A Case for Delinking Poverty Lines and Entitlements and Going Beyond Income?

The recently released Poverty Estimates for 2011-2012 wherein the the Planning Commission of India has claimed that the total numbers of persons below poverty line has declined to 21.9 % has provoked considerable debate and outrage in the media and political circles on the reliability of these figures and the adequacy of the poverty benchmarks followed by the Planning Commission.

The Hindu in an editorial noted that there is some basis for the claims that the the release of these estimates was timed to maximize its utility for the UPA Government. The CPI(M) said the estimates made "a mockery of life and death struggles" of the people. Its sister-party, CPI averred that the Planning Commission was "perpetuating fraud" on poverty line to restore the image and credibility of the UPA government ahead of the 2014. Echoing the Left Parties, BJP charged the government with “making a mockery of the plight of the poor people and misleading them.” [See this report for the reaction of opposition parties]. Curiously, some of the UPA leaders too have not been shy of taking potshots at the Planning Commission Poverty Line.

Joining the debate, N.C. Saxena, Member National Advisory Council has argued that “the present methodology for determining poverty based on consumption expenditure is certainly flawed, and leads to under-reporting of the actual number facing acute deprivation” and that the “current poverty line is too low and could be called the destitution or the starvation line.”

The beleaguered Planning Commission has found support for the Suresh Tendulkar Methodology in T. N. Ninan, columnist for Business Standard, who wrote: “the Tendulkar definition of extreme poverty closely mirrors the poverty line used by 189 members of the United Nations to set the first of eight Millennium Development Goals - which is, to halve the level of poverty between 1990 and 2015 (something which, please note, India has already achieved). The definition of poverty used to set this goal is $1.25 per day. That would be about Rs 75 per day in a straight conversion to rupees at current exchange rates, but works out to about Rs 30 when you take purchasing power parity into account, as you are supposed to. As it happens, the Tendulkar line for rural areas in 2011-12 was Rs 27, and in urban areas Rs 33. So any criticism of the Tendulkar definition of extreme poverty runs smack into what is the internationally accepted definition. For some strange reason, the government finds it hard to point this out.”

This debate, as intense as it has been, has however not emphasised enough on the advisability of linking poverty line and welfare entitlements. Many of the critics of the Planning Commission Estimates, from Harsh Mander to Bharatiya Janata Party, have expressed their fear that the Poverty Line has been pegged on the lower side so as to cap the number of beneficiaries for social welfare schemes and thereby limit social spending by the government. Interestingly, Vivek Dehejia, Professor of Economics at the Carleton University, made the same point while supporting the existing Poverty Line. In a tweet, he noted that “criticisms of the poverty line as being "too low" often miss the point that it's used to target allocations, not as an ethical judgement.” 

Certainly, the Government has a compelling interest in using poverty benchmarks as metric for policy formulation. Yet, an objective definition of poverty cannot solely be a function of public policy. As Amartya Sen argued in Poverty and Famines: An Essay on Entitlement and Deprivation (Oxford: 1999):

“there is clearly a difference between the notion of 'deprivation'and the idea of what should be eliminated by 'policy'. For one thing, policy recommendations must depend on an assessment of feasibilities ('ought implies can'), but to concede that some deprivations cannot be immediately eliminated is not the same thing as conceding that they must not be currently seen as deprivations.” [p. 20]

Therefore, it is imperative that current assessment of poverty in India must be kept separate from governmental policy on identifying 'target groups' for social welfare schemes. The fact that the latter would be contingent upon availability of resources does not imply that the benchmarks used for measuring poverty must also be so qualified. Admittedly, it would be politically difficult for any government in India to admit that their pro-poor schemes exclude a sizable section of persons living under poverty. Nonetheless, such conflation of poverty lines and welfare entitlements has impeded analytical clarity over the utility of poverty lines and also incentivises under-representation of the extent of deprivation in the country by government of the day.

The current debate also points towards the limitations of a benchmark based on income and consumption expenditure. Proponents of the Capability Approach have asserted for long that income is only instrumentally significant and is not valued for its own sake; that its conversion into well being is also contingent on a number of variables including personal heterogeneities, physical environment, social climate and relational perspectives. Thus, an income-centric understanding of poverty cannot capture the true extent of deprivation. As N.C Saxena noted in the above-cited column: “the estimates for the number of poor should be reworked by taking into account their deprivations and living conditions, such as access to basic services, shelter, public health, and education.”

It is not a surprise therefore that Y.K. Alagh, a critical figure in the formulation of the first poverty line in the Seventies, has urged for a complete overhaul of the methodology currently used by the Planning Commission and the relevance of a singular country-wide benchmark for assessing poverty.