Two different sets of poverty estimates for India were released recently. One paper was written by Surjit Bhalla, Karan Bhasin and Arvind Virmani and the other by Sutirtha Roy and Roy Weide, both affiliated to the World Bank. Both presented estimates for roughly the same period after 2011-12, but ended up on different estimates of poverty and the magnitude of its decline. This is in contrast to the two earlier estimates, both of which showed an increase in poverty after 2011-12 using data on consumption expenditure from the National Statistical Office (NSO), albeit from different surveys. s. Subramaniam presented his estimates in 2019 using leaked consumption expenditure data from the 2017-18 survey, which was scrapped by the government. Santosh Mehrotra and Jajati Parida, on the other hand, used consumption aggregates from NSO’s employment surveys to arrive at similar estimates to Subramaniam of poverty growth after 2011-12.
All this combined, poverty can be estimated at 2.9% by Bhalla, Bhasin and Virmani to 13.6 per cent by Roy and Waid, 25.9% by Mehrotra and Parida, and 35.1% by Subramaniam. Barring Mehrotra and Parida, whose estimates are for 2019-20, the rest are for 2017-18. Obviously, the variation is huge. Reality does not change regardless of how poverty is measured, but this variation is an indicator of the state of affairs in poverty measurement. The difference in poverty estimates is due to the measure of income/consumption used as the poverty line of their choice. While Subramaniam used leaked NSO data on consumption, Mehrotra and Parida used the low consumption question in NSO’s job survey. Roy and Weed used the Center’s Consumer Pyramid Household Survey to monitor the Indian economy, with some adjustments. Bhalla, Bhasin and Virmani have used personal final consumption expenditure (PFCE) estimates of national accounts to build a series. Bhalla, Bhasin and Virmani’s estimate is different here, which does not use household surveys; Given the non-comparability of national accounts data with survey data, this is the age-old approach Bhalla has been advocating without success. The poverty line also creates a difference: like Roy and Weed, Bhalla, Bhasin and Virmani used the World Bank’s poverty lines of $1.9 and $3.2, while Subramaniam and Mehrotra and Parida, respectively, used the Rangarajan and Tendulkar committees. used by the official poverty line.
This is not the place to examine the merits and demerits of those conjectures. There is a loss of reliable data due to conflicting estimates of poverty for the same period and a scale to measure poverty and inequality after 2011-12. Until then, the responsibility of providing official poverty estimates based on comparable and acceptable criteria rested with the government, especially the then Planning Commission. Panels would regularly define and update our poverty line using NSO data, all of which were freely available, for a healthy debate on poverty. In fact, India can claim to be a leader in poverty studies as well as household consumption surveys, which were acclaimed and adapted by agencies like the World Bank.
We are now in a situation where the Final Consumption Survey of 2017-18 was abruptly canceled without any official study or findings of abnormality being made public. Even as for the committees that define the poverty line, the last panel led by C. Rangarajan has seen no action by the government, although its report was submitted eight years ago.
The absence of an official poverty line and consumption data has forced researchers to use alternative methods of estimation. But it has created more confusion than clarity as to how Indians have fared. This question is important in normal times, but more so after the economy has gone through policy shocks like demonetisation and GST roll-out and natural calamities like the 2014-15 drought and the Covid pandemic. Poverty estimation is not merely an academic exercise but an important criterion to judge policy outcomes and the overall functioning of the government. Note that poverty figures are used for allocation under various government programs and for the distribution of resources, financial and otherwise, in particular states. Poverty and income distribution are issues of public discussion, as they are instruments of governance and public policy for an economy that still has a large population that is economically vulnerable, even if not officially poor.
Himanshu is Associate Professor at Jawaharlal Nehru University and Visiting Fellow at Center de Sciences Humanes, New Delhi