Poverty line low, need to revisit methodology, says Montek Singh Ahluwalia

NEW DELHI: Planning commission deputy chairman Montek Singh Ahluwalia on Monday admitted that the latest poverty estimates released last week is indeed low and needs to be revised upward.


The commission said last week that only 21.9% of the population was poor, based on a per capita spending of 33.33 day in cities and 27.20 rural India, causing widespread outrage for being too low.

"As the country becomes richer and the per capita income goes up, there is need to redefine the poverty line. The latest numbers that planning commission have released, based on the Tendulkar Committee report, are absolutely rock-bottom numbers and gives us the number of poor who are actually the weakest group and therefore, should be the priority of the government," Ahluwalia said.

Based on this cut off, there were 269.3 million poor in India in 2011-12 against 407.1 million in 2004-05. If the poverty cut off is revised, the number of poor could increase again.

Ahulwalia said poverty has fallen at a faster pace during UPA regime and even the absolute numbers have come down as compared to the previous government. The last poverty estimates, based on the National Sample Survey, had come in 2004-05 and 2009-10. However, government did not consider the numbers of 2009-10 saying that it was a drought year and would not convey the real picture.

Hence, NSSO conducted a survey once again, based on which planning commission released the poverty estimates for 2011-12, the last year of the 11th plan period. According to latest estimates of the Planning Commission, the poverty ratio, or population of poor in the country, dipped to 21.9% in 2011-12 from 37.2% in 2004-05 due to an increase in per capita consumption.

This was a decline of 2.2% per annum since 2004-05 vis-a-vis 0.74% in the tenure of previous government, the Planning Commission had said. Besides, the absolute poverty numbers also declined, pulling out nearly 130 million people out of poverty in seven years of UPA regime.

The plan panel had used the Suresh Tendulkar Committee's methodology, which factors in spending on health and education besides calorie intake to arrive at a poverty line for cities and villages. Accordingly, those whose daily consumption of goods and services exceed 33.33 in cities and 27.20 in villages are not poor.

This has drawn lot of criticism from the opposition and from within the party. Since there has been similar criticism in the past, government has already set up a committee under Prime Minister's Economic Advisory Council chairman C Rangarajan to revisit the methodology for tabulating poverty.

The committee is expected to submit its report by middle of next year and Ahulwalia says he is confident of seeing an increase in absolute poverty numbers when the Rangarajan committee's recommendations are out.