India sees rising living standards, as poverty ratio declines

NEW DELHI: The poverty ratio in the country has come down to 22% from 36% in 1993-94 as per initial estimates, the government said. This could be a shot in the arm for the UPA government and a justification that reforms and liberalisation do help in improving the living standards of the masses.

The latest poverty estimates are based on the results of the large sample surveys conducted by National Sample Survey Organisation (NSSO) in 2004-05 on household consumer expenditure based on mixed recall period (MRP).

Based on this result, the government claims that poverty has declined by about 0.79 % per year during the period 1999-2005. Measurement of poverty has always been an important yardstick for the government to decide if its economic policies have helped the poor.

The NDA government had used the same MRP methodology to put the percentage of those below poverty line at 26.1% as on 1999-2000. But the UPA government had disputed the method and reverted to the earlier standard, under which the percentage of those below poverty line was set at 27.8%. However, it had said that if the same yardstick’s adopted then the poverty ratio can come down to 22% in 2004-05.

In the MRP method, consumer expenditure data of five non-food items — clothing, footwear, durable goods, education and institutional medical expenses and other items are collected over a fixed period. Usually, the data is collected on a year’s recall period and the consumption data for remaining items is collected from a 30-day recall period.

However, the final word on the subject will come from the NSSO survey on a quinquennial basis. The report on consumption expenditure is yet to be released. The government also said the decline in poverty is a complex process and not dependent on GDP growth.

“Unequal agricultural development, frictions and rigidity in the economy are some of the reasons for the imbalance,” a government paper on the subject said. Thus, while GDP in real terms during 1993-94 to 2004-05 period grew at around 6.3%, the rate of reduction in poverty was far more slow.