poverty estimation
Former Economic Advisory Council to the Prime Minister (PMEAC) Chairman C. Rangarajan is defending himself against criticisms on his estimation of poverty, which states that currently three out of ten Indian families are living in poverty. The Council’s estimation methods are considered somewhat conservative, involving in-depth normative analysis regarding food consumption and needs, as well as behavioral standards among city dwellers and rural families.

The panel accrued the research of the Indian Council for Medical Research to compute a person’s average need of calories, proteins and fats. According to Rangarajan’s formula, the states with the highest poverty rates are Assam, Jharkhand, Manipur and Odisha.

Under the Council’s poverty standards, a rural family of five spending less than $80 a month or an urban family of five spending less than about $115 a month should be considered poor. So, according to Rangarajan, 363 million Indians, nearly 30 percent of the population, are considered poor according to the latest census from 2011-2012. The Council also stressed how varied the prices of goods are across India. For instance, the report showed that, “the most expensive regions for the poor are about twice as costly as the cheapest.”

Their research unveiled that, in regions such as Gujarat — the state that the current Prime Minister once governed, figures show urban poverty rates slightly below the national average, but rural poverty rates drastically lower. This demonstrates the increasing gap between the rich and poor. The report showed a disdain for welfare programs in the region and noted, “Its poor are so poor that they are unable to exploit the economic opportunities as efficiently as the more fortunate.”

Although this established definition of a poverty line in India is the strictest guideline set in history, it reveals progress. In 2010, 38.2 percent of Indian families were considered poor, demonstrating a decrease since 2011. This new assessment of poverty in India has eased political tensions regarding the estimation of poverty. Before, the Congress Party was at odds with much of the population and even with newly elected Prime Minister Narendra Modi regarding the definition of poverty.

Most believed the poverty line was set too low. With these new standards, India hopes to go forward with more effective poverty reduction strategies, as it now has more realistic assessments of conditions in both rural and urban communities. The government is confident that these estimations will better allow for order in public spending to subsidize millions of lives, ensuring that the poorest — or those most in need — receive what is necessary to survive.

– Cambria Arvizo

Sources: New York Times, Business Standard, India Today

Photo: Rediff Business