Re-defining Poverty in India

I am reading Economics these days (I intentionally used word reading' and not 'studying' - reading is fun, studying may not be). So a less-publicized news report caught my attention and I did some research to follow it up.

The recent report by renowned economist Suresh Tendulkar states that 37.2% of the population in India is below poverty line as against 27.5% in 2004. This is not because India is not growing, but rather because Tendulkar has 'redefined' the meaning of poverty in the present context. And that was very much required; because as the report shows 1) The BPL (below poverty line) definition was skewed and 2) a slight change in the definition of poor can change the whole picture completely.

The earlier definition for 'poor' was a person from rural area who spends less than Rs. 356 per month i.e. less than $8 per month! (at Rs. 47 per USD); or a person from urban area who spends less than Rs. 539 per month i.e. $11.5 per month! (at Rs. 47 per USD) Now these figures were based on very old and outdated theory of consumption (set in 1973-74 and unchanged since then). It used no. of calories as a unit to measure the consumption - meaning that it was mainly based on nourishment i.e. food consumption i.e. spending on food i.e. prices of food. It did not take into account broader aspects of 'standard of living' such as education, health, clothing, land/house owned or other essential items.

The definition based on calories (food consumption) alone was probably right in the 50s and 60s when India did not even produce sufficient crops to feed its own population. But now (especially after 1990s) it makes little sense to use same old yardstick of 'no. of calories consumed' to define poverty.

The definition has to be more inclusive representing the current lifestyle. Shouldn't earlier essentials - Roti, Kaada aur Makaan be supplemented with Bijli, Mobile aur Internet?? Maybe yes - coz it would instigate Manoj Kumar to make a sequel to his pathetic film 'Roti, Kapda aur Makaan', giving us another master-piece of comedy. Jokes apart but there is another key aspect why the correct definition of poverty is extremely crucial - because it can change the whole picture of Indian Poverty!

Check the statistics below:

Just by changing poverty line from $1 per day to $2 per day (i.e. from Rs. 47 to Rs. 100) the % of poor in India increases from 35.1 to 79.6!!! That means almost 45% of population earns between $1 and $ 2per day. 

That means tweaking poverty definition by a few Rs. can change the number of poor in India significantly. And this is what has been confirmed by Tendulkar's report. The Tendulkar committee has revised the poverty line in terms of money spent per person per month. From Rs356.30 a month, this has increased to Rs446.68 in rural areas (i.e. from $8 per month to $9.5 per month). In urban areas it has risen from Rs538.60 to Rs578.8. (i.e. from $11.5 per month to $12.3 per month)

And the % of poor in India has increased from 27.5% to 37%!!! 

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I am now wondering how Government can make 'easy progress' on 'eliminating poverty' just by re-defining poverty downwards...