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

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

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.

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.

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.

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.

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

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.

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

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.

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

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.

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.

Incidence of Poverty 21.7 68 21.8 170 21.8 238 2004-05(MRP) 25.7 81 28.3 221 27.5 301 2004-05(URP) 23.6 67 27.1 193 26.1 260 1999-2000(MRP) 32.4 76 37.3 244 36.0 320 1993-94 38.2 75 39.1 232 38.9 307 1987-88 40.8 71 45.7 252 44.5 323 1983 45.2 65 53.1 264 51.3 329 1977-78 49 60 56.4 261 54.9 321 1973-74 (%) (million) (%) (million) (%) (million) Poverty ratio Number Poverty ratio Number Poverty ratio Number Year Urban Rural All India

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

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

State Specific Poverty Lines-2004-05 538.60 356.30 All-India * 665.90 362.25 Dadra & N. Haveli 23 449.32 382.82 West Bengal 22 637.67 478.02 Uttarakhand 21 483.26 365.84 Uttar Pradesh 20 547.42 351.86 Tamil Nadu 19 559.63 374.57 Rajasthan 18 466.16 410.38 Punjab 17 528.49 325.79 Orissa 16 665.90 362.25 Maharashtra 15 570.15 327.78 Madhya Pradesh 14 559.39 430.12 Kerala 13 599.66 324.17 Karnataka 12 451.24 366.56 Jharkhand 11 553.77 391.26 Jammu & Kashmir 10 504.49 394.28 Himachal Pradesh 9 504.49 414.76 Haryana 8 541.16 353.93 Gujarat 7 665.90 362.25 Goa 6 612.91 410.38 Delhi 5 560.00 322.41 Chhattisgarh 4 435.00 354.36 Bihar 3 378.84 387.64 Assam 2 542.89 292.95 Andhra Pradesh 1 Urban Rural State/U.T.'s S.No.

Number and Percentage of Population below poverty line by states - 2004-05 Contd.. 1.18 12.6 0.16 3.3 1.02 22.3 Mizoram 19 4.52 18.5 0.16 3.3 4.36 22.3 Meghalaya 18 3.95 17.3 0.20 3.3 3.76 22.3 Manipur 17 317.38 30.7 146.25 32.2 171.13 29.6 Maharashtra 16 249.68 38.3 74.03 42.1 175.65 36.9 Madhya Pradesh 15 49.60 15.0 17.17 20.2 32.43 13.2 Kerala 14 138.89 25.0 63.83 32.6 75.05 20.8 Karnataka 13 116.39 40.3 13.20 20.2 103.19 46.3 Jharkhand 12 5.85 5.4 2.19 7.9 3.66 4.6 Jammu & Kashmir 11 6.36 10.0 0.22 3.4 6.14 10.7 Himachal Pradesh 10 32.10 14.0 10.60 15.1 21.49 13.6 Haryana 9 90.69 16.8 27.19 13.0 63.49 19.1 Gujarat 8 2.01 13.8 1.64 21.3 0.36 5.4 Goa 7 22.93 14.7 22.30 15.2 0.63 6.9 Delhi 6 90.96 40.9 19.47 41.2 71.50 40.8 Chhattisgarh 5 369.15 41.4 32.42 34.6 336.72 42.1 Bihar 4 55.77 19.7 1.28 3.3 54.50 22.3 Assam 3 2.03 17.6 0.09 3.3 1.94 22.3 Arunachal Pradesh 2 126.10 15.8 61.40 28.0 64.70 11.2 Andhra Pradesh 1 (Lakhs) (Lakhs) (Lakhs) Persons Persons Persons Persons Persons Persons States/U.Ts S.No. No. of %age of No. of %age of No. of %age of Combined Urban Rural

Number and Percentage of Population below poverty line by states - 2004-05 3017.20 27.5 807.96 25.7 2209.24 28.3 All-India 2.37 22.4 1.59 22.2 0.78 22.9 Pondicherry 35 0.11 16.0 0.06 20.2 0.06 13.3 Lakshadweep 34 0.21 10.5 0.14 21.2 0.07 5.4 Daman & Diu 33 0.84 33.2 0.15 19.1 0.68 39.8 Dadra & N. Haveli 32 0.74 7.1 0.67 7.1 0.08 7.1 Chandigarh 31 0.92 22.6 0.32 22.2 0.60 22.9 A & N Islands 30 208.36 24.7 35.14 14.8 173.22 28.6 West Bengal 29 35.96 39.6 8.85 36.5 27.11 40.8 Uttarakhand 28 590.03 32.8 117.03 30.6 473.00 33.4 Uttar Pradesh 27 6.38 18.9 0.20 3.3 6.18 22.3 Tripura 26 145.62 22.5 69.13 22.2 76.50 22.8 Tamil Nadu 25 1.14 20.1 0.02 3.3 1.12 22.3 Sikkim 24 134.89 22.1 47.51 32.9 87.38 18.7 Rajasthan 23 21.63 8.4 6.50 7.1 15.12 9.1 Punjab 22 178.49 46.4 26.74 44.3 151.75 46.8 Orissa 21 3.99 19.0 0.12 3.3 3.87 22.3 Nagaland 20 (Lakhs) (Lakhs) (Lakhs) Persons Persons Persons Persons Persons Persons States/U.Ts S.No. No. of %age of No. of %age of No. of %age of Combined Urban Rural

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 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. 27.5 36.0 Total 3 25.7 32.4 Urban 2 28.3 37.3 Rural 1 2004-05 1993-94 Comparison of Poverty Estimates Based on Uniform Recall Period

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.

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. 21.8 26.1 Total 3 21.7 23.6 Urban 2 21.8 27.1 Rural 1 2004-05 1999-2000 Comparison of Poverty Estimates Based on Mixed Recall Period

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.

238.50 301.72 260.25 320.37 Number of Poor (Million) 2 21.77 27.54 26.10 35.97 Poverty Ratio 1 TOTAL 68.20 80.80 67.01 76.34 Number of Poor (Million) 2 21.70 25.71 23.62 32.36 Poverty Ratio 1 URBAN 170.30 220.92 193.24 244.03 Number of Poor (Million) 2 21.79 28.27 27.09 37.27 Poverty Ratio 1 RURAL 365-Day 30-Day 2004-05 1999-2000 1993-94 Poverty Ratio and Number of Poor

0.87 0.77 3. Total 0.38 0.60 2. Urban 1.06 0.78 1. Rural (365-Day) (30-Day) 2004-05 2004-05 1999-2000 to 1993-94 to (Percent point per year) Annual Average Change in Poverty Ratio

Ranking of states by Poverty Ratio (URP Consumption ) 4 2 5 4 1 1 Delhi 12 11 6 6 13 13 West Bengal 15 17 17 Uttarakhand 14 13 12 12 14 14 Uttar Pradesh 11 10 10 14 10 10 Tamil Nadu 10 7 14 9 9 6 Rajasthan 1 1 3 3 2 2 Punjab 20 16 20 16 19 16 Orissa 13 12 16 11 12 11 Maharashtra 17 15 19 17 15 12 Madhya Pradesh 6 6 9 7 6 5 Kerala 9 9 13 15 7 8 Karnataka 19 8 20 Jharkhand 2 8 2 2 3 9 Himachal Pradesh 3 5 7 5 5 7 Haryana 7 4 4 8 8 4 Gujarat 16 18 16 Chhattisgarh 18 17 15 10 18 17 Bihar 8 14 1 1 11 15 Assam 5 3 11 13 4 3 Andhra Pradesh 2004-05 1993-94 2004-05 1993-94 2004-05 1993-94 Total Urban Rural

Ranking of states by Poverty Ratio (MRP Consumption ) 4 3 5 4 1 1 Delhi 12 12 6 6 13 13 West Bengal 15 17 17 Uttarakhand 14 13 12 14 14 12 Uttar Pradesh 11 10 10 10 10 10 Tamil Nadu 10 7 14 8 9 8 Rajasthan 1 1 3 2 2 2 Punjab 20 17 20 17 19 17 Orissa 13 11 16 13 12 11 Maharashtra 17 15 19 16 15 14 Madhya Pradesh 6 5 9 9 6 5 Kerala 9 9 13 11 7 9 Karnataka 19 8 20 Jharkhand 2 2 2 1 3 3 Himachal Pradesh 3 4 7 5 5 4 Haryana 7 6 4 7 8 7 Gujarat 16 18 16 Chhattisgarh 18 16 15 15 18 16 Bihar 8 14 1 3 11 15 Assam 5 8 11 12 4 6 Andhra Pradesh 2004-05 1999-00 2004-05 1999-00 2004-05 1999-00 Total Urban Rural

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

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

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

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)

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.

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.

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.

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.

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.

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.

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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