A Common Indian is a Poor Indian

In this article (pdf) in the latest issue of EPW (alternate location), economists Arjun Sengupta et al contest the official levels of poverty and indicate that 75% of Indian population is poor, which is twice the official figure. This means a staggering 836 million as of 2004–05.

The difference in the approach is their criteria for measurement of poverty that they insist needs to measure relative poverty as opposed to absolute poverty. Also interesting is the authors’ analysis by community (SC/ST, OBCs and Muslims- the overlap between poverty and these communities is evident.)

I do hope this stirs up debate around the jingle of ‘trickle down’ economics that one has heard over the last two decades and recognize the darkness in the noon of unprecedented growth rates.

Our estimate that a little more than three-fourths of the Indian people are poor and vulnerable in 2004-05, based on a value that is double the official poverty line, is consistent with other estimates. For example, the World Development Report 2006 of the World Bank reports 35 per cent of the Indian population as living below the extreme poverty line of one PPP $ per day.

The notion of an absolute minimum of a basket of goods yielding a calorie value plus some essential items loses most of its significance in a growing economy relative to per capita income. Poverty should be reckoned in relative terms to capture the inequalities in the system. There is nothing absolute about an absolute minimum for a poverty line when the economy is on a growth path of an unprecedented kind. That this point has not been factored, not just in India but even in some other countries with much faster rates of growth (e g, China), perhaps reflects an eagerness to show a declining trend in poverty or, for that matter, the magic of “trickle down” growth. There is no doubt that the case for revisiting the poverty line could become stronger as the economy continues to grow.

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5 thoughts on “A Common Indian is a Poor Indian

  1. Renegade Eye: Of course, you are right! But hats off to Arjun Sengupta and his associates for contesting the official figures. Their study is very significant because it belies the government’s claim that there has been a decline in poverty since the neo- liberal ‘reforms’.

  2. poverty estimation is a dicey game. there have been other articles in epw which have showed that even below absolute poverty line population is above 75% if the current actual prices of the food basket are considered instead of just inflating the original poverty line income of the 1970s by using the wpi change. in another article utsa patnaik showed that if the NSSO estimates of consumption expenditure are taken then also the population below poverty line is above 75%.

  3. Its a shame that one should have to reiterate these statistics time and again, though even then one cannot match the din of those who are celebrating the ‘reforms’ for nearly two decades now.

    I think it is significant- and is good for the UPA- that they have people like Arjun Sengupta around to hold the mirror once in a while. It is unfortunate that the Left has not pushed for him in a more important position- he is well suited to head the Planning Commission, at least much better than the present incumbent.

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