ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Towards New Poverty Lines for India

This paper presents the result of an exercise prepared for the Planning Commission's Expert Group to Review the Methodology for Estimation of Poverty to draw up new poverty lines and, correspondingly, new poverty estimates based on the National Sample Survey consumption data. The exercise begins by accepting the official all-India urban poverty estimate of 25.7% for 2004-05, then derives the all-India urban poverty line that corresponds to this head count ratio by using the multiple rather than uniform reference period distribution from the nss data. It then recalculates, based on this modified poverty line, new state-wise urban and rural poverty lines that reflect spatial variations in the cost of living in 2004-05. The resulting estimates of the incidence of rural poverty show a head count ratio of 41.8% for 2004-05 as against the official estimate of 28.3%. The estimates reveal much larger rural-urban differences but less concentration of either rural or urban poverty in a few states. Although the new poverty lines preserve the official estimate of all-India urban poverty in 2004-05, there are significant changes at the state level.

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mortality rate, (7) Children (age 12-23 months) fully immunised, (8) Total voting population (+18 years of age), (9) BPL population, (10) Percentage of persons living in urban areas, (11) Under five mortality rate, (12) Households with electricity connection, (13) Habitations connected by pucca roads, (14) Households having access to safe drinking water, (15) Violent crimes (% of total crimes), and (16) Crime against women (% of total crimes).

Electoral Politics and the Manipulation of Statistics

The 2009 Lok Sabha election campaign has witnessed political parties making widespread use of constituency-wise data on economic and social indicators to attack each other and central/state governments. They have included statistical "evidence" in their manifestos and a number of large media outlets have cited these "data" as part of their efforts to educate the voter. Most unfortunate is that the mass of data on social and economic indicators provided by independent and private agencies to the media is of very doubtful value. These data do not appear to be based on any official/reliable sources, are inconsistent and have been created for years and for geographical units where no such data have ever been known to exist.

What Are These New Poverty Estimates and What Do They Imply?

The World Bank's recent estimates of poverty in the developing world have led to an upward revision of the number of poor in the world by 400 million. These adjustments are made on the basis of the revision in purchasing power parity estimates as part of the International Comparison Program exercise. Using the same ICP exercise, the Asian Development Bank claims an even higher estimate of the poor in Asia. A proper examination of the underlying database and the methodology for estimating poverty across countries suggests that though these estimates are better than the earlier ones, the assumptions behind the adjustments and the quality of data obtained from the ICP limit the usefulness of such an exercise for cross-country poverty comparisons. For India, both these estimates suggest severe underestimation in the official numbers on poverty.

Social Sector: Continuation of Past Priorities

Has budget 2008-09 been able to fulfil its commitments to the National Common Minimum Programme? This article analyses the allocations made to the social sector, investigating spending on education, health, employment generation and the Bharat Nirman programme.

Recent Trends in Poverty and Inequality: Some Preliminary Results

Preliminary estimates from the published reports of the 61st round of the National Sample Survey suggest that while poverty did reduce during 1993-2005, the annual rate of reduction in this period was lower than in the 1970s and 1980s. More importantly, the bulk of this decline occurred in 1999-2005, with little or no reduction in poverty in 1993-2000, confirming the earlier consensus that the 1990s were indeed the lost decade for poverty reduction. Although the analysis is not conclusive, the fall in the relative price of food and the regional pattern of changes in employment and wages appear to underlie these trends. These results need to be explored in greater detail as and when the unit level data for 2004-05 become available. The paper also flags certain issues related to the poverty line which need to be settled once and for all.

Poverty and Inequality in India-II

Part I had critically examined previous 'adjustments' to the 55th round of the NSS, and offered corrections. Part II puts this round in the context of other NSS rounds to examine the 1990s trends in their entirety. It is now certain that economic inequality increased sharply during the 1990s in all its aspects and, as a result, poverty reduction deteriorated markedly despite higher growth. This has implications for policy, and lessons for future survey design.

Poverty and Inequality in India - I

The 55th round (1999-2000) of the NSS used a different methodology from all previous rounds and arrived at lower poverty estimates. The consensus from earlier NSS rounds, that poverty reduction had been set back during the 1990s, was challenged by this data. This was bolstered by some 'adjustments', which although agreeing that the 55th round had overestimated poverty reduction, claimed that the number of poor had nonetheless fallen by 30-45 million. However, a detailed re-examination shows that these 'adjustments' were not correct. The poverty ratio fell at most by 3 percentage points between 1993-94 and 1999-2000, and it is likely that the number of poor increased over this period. The main lesson is that poverty estimates are very sensitive to both survey design and post-survey analysis. The first of a two-part article.


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