The most significant agreement with some of the expert analyzes from our paper (Bhalla-Bhasin-Virmani, Epidemics, Poverty and Inequality: Evidence from India, IMF Working Paper, April 2022) is on the need to raise the poverty line, possibly increasing 68% in actual. in (ppd $1.9 per person per day to $3.2 ppd). The current line, in current rupee terms, is approximately 52 and we have recommended that it be increased to approx. 88. For a poor family of five persons, it would mean that the household income 1.6 lakh annually. With this poverty line, approximately one-fifth of the population would be poor, the ‘correct’ definition of relative poverty for a lower-middle-income economy. Note that poverty reduction is an intrinsic product of economic growth. In 2004, the poverty line was raised to 18% by the Government of India (Tendulkar Committee) and was accepted by all as a worthy move.
Among the original points raised in our paper was a simple point about measurement. Somewhat disconcertingly, not a single expert, friendly or otherwise, has noted this discrepancy between those who support and support the government of India, and the World Bank reports the world and the individual country (hereinafter World Bank) in its published Povkal report.
It is a simple matter of definition, on which there should be no disagreement. The facts are as follows.
The National Sample Survey (NSS) has three different definitions based on per capita consumption. The differences have to do with the recall duration of consumption for the three broad categories, and convergence across the academic and policy community (and the World Bank) on the appropriateness of each recall period. The ‘write’ recall duration is also supported by common sense justifications of memory and accuracy. For perishables (vegetables and fruits), the accuracy is increased with a recall period of 7 days. For periodic consumption (such as toothpaste, club fees, doctor visits, etc.), a 30-day recall is considered appropriate; And for durable goods (such as clothing, cars, carpets, furniture, etc.), the 365 recall period is considered reasonable.
Prior to the 1983 NSS report on consumption, all commodities were tabulated under a 30-day “Uniform Recall Period” (URP). Starting in 1983, the NSS combined a mixed reference period (MRP) with a 365-day recall. The term for “durable”. And after some experimentation and verification in the NSS surveys of 1999-00, 2009-10 and 2011-12, the NSS organization officially switched to the MMRP (Modified Mixed Recall Period) method. The difference between MMRP and MRP is in addition to the 7-day recall documentation for answers to questions related to fruit and vegetable consumption.
It is also worth noting that the Tendulkar Committee in its 2009-10 survey rejected the URP in favor of the MRP; And after 2011-12 (such as 2017-18 and onwards), MRP was officially canceled in favor of MMRP. Somewhat shockingly, the World Bank’s unofficial ‘gold standard’ of poverty measurement, the ‘junk’ and old (pre 1983) method of measuring consumption, is based on the Indian poverty estimates for 2011-12 and beyond. Submission continues, and hence poverty. It is quite possible that the World Bank does not use an official method of measurement for any other country, and does not use the 45 year old method for any other country (the last exclusive URP survey was in 1977–78).
It doesn’t matter if it doesn’t work. But it does. The MRP estimate for extreme poverty is about 3 percent lower than the URP, and about 10 percent lower than the MMRP estimate. In 2011-12, for India, this meant that the World Bank was wrongly classifying 100 million Indian individuals as extremely poor. The slogan of the World Bank is that it dreams of a poverty free world. The practice of using the URP method for India, with more than a fifth of the developing world’s population, adds to the nightmare of a world that is not free from absolute poverty.
Given the enormous importance of the recall period in generating representative estimates of poverty, World Bank authors Sutirth Sinha Roy and Roy van der Weid (Poverty in India has decreased over the past decade, but not by that much) and The heeding of the recommendation is surprising. As previously thought, World Bank Working Paper, April 2022) to use the CMIE Consumer Pyramid Household Survey which has a 4 month (120-day recall) period for all consumption items!
Not all poverty estimates are created equal. It is unfortunate that in India, a single question consumption estimate, as in the labor force surveys conducted by the NSS (PLFS Survey) in 2017-18, has 33 question-based estimates (Pre-2017-Pre-2017-18 NSS Labor Force Survey). . or the 120-month recall period of consumption (in CMIE) for items with significantly lower consumption has the same validity as the 30-day recall questions for a more detailed consumption estimate; or a 30-day recall period is preferred by the World Bank for India, when other official and equally detailed estimates are available (as in the MMRP surveys of 2009-10 and 2011-12). Non-survey years for their estimates of poverty (note that in most countries there is at least a 3–4 year gap between national surveys), the World Bank has to rely on base-year estimates of consumption and for the intervening years. It has to depend on the national account growth rate. , This is exactly what we do, with the important difference that we use the 2011-12 base year MMRP estimate, not the 10% lower 2011-12 URP estimate. Why the base-year reflects an unofficial underestimation of consumption has not been answered by our critics or the World Bank.
These are personal views of the author.
Surjit S. Bhalla is the executive director of the IMF, representing India, Sri Lanka, Bangladesh and Bhutan.