37.2% of India is in poverty by criterion of consumption

The poverty ratio or the number of poor as a percentage of total population in India for 2004-05 is estimated at 37.2 per cent, according to a new report submitted on Tuesday by the Suresh Tendulkar committee to Planning Commission Deputy Chairman Montek Singh Ahluwalia.

The committee, headed by Tendulkar, former chairman of the PM's Economic Advisory Council, was asked to review the methodology to measure poverty.

The committee has defined the poor based on a normative living standard — it has moved away from calorie intake as the criterion and considered per capita consumption expenditure on commodities and services.

The number of poor in India in 2004-05 based on an estimate by the Planning Commission released in March 2007 is 30.17 crore or 27.5 per cent of the population.

It will, however, be wrong to compare the Tendulkar committee's estimate with the Plan panel's 2007 numbers since the criteria for defining the poverty line itself have changed.

When contacted, Ahluwalia told The Indian Express, "The report says there is nothing wrong with the Plan panel's 2004-05 estimate of urban poor. Yes, it has said that the rural poverty line is understated."

He said the government will study the methodology and it was early to say if the report will be accepted. Further, it also needs to be seen if the new poverty line should be applied to 2004-05 or 2009-10, Ahluwalia said.

The Tendulkar committee has set the threshold per capita consumption expenditure for defining the poor in rural India at Rs 446 per month and for the poor in urban India at Rs 580 per month, after making adjustments for price differences.

The Plan panel's earlier estimate had pegged rural poverty at 28.3 per cent and poverty ratio in urban areas at 25.7 per cent. The Tendulkar committee says the poverty ratio in rural India, based on the new line, is significantly higher at 41 per cent or 32 crore in absolute terms. In urban areas, it is 27.5 per cent or 8.71 crore.

Planning Commission Member Abhijit Sen put the two estimates in perspective. "Basically, what the Tendulkar committee means to say is calorie intake that is taken as a criterion since 1970s is no longer relevant today because people in rural areas consume far less calories for the same income today compared with what they did in 1970."

The Tendulkar committee has hence looked at the bundle of goods and services being consumed by people in urban areas and compared it with the consumption pattern of people in rural India. "This has led them to believe that the rural poverty line should go up," Sen said.

The Plan panel's estimate for 2004-05 was based on the National Sample Survey Organisation (NSSO) survey finding that said an income of Rs 560 per month was enough to purchase 2,100 calories of nutrition in urban areas and an income of Rs 368 per month was enough to purchase 2,400 calories of nutrition in rural areas.

The poverty ratio of 27.5 per cent in 2004-05 suggested that it had come down significantly from 36 per cent in 1993-94.

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