Politics of the Indian Poverty Line
The left critiques against the impact of the poorly named “globalization” policies on India can be divided into broadly two categories. First there is what we may call the “weak critique” that argues that despite the impressive growth rates, the majority of the population has been excluded and that inequality is rising. There is vast agreement at least on this score among the broad progressive Indian community. On the other hand, there is what we may call the “strong critique” that argues that the impressive growth rates have been attained at the expense of the majority of the population, that poverty in India has actually gone up.
Understanding the arguments that support both of these positions has obvious significance for people concerned about poverty in India. While attempting a complete overview of these arguments is beyond the scope of this article, we focus on the debate around the measurement of the poverty line which is a critical part of the larger poverty debate. One might prima-facie assume that such a basic figure as the poverty line is measured accurately and lends itself to agreement, at least on factual grounds, across the entire political spectrum. Perhaps not surprisingly this is far from the case. There is considerable disagreement over the interpretation of poverty line figures in India. Whatever one’s point of view may be, there is no denying that the question of what the Indian poverty line actually is and how has it been changing over time is of tremendous significance. Besides its natural importance, the poverty line figures are used to determine all forms of government policy.
Different institutions have different ways of measuring poverty. The World Bank for instance uses an income standard to define poverty. The Indian government however adopted a nutritional norm. The official definition of the Indian poverty line, as stated by the Ministry of Statistics and Program Implementation [1] is as follows.
"The official estimates of the poverty line are based on a norm of 2400 calories per capita per day for rural areas and 2100 per capita per day for urban areas."
Back in 1973 when this methodology was first adopted, the monthly cost of purchasing a basket of food that yields the minimum calorie requirement was determined. This monthly cost has then been adjusted for inflation and food prices. A person is deemed above the poverty line if their total monthly expenditure exceeds this amount.
There are several critiques of this approach to determining poverty line figures. The first is that the total expenditure is used above, not the part of the expenditure that pertains to food. This assumes that a person spends all their income on food, excluding expenditure on other necessities such as health and education.
Second, the criteria implied by this definition are woefully inadequate. For instance as of 2004-05, the government deemed a person below the poverty line in rural India if their net monthly expenditure was above Rs. 356. This comes to less than $9 per month. Note that this means that if one’s total expenditure is above $9, independent of the food component of their expenditure, they are deemed to be above the poverty line!
The third critique of this approach is even more fundamental. It turns out that the National Sample Survey of India which is the basis for determining expenditure figures also reports calorie intake figures. The question naturally arises why not use the actual calorie intake, why bother with total expenditure figures. Interestingly, using the calorie intake figures yields dramatically different results [2]. For instance, using the calorie figures as obtained through the 55th round of the National Sample Survey directly shows that 87% of the rural population of India has a per-capita calorie intake of less than 2400kCal a day and is thus below the poverty line.
The significance of this observation cannot be overstated. The number is alarmingly high. In contrast, the official poverty line figures state that as of 2004-05 is 28.3%. Second, it has also increased over time – the percentage of the rural population consuming below 2400kCal a day was 75% in 1993-94. These numbers would appear to be a scathing indictment of government policies of the past decade and a half. Similar observations have been made in other studies [3].
This disparity between official poverty figures and the calorie-based figures has been analyzed from other points of view by economists. Meenakshi and Vishwanathan[4] analyze the poverty figures as broken down by state and observe that the trends are sensitive to where the calorie norm is set. Thus, if we set the calorie norm for rural India at 2200kCal per day instead of 2400, we find that fewer states have regressed over time. They also point out that the diet of Indians has diversified substantially over time and that cereals now constitute a smaller percentage of food intake. Third, a break-down of the calorie data by income level suggests that a substantial fraction of the upper-most income quintile also has a substantial fraction of the population below the poverty line in some of the states. For instance, more than 40% of the richest quintile have an intake below the 2400kCal norm in the state of Andhra Pradesh.
Mahendra Dev [5] observes that the calorie data yield another unintuitive conclusion that the states that are acknowledged to be relatively more prosperous such as Tamil Nadu have higher poverty rates (86.5%) than some of the least prosperous ones such as Rajasthan (56.7%).
Is it really the case that Indians’ diets have diversified so that they consume less as measured in calories? If that sounds counter-intuitive, how do we address the counter-arguments presented above? The fact that a substantial fraction of the wealthy consume fewer calories is surely voluntary. Meenakshi and Vishwanathan’s argument that the data is sensitive to the actual norm set is moot. Of course the data is going to be sensitive to the value of the actual norm. This is hardly a cause for surprise. The key fact that neither of the above arguments addresses is that the calorie consumption of the majority of the population has declined over time and this is what should concern us.
Pronab Sen offers a different point of view [6]. He argues that the main rationale for using expenditure data instead of consumption data is that expenditure indicates whether the basket of foods that yield the requisite number of calories can be afforded, whereas in reality the diet may be different than this specific basket of foods. He derives the number of calories consumed per rupee spent on food. He breaks the data down into three classes: below poverty line (BPL), poverty line (PL) and above poverty line(APL) (as defined by the official poverty line). He computes the calorie-rupee ratio for each of these classes. Not surprisingly the ratio is highest for the BPL class. He then computes the calories that the other classes could potentially have consumed by multiplying the amount they spent on food by the calorie-rupee ratio for the BPL class. This indicates how many calories these other classes could afford to consume had they chosen a different basket of food. The poverty lines as defined by the potential calorie intake is much closer to what the official statistics indicate.
However, there is a fundamental question that crops up about this analysis when we probe deeper namely how exactly is the calorie-per-rupee figure computed for the BPL class. We illustrate the issue by considering the data for a specific state, Andhra Pradesh. Pronab Sen claims that the calories per rupee figure for the BPL class is 397 [7]. Since the calculation that yields this number is not precisely explained, this writer attempted to derive this number by looking at the source data, which is the 55th round of the National Sample Survey. The relevant table from NSS is reproduced below from Appendix A1.
The first column corresponds to the cumulative population at the given MPCE level. MPCE stands for Mean Per-Capita Consumer Expenditure which includes expenditure on all items including food. This is categorized into ranges - a crucial point when we are computing mean per rupee spent, etc. The third column tells us what fraction of the expenditure is on food. The next column is the per-capita calorie intake. The last column is not in NSS. It's something this writer computed. (This is all for the state of Andhra Pradesh.)
The poverty line class is the third row in this table (where calorie intake is 1662 per day). The main question is this: How should we calculate the calorie/rupee for the BPL class represented by the first two rows? Since MPCE is a range, you may say let's take the average MPCE for a row and use that. This is what yields the last colum in the table above. Clearly, the number for the first row is going to boost up the average artificially since the minimum there is 0. Zero is a fine lower bound for classification, but is terrible for calculating the average calorie per rupee. If you assume that the average in the first row is something like 200 Rs, we get very different numbers from what Pronab Sen gets.
But perhaps the most insightful interpretation of the NSS data that counters the “strong critique” is offered by Angus Deaton and Jean Dreze[8]. We reproduce portions of this article that talk about the calorie intake levels.
“The reduction of cereal consumption in the nineties may seem inconsistent with the notion that poverty has declined during the same period. Indeed, this pattern has been widely invoked as evidence of “impoverishment” in the nineties. If cereal consumption is declining, how can poverty be declining?
It is worth noting, however, that the decline of cereal consumption is not new. A similar decline took place (according to National Sample Survey data) during the seventies and eighties, when poverty was certainly declining. Hanchate and Dyson's (2000) recent comparison of rural food consumption patterns in 1973-74 and 1993-94 sheds some useful light on this matter. As the authors show, during this period per-capita cereal consumption in rural areas declined quite sharply on average (from 15.8 to 13.6 kgs per person per month), but rose among the poorest households. The decline in the average is driven by reduced consumption among the higher expenditure groups. The average decline is unlikely to be driven by changes in relative prices; indeed, there has been little change in food prices, relative to other prices, in the intervening period. Instead, this pattern appears to reflect a substitution away from cereals to other food items as incomes rise (at least beyond a certain threshold). The consumption of “superior” food items such as vegetables, milk, fruit, fish and meat did rise quite sharply over the same period, across all expenditure groups. Seen in this light, the decline of average cereal consumption may not be a matter of concern per se. Indeed, average cereal consumption is inversely related to per-capita income across countries (e.g. it is lower in China than in India, and even lower in the United States), and the same applies across states within India (e.g. cereal consumption is higher in Bihar or Orissa than in Punjab or Haryana).
Food intake data collected by the National Nutrition Monitoring Bureau (NNMB)
shed further light on this issue. Aside from detailed information on food intake, the NNMB surveys include rough estimates of household incomes.… The substitution from cereals towards superior food items with rising per-capita income emerges quite clearly. This pattern, if confirmed, would fit quite well with the data on change over time. It also implies that the decline of average cereal consumption in the nineties is not inconsistent with our earlier findings on poverty decline.”
Where does this leave us? For a person concerned about poverty in India, it would appear that the answer to a rather fundamental question – what has been the trend in poverty over the past 15 years – remains inconclusive. If we turn to other measures of poverty besides the poverty line for clarification, we find that the picture still remains inconclusive. While a detailed analysis of other measures of poverty is beyond the scope of this article, we make our point by quoting different points of view.
On the one hand, we have Utsa Patnaik stating that: “Many economic and social indicators suggest that not only is the level of absolute poverty in India high, there has also been an adverse impact of neoliberal policies on poverty.”
On the other hand, we have Deaton and Dreze stating that: “At one end of the spectrum, it has been claimed that the last decade has been a period of unprecedented improvement in living standards, thanks to liberalization. At the other end, the nineties have been described as a period of widespread “impoverishment”, attributed to liberalization. Clearly, these readings fail to do justice to the diversity of recent trends.” Instead, Deaton and Dreze find a more complex picture when they turn to other indicators of poverty. For example, school attendance rates have increased throughout the 1990s whereas the rate of decline of infant mortality slowed down.
More importantly, they also argue against the “mechanical manner” in which the poverty debate in India is framed around the impact of the “liberalization” policies ignoring much else that happened in the 1990s. This analysis is worth taking seriously given that Jean Dreze is one of the world’s most distinguished experts on hunger and poverty.
It is quite striking that a question that is presumably a factual one is debated so heatedly with various interpretations of the same data depending on one’s political viewpoint. For activists concerned with India, it is good to be aware of these various points of view and show caution in drawing any sweeping conclusions about poverty trends in India. It is also critical that this debate is carried out in the public domain rather than among academicians.
References
[1] A Note On Poverty Estimation http://mospi.nic.in/compenv2000_appendix+6.htm
[2] Utsa Patnaik. Neoliberalism and Rural Poverty in India. Economic and Political Weekly. July 28, 2007.
[3] Madhura Swaminathan. Eleventh Plan ignores food and nutrition insecurity. http://www.hindu.com/2006/09/01/stories/2006090102841000.htm
[4] J V Meenakshi, Brinda Vishwanathan. Calorie Deprivation in Rural India, 1983-1999/2000. Economic and Political Weekly, January 25, 2003.
[5] Mahendra Dev. Calorie Norms and Poverty. Economic and Political Weekly. Feb 19, 2005.
[6] Pronab Sen. Poverty-undernutrition linkages. Nutrition Foundation of India Bulletin, January 2005. Available from: http://www.nutritionfoundationofindia.res.in/
[7] ibid, Table 2.
[8] Deaton A. and Drèze J. Poverty and Inequality in India: A Reexamination. Economic and Political Weekly, September 7, 2002.
Understanding the arguments that support both of these positions has obvious significance for people concerned about poverty in India. While attempting a complete overview of these arguments is beyond the scope of this article, we focus on the debate around the measurement of the poverty line which is a critical part of the larger poverty debate. One might prima-facie assume that such a basic figure as the poverty line is measured accurately and lends itself to agreement, at least on factual grounds, across the entire political spectrum. Perhaps not surprisingly this is far from the case. There is considerable disagreement over the interpretation of poverty line figures in India. Whatever one’s point of view may be, there is no denying that the question of what the Indian poverty line actually is and how has it been changing over time is of tremendous significance. Besides its natural importance, the poverty line figures are used to determine all forms of government policy.
Different institutions have different ways of measuring poverty. The World Bank for instance uses an income standard to define poverty. The Indian government however adopted a nutritional norm. The official definition of the Indian poverty line, as stated by the Ministry of Statistics and Program Implementation [1] is as follows.
"The official estimates of the poverty line are based on a norm of 2400 calories per capita per day for rural areas and 2100 per capita per day for urban areas."
Back in 1973 when this methodology was first adopted, the monthly cost of purchasing a basket of food that yields the minimum calorie requirement was determined. This monthly cost has then been adjusted for inflation and food prices. A person is deemed above the poverty line if their total monthly expenditure exceeds this amount.
There are several critiques of this approach to determining poverty line figures. The first is that the total expenditure is used above, not the part of the expenditure that pertains to food. This assumes that a person spends all their income on food, excluding expenditure on other necessities such as health and education.
Second, the criteria implied by this definition are woefully inadequate. For instance as of 2004-05, the government deemed a person below the poverty line in rural India if their net monthly expenditure was above Rs. 356. This comes to less than $9 per month. Note that this means that if one’s total expenditure is above $9, independent of the food component of their expenditure, they are deemed to be above the poverty line!
The third critique of this approach is even more fundamental. It turns out that the National Sample Survey of India which is the basis for determining expenditure figures also reports calorie intake figures. The question naturally arises why not use the actual calorie intake, why bother with total expenditure figures. Interestingly, using the calorie intake figures yields dramatically different results [2]. For instance, using the calorie figures as obtained through the 55th round of the National Sample Survey directly shows that 87% of the rural population of India has a per-capita calorie intake of less than 2400kCal a day and is thus below the poverty line.
The significance of this observation cannot be overstated. The number is alarmingly high. In contrast, the official poverty line figures state that as of 2004-05 is 28.3%. Second, it has also increased over time – the percentage of the rural population consuming below 2400kCal a day was 75% in 1993-94. These numbers would appear to be a scathing indictment of government policies of the past decade and a half. Similar observations have been made in other studies [3].
This disparity between official poverty figures and the calorie-based figures has been analyzed from other points of view by economists. Meenakshi and Vishwanathan[4] analyze the poverty figures as broken down by state and observe that the trends are sensitive to where the calorie norm is set. Thus, if we set the calorie norm for rural India at 2200kCal per day instead of 2400, we find that fewer states have regressed over time. They also point out that the diet of Indians has diversified substantially over time and that cereals now constitute a smaller percentage of food intake. Third, a break-down of the calorie data by income level suggests that a substantial fraction of the upper-most income quintile also has a substantial fraction of the population below the poverty line in some of the states. For instance, more than 40% of the richest quintile have an intake below the 2400kCal norm in the state of Andhra Pradesh.
Mahendra Dev [5] observes that the calorie data yield another unintuitive conclusion that the states that are acknowledged to be relatively more prosperous such as Tamil Nadu have higher poverty rates (86.5%) than some of the least prosperous ones such as Rajasthan (56.7%).
Is it really the case that Indians’ diets have diversified so that they consume less as measured in calories? If that sounds counter-intuitive, how do we address the counter-arguments presented above? The fact that a substantial fraction of the wealthy consume fewer calories is surely voluntary. Meenakshi and Vishwanathan’s argument that the data is sensitive to the actual norm set is moot. Of course the data is going to be sensitive to the value of the actual norm. This is hardly a cause for surprise. The key fact that neither of the above arguments addresses is that the calorie consumption of the majority of the population has declined over time and this is what should concern us.
Pronab Sen offers a different point of view [6]. He argues that the main rationale for using expenditure data instead of consumption data is that expenditure indicates whether the basket of foods that yield the requisite number of calories can be afforded, whereas in reality the diet may be different than this specific basket of foods. He derives the number of calories consumed per rupee spent on food. He breaks the data down into three classes: below poverty line (BPL), poverty line (PL) and above poverty line(APL) (as defined by the official poverty line). He computes the calorie-rupee ratio for each of these classes. Not surprisingly the ratio is highest for the BPL class. He then computes the calories that the other classes could potentially have consumed by multiplying the amount they spent on food by the calorie-rupee ratio for the BPL class. This indicates how many calories these other classes could afford to consume had they chosen a different basket of food. The poverty lines as defined by the potential calorie intake is much closer to what the official statistics indicate.
However, there is a fundamental question that crops up about this analysis when we probe deeper namely how exactly is the calorie-per-rupee figure computed for the BPL class. We illustrate the issue by considering the data for a specific state, Andhra Pradesh. Pronab Sen claims that the calories per rupee figure for the BPL class is 397 [7]. Since the calculation that yields this number is not precisely explained, this writer attempted to derive this number by looking at the source data, which is the 55th round of the National Sample Survey. The relevant table from NSS is reproduced below from Appendix A1.
| Cumulative Population | MPCE Low | MPCE High | % on food | Amount On food | Per-capita Calorie Intake (kCal/day) | Calorie/Rupee |
| 5 | 0 | 225 | 0.67 | 75.375 | 1232 | 490.3483 |
| 10 | 225 | 255 | 0.67 | 160.8 | 1488 | 277.6119 |
| 20 | 255 | 300 | 0.66 | 183.15 | 1662 | 272.2359 |
| 30 | 300 | 340 | 0.66 | 211.2 | 1780 | 252.8409 |
| 40 | 340 | 380 | 0.66 | 237.6 | 1871 | 236.2374 |
| 50 | 380 | 420 | 0.65 | 260 | 1990 | 229.6154 |
| 60 | 420 | 470 | 0.64 | 284.8 | 2096 | 220.7865 |
| 70 | 470 | 525 | 0.62 | 308.45 | 2212 | 215.1402 |
| 80 | 525 | 615 | 0.61 | 347.7 | 2381 | 205.4357 |
| 90 | 615 | 775 | 0.56 | 389.2 | 2458 | 189.4656 |
| 95 | 775 | 950 | 0.53 | 457.125 | 2754 | 180.7383 |
The first column corresponds to the cumulative population at the given MPCE level. MPCE stands for Mean Per-Capita Consumer Expenditure which includes expenditure on all items including food. This is categorized into ranges - a crucial point when we are computing mean per rupee spent, etc. The third column tells us what fraction of the expenditure is on food. The next column is the per-capita calorie intake. The last column is not in NSS. It's something this writer computed. (This is all for the state of Andhra Pradesh.)
The poverty line class is the third row in this table (where calorie intake is 1662 per day). The main question is this: How should we calculate the calorie/rupee for the BPL class represented by the first two rows? Since MPCE is a range, you may say let's take the average MPCE for a row and use that. This is what yields the last colum in the table above. Clearly, the number for the first row is going to boost up the average artificially since the minimum there is 0. Zero is a fine lower bound for classification, but is terrible for calculating the average calorie per rupee. If you assume that the average in the first row is something like 200 Rs, we get very different numbers from what Pronab Sen gets.
But perhaps the most insightful interpretation of the NSS data that counters the “strong critique” is offered by Angus Deaton and Jean Dreze[8]. We reproduce portions of this article that talk about the calorie intake levels.
“The reduction of cereal consumption in the nineties may seem inconsistent with the notion that poverty has declined during the same period. Indeed, this pattern has been widely invoked as evidence of “impoverishment” in the nineties. If cereal consumption is declining, how can poverty be declining?
It is worth noting, however, that the decline of cereal consumption is not new. A similar decline took place (according to National Sample Survey data) during the seventies and eighties, when poverty was certainly declining. Hanchate and Dyson's (2000) recent comparison of rural food consumption patterns in 1973-74 and 1993-94 sheds some useful light on this matter. As the authors show, during this period per-capita cereal consumption in rural areas declined quite sharply on average (from 15.8 to 13.6 kgs per person per month), but rose among the poorest households. The decline in the average is driven by reduced consumption among the higher expenditure groups. The average decline is unlikely to be driven by changes in relative prices; indeed, there has been little change in food prices, relative to other prices, in the intervening period. Instead, this pattern appears to reflect a substitution away from cereals to other food items as incomes rise (at least beyond a certain threshold). The consumption of “superior” food items such as vegetables, milk, fruit, fish and meat did rise quite sharply over the same period, across all expenditure groups. Seen in this light, the decline of average cereal consumption may not be a matter of concern per se. Indeed, average cereal consumption is inversely related to per-capita income across countries (e.g. it is lower in China than in India, and even lower in the United States), and the same applies across states within India (e.g. cereal consumption is higher in Bihar or Orissa than in Punjab or Haryana).
Food intake data collected by the National Nutrition Monitoring Bureau (NNMB)
shed further light on this issue. Aside from detailed information on food intake, the NNMB surveys include rough estimates of household incomes.… The substitution from cereals towards superior food items with rising per-capita income emerges quite clearly. This pattern, if confirmed, would fit quite well with the data on change over time. It also implies that the decline of average cereal consumption in the nineties is not inconsistent with our earlier findings on poverty decline.”
Where does this leave us? For a person concerned about poverty in India, it would appear that the answer to a rather fundamental question – what has been the trend in poverty over the past 15 years – remains inconclusive. If we turn to other measures of poverty besides the poverty line for clarification, we find that the picture still remains inconclusive. While a detailed analysis of other measures of poverty is beyond the scope of this article, we make our point by quoting different points of view.
On the one hand, we have Utsa Patnaik stating that: “Many economic and social indicators suggest that not only is the level of absolute poverty in India high, there has also been an adverse impact of neoliberal policies on poverty.”
On the other hand, we have Deaton and Dreze stating that: “At one end of the spectrum, it has been claimed that the last decade has been a period of unprecedented improvement in living standards, thanks to liberalization. At the other end, the nineties have been described as a period of widespread “impoverishment”, attributed to liberalization. Clearly, these readings fail to do justice to the diversity of recent trends.” Instead, Deaton and Dreze find a more complex picture when they turn to other indicators of poverty. For example, school attendance rates have increased throughout the 1990s whereas the rate of decline of infant mortality slowed down.
More importantly, they also argue against the “mechanical manner” in which the poverty debate in India is framed around the impact of the “liberalization” policies ignoring much else that happened in the 1990s. This analysis is worth taking seriously given that Jean Dreze is one of the world’s most distinguished experts on hunger and poverty.
It is quite striking that a question that is presumably a factual one is debated so heatedly with various interpretations of the same data depending on one’s political viewpoint. For activists concerned with India, it is good to be aware of these various points of view and show caution in drawing any sweeping conclusions about poverty trends in India. It is also critical that this debate is carried out in the public domain rather than among academicians.
References
[1] A Note On Poverty Estimation http://mospi.nic.in/compenv2000_appendix+6.htm
[2] Utsa Patnaik. Neoliberalism and Rural Poverty in India. Economic and Political Weekly. July 28, 2007.
[3] Madhura Swaminathan. Eleventh Plan ignores food and nutrition insecurity. http://www.hindu.com/2006/09/01/stories/2006090102841000.htm
[4] J V Meenakshi, Brinda Vishwanathan. Calorie Deprivation in Rural India, 1983-1999/2000. Economic and Political Weekly, January 25, 2003.
[5] Mahendra Dev. Calorie Norms and Poverty. Economic and Political Weekly. Feb 19, 2005.
[6] Pronab Sen. Poverty-undernutrition linkages. Nutrition Foundation of India Bulletin, January 2005. Available from: http://www.nutritionfoundationofindia.res.in/
[7] ibid, Table 2.
[8] Deaton A. and Drèze J. Poverty and Inequality in India: A Reexamination. Economic and Political Weekly, September 7, 2002.
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