January 25, 2011

Poverty Estimates by Different Committees - G1 mains Unit 3 - Indian Economy

Expert Group Methodology – Lakdawala Committee The Lakdawala Committee defined the poverty line based on per capita consumption expenditure as the criterion to determine the persons living below poverty line. The per capita consumption norm was fixed at Rs.49.09 per month in the rural areas and Rs.56.64 per month in the urban areas at 1973-74 prices at national level, corresponding to a basket of goods and services anchored in a norm of per capita daily calorie intake of 2400 kcal in the rural areas and 2100 kcal in the urban areas. The Expert Group disaggregated the National Poverty lines separately in rural and urban areas into States specific poverty lines in order to reflect the inter state price differentials. For the subsequent years, the State specific rural poverty lines in 1973-74 are updated by using state specific Consumer Price Indices of Agricultural Labourers (CPI-AL). Similarly the urban poverty lines are updated by state specific Consumer Price Indices of Industrial Workers (CPI-IW). Based on the Expert Group methodology, the poverty lines in 2004-05 at all India level were calculated as Rs. 356.30 per capita per month for rural areas and Rs. 538.60 per capita per month for urban areas and estimated poverty ratio as 27.5% (30.17 crore persons).
Tendulkar Committee There had been much discussion about whether the poverty lines underlying these official estimates need to be redefined. Recognizing the need to address these issues, the Planning Commission in December, 2005 appointed an Expert Group under the Chairmanship of Prof. Suresh D. Tendulkar to review alternate concepts of poverty and to recommend changes in the existing procedures used for official estimates of poverty. The Tendulkar Committee submitted its report in December, 2009. The Committee has recommended that the rural poverty line should be recomputed to reflect money value in rural areas of the same basket of consumption that is associated with the existing urban poverty line. The resulting estimate of the all-India rural poverty head count ratio for 2004-05 was placed at 41.8 percent, urban poverty head count ratio at 25.7 percent and at all-India level at 37.2 percent.
Arjun Sengupta Report The National Commission for Enterprises in the Unorganised Sector (NCEUS) set up by Ministry of Micro, Small and Medium Enterprises (MSME) in 2004 brought out a report on Conditions on Work and Promotion of Livelihoods in the Unorganised Sector. In this report, it was reported that 77% of the population had a per capita daily consumption of up to Rs. 20 in 2004-05. The Committee did not provide any justification for using the cut-off amount of Rs. 20 per day. Besides, the estimation of 77% is also erroneous since the percentage works out to 60.5 percent. This fact has also been reported in the Economic Survey 2008-09.
Poverty Estimate by the World Bank In the World Development Indicators 2008 brought out by the World Bank, the global poverty line has been calibrated at US $ 1.25 a day. For India, the percentage of people living below the global poverty line as defined by World Bank has declined from 59.8% in 1981 to 51.3% in 1990 and further to 41.6% in 2005.
Saxena Committee Report The Ministry of Rural Development constituted an Expert Group headed by Dr. N.C. Saxena to recommend a suitable methodology for identification of BPL families in rural areas. The Expert Group submitted its report in August 2009 and recommended to do away from the methodology of score based ranking of rural households followed for BPL census 2002. The Committee has recommended the criteria of automatic exclusion and automatic inclusion of certain sections of society facing deprivations and vulnerability, and that for rest of the people a survey be conducted to rank them on scale of 10 points. The Saxena Committee had also suggested that the national level poverty ratio can be assumed at 50 percent. This is not based on any specific justification.
Latest Position The Mid Term Appraisal of the Eleventh Five Year Plan has indicated that the revised poverty lines for 2004-05 as recommended by the Tendulkar Committee have been accepted by the Planning Commission. These estimates put 41.8% of rural population and 25.7% of urban population as BPL, resulting in a national poverty head count ratio of 37.2%. As the poverty estimates of Planning Commission will continue to be based on the sample survey of consumption expenditure of households to be carried out by the National Sample Survey Organization (NSSO) after an interval of every five years, the next poverty estimates based on the Tendulkar Methodology will be available when the data of 66th Round of NSSO Survey for 2009-10 becomes available in end 2011. The Planning Commission is not aware of separate poverty estimates brought out by any State Government.


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