Poverty line or starvation line?

By Devinder Sharma
Dec 2009

The much hyped economic growth figures of India are often twisted and skewed in favour of very rich. While the nation is asked to celebrate few billionaires' multiplying wealth, millions of Indians continue to sink deeper below the poverty line...


There is something terribly wrong with India's growth economics. Almost two decades after the country ushered in economic liberalisation, the promise of high growth to reduce poverty and hunger, has not worked. In fact it has worked the other way round: the more the economic growth, higher is the resulting poverty.

A report by an expert group headed by Suresh Tendulkar, former chairman of Prime Minister's Economic Advisory Council, now estimates poverty at 37.2 per cent, an increase of roughly 10 per cent over the estimates of 27.5 per cent in 2004-05. This means, an additional 110 million people have slipped below the poverty line in just four years.

The number of poor is multiplying at a time when the number of billionaires has also increased. Economic growth, however, does not reflect the widening economic disparities. For instance, the economic wealth of mere 30-odd rich families in India is equivalent to one-third of the country's growth. As the wealth accumulates in the hands of these 30 families, so the country's economic growth figures rise. A handful of rich therefore hide the ugly face of growing poverty.

If these 30 families were to migrate to America and Europe, India's GDP, which stands at 7.9 per cent at present, will slump to 6 per cent. And if you were to discount the economic growth resulting from the sixth pay commission, which is 1.9 per cent of the GDP, India's actual economic growth will slump to 4 per cent.

Anyway, the complicated arithmetic hides more than what it reveals. Poverty estimates were earlier based on nutritional criteria, which means based on the monthly income required to purchase 2,100 calories in the urban areas and 2,400 calories in the rural areas. Over the years, this measure came in for sharp criticism, and finally the Planning Commission suggested a new estimation methodology based on a new basket of goods that is required to survive - including food, fuel, light, clothing and footwear.

Accordingly, the Tendulkar committee has worked out that 41.8 per cent of the population or approximately 450 million people survive on a monthly per capita consumption expenditure of Rs 447. In other words, if you break it down to a daily expenditure, it comes to less than Rs 15. I wonder how can the rural population earning more than Rs 15 and less than say Rs 30 a day be expected to be over the poverty line. It is quite obvious therefore that the entire effort is still to hide the poverty under a veil of complicated figures.

India's poverty line is actually a euphemism for a starvation line. The poverty line that is laid out actually becomes the upper limit the government must pledge to feed. People living below this line constitute the Below the Poverty Line (BPL) category, for which the government has to provide a legal guarantee of food. It therefore spells out the government subsidy that is required to distribute food among the poor. More the poverty line more is the food subsidy.

If the government accepts Tendulkar committee report, the food subsidy bill will swell to Rs 47,917.62 crore, a steep rise over the earlier subsidy of Rs 28,890.56 crore required to feed the BPL population. This is primarily the reason why the government wants to keep the number of poor low. In other words, the poverty line reflects the number of people living in acute hunger. It should therefore be called as the starvation line.

I remember a few years back, a group of charitable organisations in England presented a list of demands to the government for helping the poor. Unlike India, where BPL category only receives food rations, and that too severely short on the minimum nutritional requirement for a human body, the first demand of UK charities was to provide the poor in England with washing machines.

India's poverty criteria therefore are the most stringent in the world. I don't know the economic justification of hiding the true figures, but politically it makes terrible sense. Each government therefore is happy to gloss over the starvation figures in the guise of poverty estimates. I wonder when India will include a basket of essential good like footwear, cycles, sewing machines, solar lamps, water purifiers for the poor. This is economics, and not politics as the media will like us to believe.

It is in this context that I think the political initiative in Tamil Nadu, Madhya Pradesh, Chhattisgarh, Orissa and Bihar to provide bicycles to the girl child makes terrific economic sense.

Going back to the poverty line arithmetic, I think the N C Saxena committee suggestion of considering 50 per cent of the population in the BPL category lacks any scientific basis. He has simply tried to reach a compromise. The 2007 Arjun Sengupta committee report (officially the report of the National Commission on Enterprise in Unorganised Sector), which had estimated that 77 per cent of the population or 836 million people, were unable to spend more than Rs 20 a day, is a correct reflection of the extent of prevailing poverty.

In addition to monthly income, poverty estimates must incorporate the human development index as prepared by the United Nations Development Programme. Expenses on health and education, and also indices of water and sanitation are absolutely essential in measuring poverty. Such a broad calculation is a right measure of the real poverty, and there is no reason why the country should not accept the ground realities. This should comprise the new poverty line.

India should therefore have two ways to classify the poor. The Starvation line (or call it the Hunger line if you feel politically embarrassed) should indicate the percentage of population living in abject poverty and hunger. They desperately need direct cash transfers in addition to the basic requirement of food supplies. Otherwise, the Global Hunger Index will continue to place India below Sudan and Rwanda.

Those above the hunger line (AHL), and constituting the true poverty line, should not only receive food (but in lesser quantities) but also be provided with other economic necessities. Economic growth has to be inclusive, and to make possible the development path that the country has adopted is not the right approach. Growing economic disparities, more so after economic liberalisation, have created unforeseen socio-economic upheavals which have the potential to tear apart the national fabric.

The menace of naxalism is a clear reflection of the flawed policies. This bloody monster has reared its destructive head because the nation has refused to acknowledge the existing inequalities, cleverly hiding behind the façade of economic growth figures that are tossed around every day. It is time to make the necessary corrections, beginning with redefining the criteria behind poverty and drawing two lines - a hunger line and another, a new poverty line.