- Briefly state the differential methods giving rise to different poverty numbers.
- Briefly mention the reasons for poverty reduction.
The Government has withhold conducting the Consumption Expenditure Surveys to update the poverty lines. The last such survey, conducted in 2017-18, was junked. Based on a leaked estimate, it was reported that poverty increased from 31% (2011-12) to 35% (2017-18), with the absolute number of poor increasing by 52 million.
However, another estimates by IMF & WB have reported significant decline in poverty after 2011-12, although they differ from each other on the level as well as the magnitude of poverty reduction since 2011-12.
Differential Methods: Consumption Expenditure Surveys do not capture the estimates correctly and so, unfit for poverty measurement. The IMF uses Private Final Consumption Expenditure estimates from the national accounts. But PFCE does not give the distribution of consumption across households – a prerequisite for poverty estimation. These are derived aggregates available to the country as a whole with no separate estimate for rural-urban or states. The WB has arrived at the figure by using Consumer Pyramid Survey of Households, a privately conducted survey by Centre for Monitoring Indian Economy. While their methodology is also questionable, they try to adjust the anomalies of CPSH survey to arrive at a close estimate to NSS surveys.
What may have led to the perceived poverty reduction ?: many initiatives including the MGNREGA, and Food Security Act are the major contributors pulling people out of poverty. The expansion of subsidized food under the PDS had contributed to reducing poverty. Also DBT model has significantly increased the disposable income, reducing poverty.
There is a need for strengthening the social safety nets and expenditure on food & livelihood schemes given the challenge with economic recovery with rising inflation. Another thing is to strengthen the statistical system by making it independent of state interference. Given the controversy on poverty estimates, it is pertinent that the government conducts the CES at the earliest and decide the yardsticks for fixing the poverty line. The responsibility of anchoring policies & programs to clearly defined goals of poverty reduction rests with the government.