The Modi government has found the most remarkable achievement of its 10-year term, or some might say, it dug the achievement out of the Household Consumption Expenditure Survey (HCES) Data for 2022-23 with great labour. However, with a hyper jingoistic and massively disorganised campaign that BJP seems to be running before the 2024 General Elections, the party had found no time to campaign for this ‘achievement’ of eliminating extreme poverty.
On February 24, 2024, the Ministry of Statistics and Programme Implementation released the HCES Data for 2022-23, first time after 2011-12. It only released the summary results of HCES: 2022-23, and the detailed report of the survey was reported to be coming out only by June 2024 i.e., after the 2024 General Elections. Usually, this survey takes place every 5 years and the survey that was conducted in 2017-18 was not released at all on the pretext of ‘data quality’ issues; no subsequent survey was conducted although the government came to power again, possibly due to the pandemic.
B.V.R. Subrahmanyam, the chief of NITI Aayog, the government’s think-tank claimed that the HCES data indicated that less than 5% of Indians would be, or are, below the poverty line. If this is to be taken as a fact, that would be a significant drop from the 21.9 % of people below poverty line in 2011-12. Many have pointed out the timing of the fact sheet rather than the whole report being put out just before the elections, as a ploy. There are issues with how data was collected and interpreted etc.
This article presents an overview of poverty and the concepts around it, the issue with the HCES data, and the subsequent interpretations.
What is poverty and how is it measured?
Poverty is deprivation in well-being and comprises many dimensions. It includes low incomes and the inability to acquire the basic goods and services necessary for survival with dignity. According to the World Bank, people living on less than $1.90 per person per day are considered extremely poor and in September 2022, this limit has changed from $1.90 to $2.15 USD. The World Bank uses the lines of the poorest countries to define the international extreme poverty line. Ending poverty in all forms, everywhere is also the first of the 15 United Nations Sustainable Development Goals.
Measuring poverty is crucial for several reasons. Firstly, it helps in understanding the extent of economic hardship and deprivation within a society, allowing for targeted resource allocation to assist those in need. Poverty measurement is essential for creating a foundation where every individual, regardless of background, has access to basic living standards necessary for health, education, and overall well-being. Additionally, poverty measurement is associated with current material hardships faced by families, making it a vital tool for identifying and addressing issues related to housing, food security, and healthcare access.
Poverty Ratio- also known as Head Count Ratio (HCR) is the total number of poor people to the whole population. There are various types of poverty. Absolute Poverty refers the most basic level of poverty, where individuals lack the resources to meet their basic needs for survival, such as food, shelter, and clothing. These essentials will be clubbed into a Poverty Line Basket and those who cannot afford the items in the basket in a given time are considered as poor.
Relative Poverty, on the other hand, is a measure of poverty relative to the standards of living in a society. It focuses on disparities in income and wealth within a population, highlighting the gap between the rich and the poor.
How has India measured poverty since Independence?
In India, various committees have recommended, since independence, over what poverty is and who constitutes the poor.
After India gained independence, various Working Groups played a role in shaping the methods to calculate poverty. The Working Group of 1962 established a national minimum consumption expenditure, excluding health and education costs which were assumed as government responsibilities. Later, in 1979, the Task Force (Alagh) focused on calorie requirements to determine the poverty line. The Expert Group (Lakdawala) of 1993 refined the process by introducing state-specific poverty lines to account for price differences across the country.
Data collection methods for poverty estimation have also evolved. Initially, a Uniform Resource Period (URP) with a 30-day recall period was used. Later, the Tendulkar Committee introduced the Mixed Reference Period (MRP) which incorporated longer recall periods for certain items. The Rangarajan Committee proposed a further refined MMRP method. The focus shifted to include calorie requirements, as recommended by the ICMR, to ensure basic nutritional needs were met as part of the poverty line considerations. The Rangarajan’s committee’s recommendations have not been accepted by the government.
The Brookings Commentary, 2024 by Bhalla and Bhasin
The bottom 5% of India’s rural population, ranked by their Monthly Per Capital Expenditure (MPCE), has an average MPCE of Rs. 1372 and for urban it is Rs. 2001. Monthly Per Capita Expenditure (MPCE) represents the average amount of money an individual spends each month on various needs.
After the HCES Factsheet has been released, a commentary was released based on HCES Data by the Brookings Institution, authored by Surjit Bhalla, former part-time member of the Prime Minister’s Economic Advisory Council and Karan Bhasin that stated that the country’s real per capital consumption growth has been at 2.9%; with rural growth at 3.1% and urban growth at 2.6%. There were two other things that the report mentioned- i) there was a significant decline in inequality in terms of Gini coefficient; ii) Poverty in rural areas was recorded at 2.5% and 1% in urban areas. The report also stated that given that extreme poverty is eliminated, the country should shift to a higher poverty line. While the commentary mentions that it will give reasons as to why inequality is on the decline in terms of Gini Coefficient, there was no mention of such reasons in particular. The Gini Coefficient is a measure of income inequality within a population. It ranges from 0 to 1, where 0 represents perfect equality (everyone has the same income) and 1 represents perfect inequality (one person has all the income). A higher Gini Coefficient indicates greater income inequality, while a lower coefficient suggests more equal distribution of income. It’s used to assess the gap between the rich and poor in a society.
Inconsistencies between Incomplete Government Data and Independent Research Projects
A Paris based research organisation- World Inequality Labs has come out with a paper titled “Income and Wealth Inequality in India, 1922-2023: The Rise of Billionaire Raj” with significant insights on inequality in India. Authored by four economists including Thomas Piketty, the paper had three major points. One is that India’s top 1% income share is among the highest in the world; Second, quality of economic data in India is poor and has seen a decline recently thus making their findings lower than the actual inequality and finally that by 2022-23; third, the top 1% income and wealth shares are 22.6% and 40.1% respectively and are at their highest historical levels. The paper used variety of data to arrive at their findings including National Income Accounts, Income tax Statistic, Consumption Expenditure Surveys, Indian Billionaire Rankings, India Rich Lists, and Periodic Labour Force Survey Data etc.
The Brookings report states that Inequality in terms of Gini Coefficient has been declining whereas the World Inequality Labs Report says otherwise. Clearly, these are conflicting views on data and its interpretation. To be fair, the government’s handling of data, including the publication of a mere summary fact sheet of HCES Data is not desirable for sustaining the credibility, especially after it threw into the 2017-18 HCES Data into the bin without any transparency on what went wrong.
While it is necessary to engage in a deeper discourse on the issue of poverty and on data, it is further important to change the view of what constitutes poverty in India today, more than 10 years after the Tendulkar Committee Recommendations. Not only should the discussion to raise the poverty line in the light of the pandemic, Climate Change take centre stage in policy planning, but these issues should also become prime points in political discourse, thus bringing back the alleviation of poverty, not just extreme poverty from India.
(The author is part of the organisation’s legal research team)
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Hiding the Poor but letting poverty reign- skewed policy on urban poor needs change
India behind on poverty, health and gender goals: Independent study