New Delhi: Claims that poverty has almost disappeared in India are misleading and take attention away from the lack of data on the extent of poverty in the country, a study has found.
C. A. Sethu, L. T. Abhinav Surya, and C. A. Ruthu estimate in their recently published study that according to official data, over a quarter of all Indians are below the poverty line (26.4%). The three authors have drawn on unit data from the Household Consumer Expenditure Survey (HCES) 2022–23 and recalculated the Rangarajan poverty line for each state and rural-urban area.
Their claim stands in sharp contrast to the claim by B.V.R. Subrahmanyam, the chief executive officer of NITI Aayog, in 2024, that the poverty ratio in India had fallen to below 5%.
Government silence, bringing back the money metric
An editorial written by the Review of Agrarian Studies, which has published the paper, noted that for over a decade now, there has been silence from the government of India on the extent of poverty as measured by consumption expenditure, a proxy for income. It highlights two issues – one on the lack of availability of quality data, and two, the government’s shift from measuring and reporting poverty in terms of consumer expenditure to measuring it in terms of different aspects of living standards.
An online panel discussion by the Foundation for Agrarian Studies, Bengaluru, recognised the problem of not having an official estimate of poverty in India on December 18. “Those of us concerned with not just measuring poverty but also the real problem of ending it need to bring back the money metric [in estimating poverty] in some way, even if not basing all our understanding on just using that,” Madhura Swaminathan, professor of the Indian Statistical Institute, said.
The last official estimate of poverty was provided by the Planning Commission in 2013 and was based on the poverty line recommended by the Expert Group chaired by professor Suresh Tendulkar and with data from the Consumer Expenditure Survey of 2011–12. The proportion of population that was poor was estimated to be 25.7% in rural India and 13.7% in urban India, the editorial notes.
It then goes on to essay how the United Progressive Alliance (UPA) government set up another Expert Group under the chairmanship of C. Rangarajan which recommended a poverty line a little higher than the Tendulkar poverty line, as it included expenditure on some essential non-food items in addition to expenditure on the food required for survival. “The Expert Group estimated that 30.9% of the rural population and 26.4% of the urban population in 2011–12 fell below the poverty line. These estimates were never officially endorsed,” it said.
But since 2011-12, no official data on consumer expenditure were released till earlier in 2024, on the Consumer Expenditure survey which was conducted in August 2022-July 2023.
‘Shameful’ numbers
But the problems did not end here as scholars have noted that, for many reasons – including changes in sample design, changes in items in the questionnaire, and changes in methods of data collection – data from the latest round of Household Consumer Expenditure Survey (HCES) are not strictly comparable with data from earlier rounds, as the editorial said. “Unlike earlier, a sub-sample with the old design was not canvassed; such an exercise would have allowed for testing the effects of changes in method,” it added.
While improvements in the NITI Aayog’s Multidimensional Poverty Index very welcome, according to the Review, and reflect changes in a range of spheres, “it is not a substitute for measuring income poverty.”
The Review of Agrarian Studies emphasises how the study it has published presents numbers that are at best “shameful.”
“Applying the estimated head count ratio of 27.4% in rural areas and 23.7% in urban areas to the population, there were 246.7 million poor persons in rural India and 114.4 million poor persons in urban India. Altogether, there are 361 million persons that cannot even afford the minimum expenditure norm set by the Rangarajan-led Expert Group. India has more poor people than the entire population of the United States of America. By GDP or national income, India is ranked fifth globally. In terms of the absolute number of people in poverty, India ranks first in the world. A shameful record.”
The authors of this paper focused on on the method proposed by Rangarajan’s Expert Group, and used it to calculate the poverty line in 2022–23 for rural areas (Rs 2,515) and (Rs 3,63) for urban areas. This resulted in an overall poverty head-count ratio of 26.4%.
“Using a low poverty line threshold, that too in data that possibly contains an upward bias we still found that more than one in four Indians lives in poverty,” said C.A. Sethu, the author of the paper linked at the beginning of the piece.
In the same panel discussion, P. C. Mohanan, chairman of the Kerala State Statistical Commission, noted that the authors of this study had carried “much more elaborate exercise of recomputing the poverty lines,” but wondered whether such a detailed exercise needs to be repeated every time a new round of consumption survey data is released.
