Two main criteria are generally used to assess the progress of a modern economy: the rate of economic growth and the rate of decline in poverty. The first provides an idea of overall economic performance, while the second provides an idea of how widely economic benefits are being shared. The second scale is politically more contentious, and India’s ruling regime has largely avoided the issue since 2014. This has not stopped researchers from coming up with their own estimates on poverty in India, often based on limited data and questionable assumptions.
Official poverty lines in India are based on large-scale consumer expenditure surveys conducted by enumerators of the National Sample Survey (NSS) spread across the country. From the 1970s, official estimates of poverty were estimated by the Planning Commission on the basis of data from the quinquennial round of the NSS consumer expenditure survey. The previous such exercise had seen a sharp decline in poverty between 2004-05 and 2011-12.
A consumer expenditure survey was conducted in 2017-18, but it was suppressed. The leaked findings of the survey were published in trade standard In November 2019, showing a decline in rural consumption. The leaked data indicated a one per cent increase in the national poverty rate between 2011-12 and 2017-18, as calculated by the government. Peppermint Shown (“India’s rural poverty has increased”, 3 December 2019, bit.ly/3ZWzytc,
The Ministry of Statistics and Program Implementation (MoSPI) decided to scrap the survey, citing divergence with other data-sets such as the National Accounts Statistics, and the findings of an expert panel. However, the expert panel in question did not recommend suppressing that survey on the basis of such deviations, a member of that panel told this writer. Mospi declined to share a copy of the expert panel’s report when this writer filed a Right to Information request (and subsequent appeal) to obtain it, citing the “sensitivity” of the matter.
The divergence between survey estimates and national accounts is neither new nor unique to India. Several scholars, including Nobel-winning economist Angus Deayton, have examined the issue in the past, and the broad consensus is that survey data cannot be considered flawed because it varies from national account estimates. This is especially true in the case of countries like India, where national account of consumption is estimated, not directly estimated. In 2015 an official committee set up by Mospi and led by statistician AK Adhikari to investigate the issue showed that part of this divergence can be explained by definitional issues. The rest of it was due to errors in both the survey and the National Accounts Estimates.
Over the years, the NSS Consumer Expenditure Questionnaire has grown longer as new items have been added to reflect changing consumption patterns. However, questions on new items are usually placed at the end of the question set. So respondents may be too tired to answer properly. Since new items make up a large part of India’s national accounts, this may partly explain the growing divergence between the data-sets.
The methodology of the ongoing Consumer Expenditure Survey (2022-23) has been revamped to make the survey results more accurate. Under the new method, different parts of the questionnaire are used in different rounds, so that each individual interview is short. However, this change makes the survey incomparable with previous rounds.
To ensure comparability, the National Statistical Commission (NSC) suggested that the old method should be continued in the sub-sample of the survey. But soon after, the NSC did a U-turn on it, according to two people familiar with the development. So there would be no direct way to compare results from the past. Such comparisons will probably still be made. The government’s cheerleaders may well use the new survey data to describe the unprecedented decline in poverty over the past decade. Others may use alternative data sources to refute such claims. Independent scholars can complain, but Mospi officials will claim that academics are unhappy because they don’t like change.
A much-needed reform of an important survey is likely to be mired in controversy. India’s statistical establishment is to blame for this. A long line of scholars, from PC Mahalanobis to Moni Mukherjee to Deaton, had stressed the importance of conducting consumer expenditure surveys on an annual basis. When a poll is conducted regularly, the stakes in any one round are very low. It also allows for gradual experimentation without sacrificing comparability entirely.
In the absence of an annual survey schedule, the next best approach would have been to conduct a large-scale pilot survey using the new questionnaire recommended by the panel of officers. If such tests were conducted, the results should have been released publicly before the design of the new survey was finalized. It did not happen.
Finally, note that even in the past India’s official statisticians have faced trade-offs between comparability and accuracy. When making changes to the survey design, NSS surveyors will keep a sub-sample that will be conducted using the old methods, so that comparisons can be made with previous rounds. This is what the NSC had initially recommended. It is unclear why it reversed its own decision. India’s statistical leadership needs to come clean on this issue.
Pramit Bhattacharya is a journalist based in Chennai. His Twitter handle is pramit_b.
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