A thin Indian line

The poverty line. You’ve heard that phrase so often. So many below it, so many have moved above it; 36 per cent below it once, 26 per cent now. The numbers fly about, the debates rage on. Yet what is the line? What does it mean to say someone is below the poverty line?

Let’s start with what the line is. [This page](http://mospi.nic.in/compenv2000_appendix 6.htm) gives us the definition according to the Government’s Ministry of Statistics and Programme Implementation: “The official estimates of the poverty line are based on a norm of 2400 calories per capita per day for rural areas and 2100 per capita per day for urban areas.” This goes back to the 1970s; at that time, we decided to measure poverty levels by considering a minimum nutritional level. More accurately, the measure was the amount of money required to buy food equivalent to this nutritional level. If you earned more than this amount, you were above the poverty line.

Something important to note here: it’s not that your expenditure on food - the portion of your earnings that you spend on food - had to be more than this amount for you to be recognised as being above the poverty line. No, the definition assumed that your entire earnings had to be more than the amount. That is, the official definition of the poverty line assumed that you spend all your money on food. Keep that in mind.

In the ’70s, when our governments first began using this definition, the monthly cost of the “basket of food” required to supply these nutritional levels was calculated to be Rs 62 in rural areas, and Rs 71 in urban areas. With inflation, those numbers rose to Rs 328 and Rs 454 respectively, by the year 2000. As far as I know, we don’t yet have available any poverty figures post that date. But according to this table, inflation was 3.8 per cent in 2001, 4.3 per cent in 2002, 4.1 per cent in 2003 and 5.5 per cent in 2004. (2004 is the most recent year for which I’ve been able to find inflation figures). Inflate Rs 454 by these amounts, and you get a 2004 figure of Rs 540: the price of our urban basket of food. (I’ll focus on the urban basket for the rest of this article; the reasoning is similar for rural areas).

What are we talking about here? This much: In 2004, if you lived in an Indian city and you earned more than Rs 540 a month, you were considered above the poverty level. Remember again that this figure is the estimated cost of that basket of food on which you spend all your money. We are not talking here about whatever you need to spend on shelter and clothing and transport and such like.

Every fourth person around me is officially poor - and I don’t know any of them. In contrast, every twenty-fifth Indian around me uses the Web. I know plenty of those Indians. Why am I so detached from an entire one-fourth of my country?

• GDP number crunching won’t do

• Minimised by the law

• Too little, for too long

So what we are saying is that if your total earnings amounted to more than Rs 540 a month, you were not considered poor. We are saying that if you earned, let’s say, Rs 600 a month, out of which you paid Rs 540 for food, you were not considered poor. And it is by this calculation that we estimate that 26 per cent of India is below the poverty line; that we are pleased that that number has declined from 36 to 26.

It’s worth some thought, the implications of these numbers and this method.

First thought, can you think of anyone you know who earns Rs 540 or less a month? I certainly don’t. The woman who sweeps our house every evening, who is visibly poorer than most other people I know, takes home Rs 700 from us, and similar amounts from other homes she works in. She’s nowhere close to this line.

Yes, I know nobody who lives below the official poverty line. Yet according to widely publicised figures, 26 per cent of India lives below it. That is, every fourth person around me, here in India, is officially poor - and I don’t know any of them. In contrast, I recently ran into figures that show that only four per cent of India - or every twenty-fifth Indian around me - uses the Web. I know plenty of those Indians. Why am I so detached from an entire one-fourth of my country?

Second, consider again the meaning of the poverty line: that your entire income must be below the price of the basket of food for you to qualify as poor.

But how realistic is this? For all of us, food is just one of the things we spend our income on. What about shelter, clothing, transport, fuel, health care, education, putting something away for a monsoon day? What about paying off a loan I might have taken to buy seed, or a cow, or a motorbike? All these things need money, take chunks of our earnings.

To put this in perspective, let me arbitrarily decide for the purposes of this argument that people at the lower end of the economic scale spend one third of their earnings on food. Therefore, to be able to spend Rs 540 a month on that basic basket of food, such a person would need to earn Rs 1620 a month. Less, and she would be unable to afford those minimum nutritional standards. Less, and she would be poor.

Does this seem like a better way to measure poverty? To me it does.

So do you know anyone who earns less Rs 1620 a month?

I do. And that leads me to this thought. If 26 per cent of India lives below the poverty line, earning less than Rs 540 a month, what fraction of India earns less than Rs 1620 a month? What does that say about our poverty levels?

Why all this calculation and reasoning? Because to me, it seems obvious that we need a more realistic way of measuring poverty in this country. At the Centre for Policy Alternatives Society in New Delhi, Ronald Abraham and Mohan Guruswamy have got to grips with that problem. They have just published a monograph called “Redefining Poverty: A New Poverty Line for a New India.” (available here, PDF file). It looks at just the issues I’ve touched on here, though of course in much greater detail.

But theirs is not the first attempt at a better measure of poverty. Another such attempt came from the UNDP, who first used it in their 1996 Human Development Report. They called it the Capability Poverty Measure, or CPM. Here’s a short extract from that Report:

“[We need] a more people-centred measure of poverty that recognizes that human deprivation occurs in a number of critical dimensions. Lack of income is just one dimension, and it is focused on means rather than ends. The CPM is a multi-dimentional index of poverty focused on capabilities … Deprivaton is reflected in a lack of basic capabilities — when people are unable to reach a certain level of essential human achievement or functioning. [My italics]”

So for any country, its CPM is calculated using three chosen factors: the percentage of children under five who are underweight; the percentage of births unattended by trained health workers; and adult female illiteracy. Why these? “Rather than trying to be comprehensive by reflecting deprivation in all human priority areas,” says the 1996 Report, “the index emphasizes critical areas where progress is needed most.

And what did the CPM reveal about India?

According to the 1996 Report, 53 per cent of Indian children under five were underweight. 67 per cent of Indian births were unattended by health personnel. 64 per cent of Indian women were illiterate. Average these to get our CPM: 61.5. That made us 89th among 101 developing countries the HDR ranked that year by their CPM.

In other words, in 1996 about three of every five Indians were “capability poor” (as opposed to “income poor”). Of such people, that 1996 Report observes that they “lack basic, or minimally essential, human capabilities.” It also makes this instructive point: “Poverty cannot be eradicated merely by boosting income.”

Actually, the first step towards eradicating poverty is to understand just how many of us are poor, and what that means. That’s the reason for these different ways to consider the poverty line. As Guruswamy and Abraham write: “The present unrealistically low poverty line only serves the purpose of making the Government and its development efforts - or the lack of it - look good.”