India, remapped

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Bibek Debroy Posted: Oct 08, 2008 at 0034 hrs IST

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Not long ago, the World Bank increased India’s poverty figures by jacking up the international (purchasing power parity-based) poverty line to $1.25 per person per day. (ADB increased it to $1.35.) So there are 456 million (41.6 per cent of population) poor people. The official Planning Commission figure continues to be 27.5 per cent of population, say 300 million people today, depending on what population figure one takes. The National Commission for Enterprises in Unorganised Sector (NCEIUS) had a figure of 237 million for poor and extremely poor. Since assumptions differ, one can’t quite match these estimates. However, they all originate with the NSS large sample of 2004-05. Hence, these figures are somewhat dated. With income and consumption growth, even if this growth is unevenly distributed across segments of the population, poverty figures must be lower today, as a ratio, if not in absolute terms. Until we have another NSS large sample, perhaps in 2009-10, we won’t quite know. For the moment, let’s assume there are around 250 million poor people, regardless of whether we are in 2004-05 or 2008. Given the present thrust of public policy, most analysis of income (or expenditure) poverty has attempted to correlate poverty with collective identities like SC/ST/OBC/religious status.

But why are we interested in such poverty numbers? Because we are driven by equity considerations and want to do something for poverty alleviation, so that growth becomes inclusive and divides and disparities are reduced. Hence, we have a fleet of anti-poverty programmes, led by so-called flagship schemes. The sub-conscious is probably at work in use of the expression “flagship”. A fleet is led by a single flagship. If there are several flagships, it is reasonable to deduce we don’t quite know what to do about poverty (beyond trickle-down effects of growth) and are therefore firing several pellets from a shotgun, in the hope that something somewhere will stick. Broadly, these anti-poverty programmes are either collective or individual. Bharat Nirman and Pradhan Mantri Gram Sadak Yojana are instances of collective interventions, since they build physical or social infrastructure perceived to be public goods. In contrast, there are programmes like National Rural Employment Guarantee (NREG) or Indira Awaas Yojana, directed towards the individual poor person. They provide private goods, not public ones, but subsidise the poor. No one can question the idea of subsidising the poor, provided we know who they are. This has proved to be an intractable problem since 1991, and even before.

Who are these 250 million people? The question shouldn’t be ducked. Nor should we avoid the question by suggesting all SC/ST/ OBC/Muslims are poor and all non-SC/ST/OBC/Muslims are non-poor. There is a double problem with any surveys on poverty, the NSS included. First, data become dated. Second, and more important, these are surveys, not censuses. Knowing there are 250 million poor people isn’t of much use, unless we can ascribe names, faces and addresses to these numbers. This identification has also been a problem when some states have undertaken their own surveys on poverty. So we resorted to decentralised identification through surveys during the Ninth Plan (1997-2002), especially for rural India. A family was poor if its annual family income was less than Rs 20,000, it didn’t own a TV or fridge and its land-holding was less than 2 hectares. The Tenth Plan (2002-07) refined this to 13 parameters for rural India (land-holding, type of house, clothing, food security, sanitation, consumer durables, literacy status, labour force, means of livelihood, status of children, type of indebtedness, reasons for migration) and seven parameters for urban India (roof, floor, water, sanitation, education level, type of employment and status of children), with states like Kerala, Haryana and Maharashtra adding their own variations.

Such decentralised identification based on ownership of physical assets (and similar variables) sounds eminently sensible, particularly because panchayats are involved. But it hasn’t worked that way. Consider how the system works. On each parameter, you get a score. Each parameter has a weight and the scores are thus aggregated to obtain an overall BPL (below the poverty line) index value. No matter how decentralised the survey, this is bound to be perceived as a top-down approach, since choice of parameters, choice of weights and formulae for aggregation are all inherently subjective decisions. For every method suggested, an equally plausible alternative is possible. This is the stuff one writes academic papers with, not use it for framing public policy on such a sensitive issue, where a double mistake is possible — identifying poor as non-poor and identifying non-poor as poor. It is always best if one can figure out some method of self-identification. Old people belong to a different category. Of the 77 million old (more than 60) people in India, 25 million have been estimated to be BPL. With overlap across the two categories, there are 34 million widows.

There are schemes like Annapurna for these segments, of doubtful delivery value. But let’s leave that aside. We are still left with around 200 million poor people and the recent Eleventh Plan (2007-12) document uses 2004-05 data to estimate there are 94 million working poor, around 69.5 million in rural India and 24.5 million in urban India. If we can get this 94 million to self-identify itself as poor, we will solve the subjectivity and non-transparency problem in identifying BPL. We do possess such a mechanism in NREG, in existence in 200 districts since February 2006. Let’s ignore the old debate about whether NREG was a sensible idea to start with, opportunity costs of resources, non-creation of productive assets and corruption and leakage (documented by CAG). Through NREG, 27.8 million households (de facto individuals) have self-identified themselves as poor. However, this is really for 330 districts (130 districts were added in 2007-08). Since all districts will now be covered, this process of self-identification will therefore cover the worst of the poor in that segment of 94 million.

The rural development ministry prides itself on NREG being IT-savvy, through involvement of NIC and TCS (especially in Andhra). Since Indian IT/ITES companies have been providing software services to the rest of the world, shouldn’t their services be used in India too? That NREG database can be used to issue biometric BPL cards, so that subsidies can be targeted to only the poor. This column has counted that as PM, Manmohan Singh has mentioned subsidy-targeting 22 times. Since flags typically fly from the admiral’s ship, how about the PMO accepting this as a true flagship programme?

The writer is a noted economist