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.

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.

One farmer suicide every 30 minutes....

17,060 farm suicides in one year
- P. Sainath

Mumbai: Farm suicides in Maharashtra rose dramatically in 2006, more than in any other part of the country. The state saw 4,453 farmers' suicides that year, over a quarter of the all-India total of 17,060, according to the National Crime Records Bureau (NCRB) in its report Accidental Deaths and Suicides in India, 2006. That is the worst figure recorded 'in any year for any state' in the country since the NCRB first began logging farm suicides.The previous worst — 4,147 in 2004 — was also in Maharashtra. The State has now seen '36,428 farmers' suicides since 1995, 'in official count.' '2006 is the latest year for which data are available.'Maharashtra's 4,453 farm suicides mark an increase of 527 over its 2005 figure. This was four and a half times bigger than that in Andhra Pradesh, the next worst state, which saw a rise of 117 farm suicides over 2005. It was also more than twice the increase of 198 in Madhya Pradesh and Chhattisgarh taken together. Worse, it means that farmers accounted for half 'the increase' in all suicides in Maharashtra in 2006.Significantly, Maharashtra's upward spike occurred in the year when both Prime Minister's and Chief Minister's relief packages — worth Rs. 4,825 crores in all — were being implemented in the State's Vidharbha region, where such suicides have been most intense. There were 17,060 farmers' suicides across India in 2006. The NCRB's figures show an unrelenting upward trend in what can be termed the 'SEZ' or (Farmers) 'Special Elimination Zone' states. These States, which account for nearly two-thirds of all farm suicides in the country, include Maharashtra, Andhra Pradesh, Karnataka and Madhya Pradesh (including Chhattisgarh). As a group, the 'SEZ' States saw an increase of 6.2 per cent in such deaths.

Continued on http://www.hindu.com/2008/01/31/stories/2008013160930100.htm

The Bhopal Gas Crime: A Few Thoughts on the 23rd Anniversary

Yet another year has passed by since the disastrous gas leak in Bhopal. The anniversary constitutes an opportunity to reflect on what has happened thus far and what lies ahead.

From the point of view of justice, I think it would be fair to say nothing has fundamentally changed. The criminal case is unresolved with the chief accused not even showing up in court thus far and the factory site and its neighboring area remains seriously contaminated.

Of course, this is not to say that nothing has been achieved. Far from it. The very fact that the memory of Bhopal still survives is testimony to the immense courage and will shown by the survivors. The survivors’ campaign has achieved significant victories, for instance the fact that the Prime Minister of India agreed to provide clean water from the Kolar reservoir to the disaster affected areas.

I’d like to reflect on one key lesson for all of us active campaigners as well as those that are sympathetic to the cause of the survivors. It’s one thing to be moved by the plight of the victims of this crime. Our world is so screwed up even this is not as common as it should be. But once moved, it’s far too easy to forget about the survivors’ rights and instead adopt a charitable mindset.

This issue comes to focus when we consider the contamination problem. Many well-meaning folks wonder what is wrong with some agency (such as Tata) doing a clean-up of the factory site as a matter of charity. They wonder why the survivors would be opposed to such proposals.

Just in case anyone has any doubts, let me start by saying the survivors most definitely want a clean-up. They are sick of living with water filled contaminants orders of magnitude above safe levels. They want the clean-up to be comprehensive. The issue is this: do we believe the survivors have a right to a comprehensive clean-up? If the answer is yes, then it follows that the agency doing the clean-up must be accountable to the survivors so that if the clean-up is not comprehensive, then the survivors have legal recourse to take action.

An offer made out of charity almost by definition undermines this right. That is the problem.

On the occasion of the 23rd anniversary, maybe we should all resolve to fight for the survivors' rights.

Response to Gurcharan Das' article: Let Biotech Crops Bloom

Gurcharan Das recently wrote a much discussed article in the Times of India. Several responses have been given already such as the ones here and here. These responses mostly concentrate on the real role of Bt Cotton on the increased cotton production.

Here are a few more responses pertinent to Mr. Das' article.

1. Cotton production has indeed increased over the last 4 years. There are government reports studying why. This has nothing to do with Bt Cotton. Here is a ICAR summary of why cotton production has increased. Note that there is no mention of Bt Cotton. Instead, what is recognized is that "favourable weather conditions and manageable pest situation prevailed throughout the cotton growing states of the country".

2. Even though cotton production has increased, what has been the impact on farmer income? I have no idea where he comes up with the number 17500 increase in net income per hectare. I ran a quick calculation using the CACP (Commission on Agricultural Costs and Prices) estimates for 2006-2007. They estimate that the C2-cost of cotton cultivation is Rs. 2665 per quintal in Maharashtra. Their own recommendation for cotton MSP is Rs. 1770 per quintal. But even assuming an MSP on the higher side of Rs.1900 per quintal, this means cotton production in Maharashtra is a lossy affair. This calculation has been independently confirmed for cotton and other crops by The Hindu

3. This leaves the question why is it that despite an increase in production are farmers suffering losses. Not hard to answer given that cotton imports have tremendously increased leading to dropping prices, the main reason being US subsidies. Sainath elaborates here.

School Vouchers: A critique

Here is a little note I wrote recently on the topic of school vouchers. I'm reprinting here to make it available on the blogosphere.

This document provides a critique of the voucher system that is currently being considered by the Government of India and has received support from various quarters [1]. We have reason to believe that one of the models the Government has in mind is the voucher system as implemented in various parts of the world including specifically the United States. Indeed, the World Bank, in various publications, has cited the United States as an example of the success of the voucher system. In this article, we critically analyze some of the arguments given in favor of the voucher system, specifically its “success” in the United States.

We begin by addressing what educational voucher proposals are. Overall, educational vouchers could be privately or publicly funded. Our focus is on publicly funded vouchers. World Bank reports [2] define vouchers as follows: “A tax funded education voucher in the most widely known sense is a payment made by the government to a school chosen by the parent of the child being educated.” The idea is that the government provides parents with a voucher which can be used to pay a part of or the full fees in private schools. Using this voucher, the parents have a choice as to where to admit their children. The idea is to provide vouchers for parents that are economically disadvantaged. However, in cases where voucher systems have been implemented [5,7], not all such parents are guaranteed vouchers. Rather the vouchers are distributed randomly among parents. It is important to keep this point in mind when we assess the cost of voucher systems. These costs can potentially be capped by not providing vouchers to all the underprivileged. We feel more fundamental arguments can be provided against the voucher system. We proceed to do this by listing some of the key arguments given in favor of voucher systems and arguing against them.

Vouchers increase parental choice while reducing their financial burden
The basic argument here is that vouchers enable increased parental choice. Given that the quality of public schooling is often undesirable (even in the United States), it is very natural for parents to want to switch their children over to better alternatives if available and affordable. Vouchers alleviate the burden of expenditure on the parents thus enriching their options.

In India’s case, the quality of public education is indeed abysmal, perhaps best illustrated by the alarming drop out rates from schools that has been well-documented [4]. Parental frustration with public schools is understandable and justifiable. Thus, efforts to increase their choices where possible have to be commended.

But we argue that choices can very well be increased by enforcing reservation in private schools. The November 2005 draft of the Right to Education Bill in India [3] stipulated that private schools (and state schools of “specified categories”) have a responsibility to provide free education to at least 25% of children admitted to class 1, from among the children belonging to the “weaker sections” of society. We observe that this stipulation very well serves the purpose of enabling a wider choice of schools for the parent of the child being educated. Further, the financial burden on economically and socially weaker families is addressed by other provisions in the draft bill that stipulate free and compulsory education. Thus, the main differences between the voucher system and this reservation clause are that with the voucher approach, (1) private schools are not required to meet any financial burden, and (2) there is no obligation on the private schools to admit children of disadvantaged children. The additional benefit offered by a voucher program is far from clear. On the other hand, voucher programs entail a higher cost to the taxpayer. Indeed, the vociferous support for vouchers seems strange given the stringent opposition to reservations in private schools since the claimed benefit is the same.

Competition between public and private schools will improve the quality of education overall
Another point made in favor of voucher systems is that they tend to increase the competition and hence positively impact the quality of public schools. But this argument hardly addresses the causes of lack of quality in public schools. Without doubt finance is a key factor that can improve public schooling dramatically in India. Indeed, this was the rationale behind the recommendation of the Kothari commission that the State invest at least 6% of its GDP on education. Instead, India spent about 3.52% of its GDP on education in 2004-2005, of which a mere 1.43% is on elementary education, as opposed to the 3% recommended by various CABE committees [4]. Thus, if the investment in voucher systems comes at the cost of investment in public schooling, as has been in the case in the United States [5], there is even less reason to believe that the quality of public schooling would improve. Rather, our expectation is that this would only exacerbate the causes lying behind the poor quality of public schooling.

Educational Vouchers have been tried out with success in various parts of the world including the United States
While there have been several cases of privately funded voucher programs in the United States, the main publicly funded voucher programs have been in Wisconsin, Ohio and Florida [5]. The oldest of these is the voucher program in Milwaukee that was started in 1990. These are touted as success stories even by the World Bank [2]. However, official research reports that the results are inconclusive. The non-partisan United States Government Accountability Office (GAO) came up with a report on the effectiveness of school vouchers in Milwaukee (Wisconsin) and Cleveland (Ohio) [5]. One of the several questions they addressed was “What is known about student academic achievement within these voucher programs?” Their research “found little or no difference in voucher and public school students’ performance”. The report also cites other studies that did find that voucher students performed better in some subject areas. It argues that “none of these findings can be considered definitive because the researchers obtained different results when they used different methods to compensate for weaknesses in the data.” Further, while several studies have argued that vouchers helped improve the racial composition of schools by helping students from poorer backgrounds, the GAO report observes that “whether the racial composition changed as a result of the voucher programs is unclear”. Instead, commenting on these studies, the GAO report states that “They reached conclusions about the voucher programs’ effect on racial composition within voucher schools without considering the full range of factors that could account for changes in the composition.”

Given this background, it would be a grievous error to conclude that voucher programs in the United States are an unmitigated success. Further evidence for the same is found in the fact that all statewide referendums on school vouchers since the 1970s have been defeated.

In conclusion, we find that arguments that promote educational vouchers as a symbol of free competition and capitalism [1] must be viewed with substantial skepticism. The research on voucher programs implemented worldwide including specifically the United States is inconclusive at best. Even the limited cases where vouchers have been found to help [7] can be interpreted as an argument in favor of reservations in private schools that serve pretty much the same purpose, but at a lower cost to taxpayers.

References

1. Capitalism and our schools: Gurucharan Das.
2. EDUCATION VOUCHERS IN PRACTICE AND PRINCIPLE: A WORLD SURVEY: World Bank
3. Right to Education Draft Bill
4. Where do children go after Class VIII? Vinod Raina:
5. School Vouchers: Publicly Funded Programs in Cleveland and Milwaukee. United States Government Accountability Office.
6. Milwaukee Voucher Program.
7. Vouchers for Private Schooling in Colombia: Evidence from a Randomized Natural Experiment. American Economic Review, 2002.

Why this blog?

I have occasionally posted in the past on my buddy Rahul's blog. This was mostly restricted to postings on social issues, which indeed I expect to be the main focus of my new blog as well. But by no means do I want to be restricted to postings on social causes alone. Hence this blog. Simple reason isn't it?