Lies, damn lies and poverty

At least one out of four Indians is poor by any yardstick. And close to half the population live on less than two US dollars a day, currently equivalent to less than Rs 100. More than half the children who join primary school drop out

Paranjoy Guha Thakurta

Many have sought to interpret the latest findings of the large-sample round conducted by the National Sample Survey Organization, containing data up to 2004-05, that came out in early-November, as a major shot in the arm for the policies of economic liberalization that have been followed by successive governments from 1991 onwards. Why the euphoria?

Earlier surveys of the NSSO based on thin samples had indicated that employment in the organized sector of the country had grown by only one per cent each year between 1993-94 and 1999-2000, whereas, the population growth in this period was in the region of 1.9 percent per year. The growth rate of employment in this period was barely half the rate of growth of employment recorded in the decade of the 1980s. The latest data released by the NSSO suggests that employment growth between 1993-94 and 2004-05 stood at an annual average of 2.1 percent.

These statistics have been interpreted by certain economists to imply that the view that India had been experiencing a phase of “jobless growth” during the post-liberalization era has little or no basis in reality. That’s not all. The gung-ho liberalizers – and there is no dearth of them in the Congress as well as the Bharatiya Janata Party – further claim that by giving up its “bad, old socialist” ways, India will be able to make a major dent on poverty.

The new data put out by the NSSO, which is arguably the most authoritative and comprehensive of its kind, indicates the proportion of people living below the poverty line in India came down from around 37 percent in 1993-94 to roughly 28 percent in 2004-05. Actually, there are two sets of figures because those conducting the survey had asked questions relating to consumption over two time frames to the respondents making the data open to different interpretations. Thus, it can also be contended the proportion of people living below the poverty line came down from around 33 percent to 22 percent during the same eleven-year period.

The National Human Development Report of the government of India released in April 2002 had pointed out that the share of the population living below the poverty line declined from nearly half (around 47 percent) in the early-1980s to a little over a quarter (26 per cent) in 1999-2000. Poverty is conventionally defined in terms of income or expenditure levels. In India, the Planning Commission defines poverty as the level of per head consumer expenditure that can provide an average daily intake of 2,400 calories per individual in rural areas and 2,100 calories per person in urban areas above a relatively small allocation of non-food items.

The Indian government’s poverty estimates are based on quinquennial rounds of surveys using “thick” samples conducted by the NSSO in 1983, 1987-88, 1993-94, 1999-2000 and 2004-05. The fact that the design of the questionnaire used in the 55th round (1999-2000) was different from those used in the earlier rounds resulted in poverty estimates not being strictly comparable to those in the earlier rounds. Several economists have sought to factor in the changes in the survey methodology and according to some, the “real” proportion of Indians living below the poverty line in 1999-2000 should be closer to 29 percent instead of 26 percent.

Using the internationally comparable estimate of the proportion of people living on less than US $1 a day as the poverty line (after adjusting for differences in purchasing power across countries), the decline in the proportion of the poor in India was from around 46 percent in the early-1990s to 39 percent in 1999-2000. These figures should be considered in the context of the fact that India started the 21st century with a per capita income that was around half that of China and Indonesia – countries that were at comparable stages of development in the late-1960s and early-1970s.

The short point is that even as economists debate and discuss statistics, one does not have to look very far to realize the state of the Indian economy. At least one out of four Indians is poor by any yardstick. And close to half the population live on less than two US dollars a day, currently equivalent to less than Rs 100. More than half the children who join primary school drop out.

The Human Development Development Report of the United Nations Development Programme released on November 9 points out that “India may outperform Bangladesh as a high growth globalization success story, but the tables are turned when the benchmark of success shifts to sanitation: despite an average income some 60 per cent higher, India has a lower rate of sanitation coverage…”

The same report points out that India spends eight times more of its national wealth on military budgets than on water and sanitation. So what if Pakistan spends 47 times more? We should realize what a long way we have to go before we start complimenting ourselves on our achievements