India Finds 100 Million New Poor People

Measuring poverty is a tricky business. Is a person poor because they can’t afford a certain set of goods that we consider necessary? If so, is that just bread and water, or does it include all portable devices produced by Apple? Is someone poor because they can see themselves getting poorer in the future? Or is poverty more simply reserved for those whose children are visibly starving to death on the streets?

A new report by a government-appointed body (which I can’t find an original copy of online) has moved the goalposts and made official estimates of poverty seem pretty optimistic about the government’s success in tackling poverty. Their report finds 41.8 per cent of the rural population and 37.2 per cent of the total population is below the poverty line. This compares with the Planning Commission’s recent estimates stating that poverty had dropped from 35.97 per cent in 1993-94 to 27.54 per cent in 2004-05. That means that the Indian government has suddenly found itself lumbered with over 100 million poor people it thought it had taken care of.

This has changed the ranking of states, with the poorest now being Orissa, Bihar, Chhattisgarh, Madhya Pradesh, Jharkhand and Maharashtra. Not surprisingly, as this Mint article points out, they are also the states in which the the Naxalite insurgency is most powerful. The news does little to support the government’s claim that its liberalised capitalist economy is dragging the poor up into the middle classes.

What has changed, of course, is the methodology. The government has previously used a pretty straight-forward system set up in the 1970s in which poverty was judged by a family’s calorie intake. The new report updated price indices and added a number of other essentials – education, health provision, rent – to the equation. The implications for the government are heavy. From Mint:

Not only do the findings establish that the unprecedented spurt in the growth trajectory in the last two decades has been less inclusive than initially assumed, they will, if the government accepts them, increase the fiscal burden on the exchequer as there will have to be greater devolution of resources to states to help fight rural poverty.


One response to “India Finds 100 Million New Poor People

  1. Pingback: India-Pakistan: New Toys and Bad Sports « Kikobor

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