of the poverty line to demarcate the poor from the non-poor and the reliable estimate of incidence of poverty.

Official Estimates of Poverty in India

• The National Planning Commission is the nodal agency in the Government for estimation of the poverty in the country.

• To estimate the poverty, the first step is to define a poverty line.

• It is the minimum required consumption level of food, clothing, shelter, transport, health care, etc.

• Planning Commission uses a poverty line based on per capita consumption expenditure as the criterion to determine the persons living below the poverty line

• Expenditure data reflect more accurately people’s actual level of living while income data are more concerned with people’s potential level of living.

• Expenditure data is also considered more reliable than income data

Methodology

• The present method used by the Planning Commission for estimation of poverty is based on the methodology recommended by the expert Group on “Estimation of Proportion and Number of Poor” (Lakdawala Committee) constituted on September,1989.

• After the Expert group submitted its report in July 1993, the poverty line defined by the Task Force at national level was retained.

• It was estimated at Rs.49.09 per capita per month for rural areas and Rs.56.64 per capita per month for urban areas at 1973-74 prices.

• This poverty line was defined by the Task Force constituted by the Planning Commission in 1973 on “Projections of Minimum Needs and Effective Consumption Demand’’

• The Task Force defined poverty line as the minimal per capita consumption expenditure, which meets the average per capita daily calorie intake of 2400 kcal in rural areas and 2100 kcal in urban areas along with a minimum non-food expenditure on such vital needs as clothing, shelter and transport etc.

• The Task Force used 1973-74 quinquennial round of NSS Data

The Expert Group Methodology

• The method uses state-specific poverty lines as against a national level poverty line for rural and urban areas.

• This method suggested use of state-specific cost of living indices for updating the poverty line separately in rural and urban areas.

• Assumption of the same consumption basket and the same calorie norm for all the States, in computation of poverty line are retained

• The use of all-India poverty lines does not generally reveal true pictures about the incidence and severity of poverty across the State.

• Use of State specific poverty lines has been recommended by the Expert Group methodology

Incidence of Poverty in India

• The incidence of poverty defined as Poverty Ratio or Head Count Ratio (HCR) is measured as the state-specific percentage of people living below poverty line and is obtained using data generated by large sample surveys on household consumer expenditure survey conducted by NSSO at an interval of approximately five years.

All India Rural Urban

Year Number Poverty ratio Number Poverty ratio Number Poverty ratio

(million) (%) (million) (%) (million) (%)

1973-74 321 54.9 261 56.4 60 49

1977-78 329 51.3 264 53.1 65 45.2

1983 323 44.5 252 45.7 71 40.8

1987-88 307 38.9 232 39.1 75 38.2

1993-94 320 36.0 244 37.3 76 32.4

1999-2000(MRP) 260 26.1 193 27.1 67 23.6

2004-05(URP) 301 27.5 221 28.3 81 25.7

2004-05(MRP) 238 21.8 170 21.8 68 21.7

Incidence of Poverty

Head Count Ratio or Poverty Ratio at the State Level

• Poverty at national level is estimated at the weighted average of state-wise poverty levels.

• The Head Count Ratio of poverty is estimated from state specific poverty lines and the distribution of persons by expenditure groups obtained from the NSS data on consumption expenditure.

• According to 61st Round of NSS, the rural poverty line was estimated as Rs. 356.30 and Urban poverty line at Rs.538.60 per-capita per month at the national level

S.No. State/U.T.'s Rural Urban

1 Andhra Pradesh 292.95 542.89

2 Assam 387.64 378.84

3 Bihar 354.36 435.00

4 Chhattisgarh 322.41 560.00

5 Delhi 410.38 612.91

6 Goa 362.25 665.90

7 Gujarat 353.93 541.16

8 Haryana 414.76 504.49

9 Himachal Pradesh 394.28 504.49

10 Jammu & Kashmir 391.26 553.77

11 Jharkhand 366.56 451.24

12 Karnataka 324.17 599.66

13 Kerala 430.12 559.39

14 Madhya Pradesh 327.78 570.15

15 Maharashtra 362.25 665.90

16 Orissa 325.79 528.49

17 Punjab 410.38 466.16

18 Rajasthan 374.57 559.63

19 Tamil Nadu 351.86 547.42

20 Uttar Pradesh 365.84 483.26

21 Uttarakhand 478.02 637.67

22 West Bengal 382.82 449.32

23 Dadra & N. Haveli 362.25 665.90

All-India * 356.30 538.60

State Specific Poverty Lines-2004-05

Rural Urban Combined

%age of No. of %age of No. of %age of No. of

S.No. States/U.Ts Persons Persons Persons Persons Persons Persons

(Lakhs) (Lakhs) (Lakhs)

1 Andhra Pradesh 11.2 64.70 28.0 61.40 15.8 126.10

2 Arunachal Pradesh 22.3 1.94 3.3 0.09 17.6 2.03

3 Assam 22.3 54.50 3.3 1.28 19.7 55.77

4 Bihar 42.1 336.72 34.6 32.42 41.4 369.15

5 Chhattisgarh 40.8 71.50 41.2 19.47 40.9 90.96

6 Delhi 6.9 0.63 15.2 22.30 14.7 22.93

7 Goa 5.4 0.36 21.3 1.64 13.8 2.01

8 Gujarat 19.1 63.49 13.0 27.19 16.8 90.69

9 Haryana 13.6 21.49 15.1 10.60 14.0 32.10

10 Himachal Pradesh 10.7 6.14 3.4 0.22 10.0 6.36

11 Jammu & Kashmir 4.6 3.66 7.9 2.19 5.4 5.85

12 Jharkhand 46.3 103.19 20.2 13.20 40.3 116.39

13 Karnataka 20.8 75.05 32.6 63.83 25.0 138.89

14 Kerala 13.2 32.43 20.2 17.17 15.0 49.60

15 Madhya Pradesh 36.9 175.65 42.1 74.03 38.3 249.68

16 Maharashtra 29.6 171.13 32.2 146.25 30.7 317.38

17 Manipur 22.3 3.76 3.3 0.20 17.3 3.95

18 Meghalaya 22.3 4.36 3.3 0.16 18.5 4.52

19 Mizoram 22.3 1.02 3.3 0.16 12.6 1.18

Number and Percentage of Population below poverty line by states - 2004-05

Contd..

Rural Urban Combined

%age of No. of %age of No. of %age of No. of

S.No. States/U.Ts Persons Persons Persons Persons Persons Persons

(Lakhs) (Lakhs) (Lakhs)

20 Nagaland 22.3 3.87 3.3 0.12 19.0 3.99

21 Orissa 46.8 151.75 44.3 26.74 46.4 178.49

22 Punjab 9.1 15.12 7.1 6.50 8.4 21.63

23 Rajasthan 18.7 87.38 32.9 47.51 22.1 134.89

24 Sikkim 22.3 1.12 3.3 0.02 20.1 1.14

25 Tamil Nadu 22.8 76.50 22.2 69.13 22.5 145.62

26 Tripura 22.3 6.18 3.3 0.20 18.9 6.38

27 Uttar Pradesh 33.4 473.00 30.6 117.03 32.8 590.03

28 Uttarakhand 40.8 27.11 36.5 8.85 39.6 35.96

29 West Bengal 28.6 173.22 14.8 35.14 24.7 208.36

30 A & N Islands 22.9 0.60 22.2 0.32 22.6 0.92

31 Chandigarh 7.1 0.08 7.1 0.67 7.1 0.74

32 Dadra & N. Haveli 39.8 0.68 19.1 0.15 33.2 0.84

33 Daman & Diu 5.4 0.07 21.2 0.14 10.5 0.21

34 Lakshadweep 13.3 0.06 20.2 0.06 16.0 0.11

35 Pondicherry 22.9 0.78 22.2 1.59 22.4 2.37

All-India 28.3 2209.24 25.7 807.96 27.5 3017.20

Number and Percentage of Population below poverty line by states - 2004-05

Comparability of poverty estimates

• The percentage and number of poor in 2004-05 estimated from URP consumption distribution of NSS 61st Round of consumer expenditure data are comparable with the poverty estimates of 1993-94. The percentage and number of poor in 2004-05 estimated from MRP consumption distribution of NSS 61st Round of consumer expenditure data are roughly (but not strictly) comparable with the poverty estimates of 1999-2000

• The poverty estimates in 2004-05 based on URP consumption distribution (27.5 percent) is comparable with the poverty estimates of 1993-94, which was 36 percent.

Comparison of Poverty Estimates Based on Uniform Recall Period

1993-94 2004-05

1 Rural 37.3 28.3

2 Urban 32.4 25.7

3 Total 36.0 27.5

• The poverty estimates in 2004-05 based on MRP consumption (21.8 percent) is roughly (but not strictly) comparable with the poverty estimates of 1999-2000, which was 26.1 percent.

Comparison of Poverty Estimates Based on Mixed Recall Period

1999-2000 2004-05

1 Rural 27.1 21.8

2 Urban 23.6 21.7

3 Total 26.1 21.8

Poverty Ratio and Number of Poor

1993-94 1999-2000 2004-05

30-Day 365-Day

RURAL

1 Poverty Ratio 37.27 27.09 28.27 21.79

2 Number of Poor (Million) 244.03 193.24 220.92 170.30

URBAN

1 Poverty Ratio 32.36 23.62 25.71 21.70


TOTAL

1 Poverty Ratio 35.97 26.10 27.54 21.77


Annual Average Change in Poverty Ratio

(Percent point per year)

1993-94 to 1999-2000 to

2004-05 2004-05

(30-Day) (365-Day)

1. Rural 0.78 1.06

2. Urban 0.60 0.38

3. Total 0.77 0.87

Ranking of states by Poverty Ratio (URP Consumption)

Rural Urban Total

1993-94 2004-05 1993-94 2004-05 1993-94 2004-05

Andhra Pradesh 3 4 13 11 3 5

Assam 15 11 1 1 14 8

Bihar 17 18 10 15 17 18

Chhattisgarh 16 18 16

Gujarat 4 8 8 4 4 7

Haryana 7 5 5 7 5 3

Himachal Pradesh 9 3 2 2 8 2

Jharkhand 20 8 19

Karnataka 8 7 15 13 9 9

Kerala 5 6 7 9 6 6

Madhya Pradesh 12 15 17 19 15 17

Maharashtra 11 12 11 16 12 13

Orissa 16 19 16 20 16 20

Punjab 2 2 3 3 1 1

Rajasthan 6 9 9 14 7 10

Tamil Nadu 10 10 14 10 10 11

Uttar Pradesh 14 14 12 12 13 14

Uttarakhand 17 17 15

West Bengal 13 13 6 6 11 12

Delhi 1 1 4 5 2 4

Ranking of states by Poverty Ratio (MRP Consumption)

Rural Urban Total

1999-00 2004-05 1999-00 2004-05 1999-00 2004-05

Andhra Pradesh 6 4 12 11 8 5

Assam 15 11 3 1 14 8

Bihar 16 18 15 15 16 18

Chhattisgarh 16 18 16

Gujarat 7 8 7 4 6 7

Haryana 4 5 5 7 4 3

Himachal Pradesh 3 3 1 2 2 2

Jharkhand 20 8 19

Karnataka 9 7 11 13 9 9

Kerala 5 6 9 9 5 6

Madhya Pradesh 14 15 16 19 15 17

Maharashtra 11 12 13 16 11 13

Orissa 17 19 17 20 17 20

Punjab 2 2 2 3 1 1

Rajasthan 8 9 8 14 7 10

Tamil Nadu 10 10 10 10 10 11

Uttar Pradesh 12 14 14 12 13 14

Uttarakhand 17 17 15

West Bengal 13 13 6 6 12 12

Delhi 1 1 4 5 3 4

Other Deprivations

• The official estimates of poverty measure only income/consumption deprivation, and this deprivation based on a monetary cut-off known as poverty line for defining a person as poor is an important indicator of economic well-being of a country

• It has limitation in capturing a wider concept of deprivation

• a composite index known as Human Poverty Index has been computed by Planning Commission and has been published in NHDR

• This index captures deprivation in three dimensions of human development viz., economic, educational and health

Poverty Alleviation Programmes

• Eradication of poverty remains a challenging task for the Government of India

• A multi-pronged approach has been adopted with economic growth focusing on sectors which are employment intensive

• This strategy has been complemented with a focus on building of capabilities through provision of basic services like education, health, housing, etc.

• State’s direct intervention through targeted anti poverty programmes also form a part of the strategy

Major Rural Poverty Alleviation Programmes

• Swaranjayanti Gram Swarozgar Yojana (SGSY)

• Sampoorna Grameen Rozgar Yojana (SGRY)

• Rural Housing – Indira Awaas Yojana (IAY)

• National Rural Employment Guarantee Act

Major Urban Poverty Alleviation Programmes

• Swarna Jayanti Shahari Rojgar yojana (SJSRY)

• JNNURM(Jawaharlal Nehru National Urban Renewal Mission )

• IHSDP ( Integrated Housing and Slum development Programme)

Public Distribution System

• In addition the Public Distribution system in India has been more focused and targeted towards the very poor category through the programme “Antyodaya Anna Yojana”. This programme has been expanded from 2.0 crore(BPL) families to 2.5 crore families in 2005.

Eleventh Plan Target for Poverty Reduction

• The Eleventh Five Year Plan period (2007-12) has set a monitorable target for reduction of poverty by 10 percentage points by 2012.

SUMMARY• One of the fundamental objectives of Planning and

Development in India lies in eradication of poverty and the prevalence of poverty in the country has been the core concern of the planning system of India.

• Precise information about incidence of poverty, number and location of poor is required for adoption of sound development strategies and effective policy making.

• The importance of measurement of poverty in the context of planning in a country as vast and diverse as India is, has been well recognized.

• The assessment of incidence of poverty separately for State-level and location-wise (rural and urban areas) will provide true picture about the incidence and the severity of poverty across the country.

• Some of the Indian States have population size, that is, larger than most of the countries of the world. Therefore, India is one of the very few countries that has different poverty lines at the sub-national level.

• The poverty ratios are being estimated in India for different States using state-specific poverty lines and the concept of the measurements of poverty remains same across the States.

• The state-specific poverty lines essentially reflect the differences in the cost of living in different States of the country.

• Also, India continues to have a stratified society for historical reasons. In particular, there are caste groups within the Hindu hierarchical structure, which have been historically oppressed, and there are tribal groups, which have remained outside the mainstream.

• The Constitution of India explicitly recognizes these historical injustices and enjoins upon the Government to pursue affirmative action, policies to bring these disadvantaged groups at par with the rest of the populations.

• Hence, official estimates of incidence of poverty have also been made available for these disadvantaged groups for effective policy-making and implementation of them for reduction of poverty.

• The importance of these regional variations in the poverty lines and quantification of poverty among the disadvantaged groups cannot be overemphasized as an application of a uniform poverty line can distort the true picture of incidence of poverty across the country.

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