Why does the world need SHG's, just ask World Bank to perform the rope trick !

For 60 years, India made a half-hearted attempt to reduce poverty. Why I say a half-hearted attempt is because the way the Planning Commission worked out a stringently low poverty line all these years, aimed more at ensuring a low budget outlay for fighting poverty, it lacked any meaningful commitment to make poverty history.  

Let me explain why it didn’t work. Perhaps this story will better explain. A poor person fell down in a 100-feet deep village well. Listening to his cry for help, a number of villagers collected and were exploring the options of pulling him out. Meanwhile, an economist, who happened to be passing by, saw the crowd and walked it to know what was happening. He told the villagers to step aside as he could be of help. Looking at the depth of the well, he immediately worked out that the man in the well probably had to energy to climb the walls to about 50 feet. So he told villagers to bring a rope of 50 feet that can pull out the man to safety.

The poor man, who was crying for help, finally was drowned.

This story tells you how all these years a futile half-hearted attempt was made, despite substantial budgetary outlays, knowing well that the poverty eradication strategy will not work.

In the last three decades, policy makers found a still better way of removing poverty. Knowing that much of the half-attempts being made was going waste, they realized the best way to remove poverty is to sweep the number of poor under the carpet. I still remember when Pranab Mukherjee was the deputy chairman of the Planning Commission (1991-96),  he brought down poverty in one shot from 37 per cent to 19 per cent. It was only after the next government took over, and replaced the Planning Commission members, that poverty was once again restored back to 37 per cent.

The business of poverty that actually extends to sweeping the poor under the carpet has now grown worldwide.  

Over the years I find that while most governments across the world have failed to stem poverty (except in countries like China), the international financial institutions are bending backwards to demonstrate that economic liberalisation helps in reducing poverty, and often drastically. This is being achieved by tampering with statistics, and often providing social indicators that don't actually measure up. One such classic example is the dollar a day measure adopted by the World Bank to define the percentage of the population living in extreme poverty.

Global empirical evidence is now emerging challenging the World Bank's deliberate underestimation of poverty. Recent studies have conclusively shown that in Latin America for instance actual poverty rates are twice than what the World Bank had projected. More recently, on April 11, 2014, a study by the University of Bristol concludes that the World Bank is painting a 'rosy' picture by keeping poverty too low due to its narrow definition. Dr Christopher Deeming of the Bristol University's School of Geographical Sciences is quoted as saying: "Our findings suggest that the current international poverty line of a dollar a day seriously underestimates global poverty."

Not even caring for such voices, World Bank has found another magic rope trick to remove poverty. Using the Purchasing Power Parity (PPP) index, it has in its latest poverty vanishing trick reduced India’s poverty in one stroke from 400 million in 2005 to a very impressive 98 million in 2010. What Planning Commission could not do in 60 years, World Bank has done remarkably well in just five years – between 2005 and 2010.

I find the World Bank behaving like a pigeon when comes face to face with a cat. By closing it eyes, the pigeon fatally pays for its mistake thinking that the danger has gone away. Similarly, removing poverty by a statistical jugglery is a dangerous exercise. It’s therefore time for India not to bask in the glory of fake poverty reduction figures but to accept the dark reality.

Poverty in India is actually growing. If you raise the existing global poverty line from 1.25 dollars a day to just 1.5 dollars a day, as Asian Development Bank has shown, India’s poverty line swells to 584 million or 47.7 per cent of the population. In simple words, if the poverty line extends to Rs 90/day, which is a more realistic benchmark, the number of people below poverty line in India will be at least five times more than what the World Bank has estimated.

And makes me wonder. Why does the world need to move towards the next series of targets under the SHGs? Just ask World Bank to play around with statistics. 

Making Poverty History: All it needs is statistical jugglery. ABPLive Jan 21, 2015.

bit.ly/1yKY93b

World Bank deliberately underestimates poverty

 

Dhravi slum in Mumbai -- National Geographic 

The business of poverty actually extends to sweeping the poor under the carpet. Over the years I find that while most governments across the world have failed to stem poverty (except in countries like China), the international financial institutions are bending backwards to demonstrate that economic liberalisation helps in reducing poverty, and often drastically. This is being achieved by tampering with statistics, and often providing social indicators that don't actually measure up. One such classic example is the dollar a day measure adopted by the World Bank to define the percentage of the population living in extreme poverty.

Global empirical evidence is now emerging challenging the World Bank's deliberate underestimation of poverty. Recent studies (ECLAC 2002, 2011) have conclusively shown that in Latin America for instance actual poverty rates are twice than what the World Bank had projected. More recently, on April 11, 2014, a study by the University of Bristol published in the Journal of Sociology concludes that the World Bank is painting a 'rosy' picture by keeping poverty too low due to its narrow definition. Dr Christopher Deeming of the Bristol University's School of Geographical Sciences is quoted as saying: "Our findings suggest that the current international poverty line of a dallar a day seriously underestimates global poverty."

He further states: "If the World Bank had in fact used a poverty line grounded in basic needs, rather in its present artificial one which only looks at one monetary measure, the total number of poor people in the world would increase substantially, perhaps by as much as 30 per cent." (The report can be read here: http://jos.sagepub.com/content/early/2014/04/09/1440783314523867.full.pdf+html).  This is exactly what I have been saying over the years. Take the case of poverty line in India. The stringent poverty measures that the Planning Commission has been adopting for decades actually only estimate the extent of starvation (India's poverty line is actually a starvation line. http://devinder-sharma.blogspot.in/2009/12/indias-poverty-line-is-actually.html).

Following the same prescription, India too has shown that its poverty has come down from 37 per cent to 22 per cent. This shameless demonstration of 'inclusive growth' comes at a time when the Arjun Sengupta committee had in 2007 worked out that 77 per cent of the population or roughly 834 million people were able to spend not more than Rs 20/day (roughly 30 US cents). Even in the United States, poverty is growing with estimates pointing to 1 in 7 living in poverty.  

Unless the World Bank makes an immediate correction, all projections of removing 'extreme poverty' by 2030 would be as farcical as its earlier target set in 1973 to remove 'absolute poverty' in low and middle income countries by the end of the century i.e. the year 2000.  But will the World Bank do this? Your guess is as good as mine. After all, it pays to keep poverty low. Only then you can justify the faulty economic policies.

Further reading: How to keep poverty low
http://www.huffingtonpost.com/devinder-sharma/how-to-keep-poverty-low_b_838329.html

Why can't US Fed print more money to remove global poverty? Just $ 120 billion more.

Is there any hope for the world's poor? Can poverty be made history? 

Every high-level Summit ends up with a call to remove poverty. The World Economic Forum too has been talking about removing poverty, and more recently it campaigned for removing hunger in our lifetime. A few weeks back at Davos in Switzerland the UN Secy Gen Ban Ki-Moon in fact led those who signed on a Zero Hunger campaign. Well, if everyone is so concerned, why is that hunger and poverty continues to grow despite all the global efforts being made to hide the realities (and play down the embarrassing statistics).

The answer is simple. The political leadership is not honest in addressing hunger and poverty.

An Oxfam International report: The cost of inequality: how wealth and income extremes hurt us all (See the pdf here: http://www.oxfam.org/sites/www.oxfam.org/files/cost-of-inequality-oxfam-mb180113.pdf) tells us that the world's top richest 100 people earned enough money in 2012 to end global poverty four times over. This comes to $ 240 billion they earned in 2012.

More recently, the TIME magazine had a report entitled: One State to destroy your faith in humanity: The World's 85 richest people own as much as the 3.5 bullion poorest (See the link here: http://business.time.com/2014/01/20/worlds-85-wealthiest-people-as-rich-as-3-5-billion-poorest/). Based on a report prepared by Oxfam, it said that the world's richest shared a wealth of 1 trillion Pound Sterling which is what the poorest 3.5 billion, half the world's population, has. What is more startling is the despite such statistics that obviously destroy our faith in humanity and also in political and economic leadership that does nothing to curb such "power grab" by a handful of wealthy families, empty slogans of fighting hunger or removing poverty are thrown at us unabashedly.

All this is happening at a time when the US Fed has decided to taper its bond-buying programme by another $ 0 billion. Beginning Feb 2014, US Fed will now be purchasing bonds worth $ 65 billion now. This tapering of its little understood Quantitative Easing programme actually began in January when it reduced bond purchases by $ 10 billion. Earlier, for 15 months, US had gone in for a QE programme which meant that the US Fed was buying bonds worth $ 85 billion every month. In other words, in 15 months, US Fed had made available US $ 1,275 billion to its investors before it began the tapering exercise.

Now what is Quantitative Easing? Now don't get bogged down by this largely unexplained phrase and give me an economic description. It's all a play of sophisticated vocabulary. Put simply it means US was on a dollar-printing exercise. By February 2014, US Fed had actually been buying extra dollars that have been printed all these months, and if you include the taper figures since Jan 2014, it had actually flooded the market with a surplus $ 1,415 billion.

How much money did the Oxfam International say that is required to remover poverty four times over? It said $ 240 billion. Now this figure actually is for removing poverty four times over. I think it will be fair to seek investments that can remove poverty twice at least. I think this is a fair calculation considering a lot of overlapping and hidden costs.

If poverty disappear I am sure you will agree that hunger will be completely wiped out. With hunger disappearing, and poverty becoming history the world not only head towards an egalitarian state but also see the economics of happiness coming into play. It's extreme poverty, hunger, disease and squalor that still shames the humanity.

And this makes me wonder if the US can simply print $ 1,415 billion to prop its own sagging economy, why can't it print another $120 billion that is required to wipe out poverty twice over? Well, that's not difficult. Surely, and I believe President Barack Obama has a dream of a world free of hunger and poverty. On Jan 9, 2014 he had named five economically challenged areas of the country that will receive a series of tax incentives and government grants as part of his efforts to combat poverty across the country. His concern for the poor is certainly evident. But what perhaps he doesn't realise it that with a little more effort he can probably lead the world in making poverty history.

Yes, he can.

My appeal to you Mr President is very simple. Please extend your Quantitative Easing programme and give an additional $ 120 billion to a group of international organisations (with backing from G-20) to launch a time bound programme to remove poverty. We all know that the biggest stumbling block in fighting poverty has been the availability of resources. Now we know it is possible. US Fed has shown that availability of money is not such a big problem as we envisaged earlier. Simply print some more money.

This is your opportunity to carve your name permanently in history, Mr President.We don't have to wait for our lifetime to remove poverty. We can certainly do it in the next few years.

Believe it or not, Mukesh Ambani and an average guard (including those posted outside his Mumbai home) fall in the top 5 per cent of the country !

My maid servant asked me the other day: “Sahib ji, TV news tells me those earning more than Rs 1000 a month are not poor. How can this be true? Although I am earning Rs 5000 every month working at your home, I mop up your floor and wash your dishes. If I was rich why should I be doing jhhadu-pochha? Kuchch karona Sahib ji. Aap bolo na…”   

  

Mohan used to be a helper in my office. He now works as a guard in the Delhi University. “Sir ji, I earn Rs 6000 every month. I have a wife and two children. I live in a one-room shanty accommodation in Kamla Nagar. I know how I am struggling to run my family. My wife suffers from asthama, and my younger son has a heart problem. If I didn’t have the BPL card, I couldn’t have got them a hospital treatment. They would have died by now. And look, this government tells me that I am not poor…”

While I was grappling with words to assuage their anger at a faulty poverty line being enacted every now and then, here comes another shocker. The National Sample Survey Organisation’s (NSSO) latest set of consumption expenditure data for 2011-12 tells us that if you live in a village and spend more than Rs 2,886 per month you are among the top 5 per cent of the country. For the urban areas, the cut-off limit is Rs 6,383 per month. That makes me as well as you, the reader, in the same category as Mukesh Ambani, Ratan Tata and Narayana Murthy. Time to celebrate, isn’t it?

However, both my housemaid and my helper have narrowly missed being in the top 5 per cent bracket of the country. But they surely can derive some console and of course a lot of happiness to know that they rub shoulders with the top 10 per cent of the country. According to NSSO, those spending Rs 2,296 in rural and Rs 4,610 in the urban areas fall in the top 10 per cent. And that makes me wonder, if a guard outside an office or a swanky home is amongst the top 10 per cent of India, then imagine the fate of the remaining 90 per cent of the population? In simple words, does it not mean that over 110-crore people out of a population of 125-crore in India are simply destitute? Does it not mean that the poverty line that has been worked out time and again is completely fallacious and meaningless? 

If a spending of Rs 96.2 in the rural areas and Rs 212.77 in the cities is what it takes to form the top 5 per cent of the country, then there is something glaringly missing in India’s growth story. The promise and excitement of being the second fastest growing major economy is simply an illusion of prosperity wherein a handful of people/families have amassed huge wealth. The average growth in income that India has witnessed means nothing considering the gigantic income inequality that prevails.

The NSSO’s consumption expenditure data only shows how wide the income gap is. With every passing year, we know the prevailing inequality is further widening. At this rate, probably India would put the US to shame where 400 individuals have amassed economic wealth equal to that of half the American population. In India, economic growth seems to be all about the ultra high net-worth individuals (HNIs) whose number has risen to 100,900 in 2012-13, and is expected to swell to 300,000 in another five years. Ultra high net-worth individuals are those who have amassed Rs 25-crore or more in past 10 years.

The more the accumulation of economic wealth with a handful of families, the more is the projection of rising average incomes and growing prosperity. 

Regardless of how strong the poor feel about the cruel joke being thrust upon them, there is excitement in the air. I mean in the air waves. For the past few days I have been hearing the TV anchors and the Congress spokespersons repeatedly emphasizing on the latest miracle that they claim has been achieved. Poverty has come down by 15 per cent in eight years, between 2004-05 and 2011-12.  Some have even demonstrated their height of insensitivity by claiming that a decent meal is possible in Re 1/5/12.

Past NSSO data shows that the percentage of population below the poverty line has come down from 37 per cent in 2004-05 to 21.9 per cent in 2011-12. Planning Commission has last year (in Mar 2012) announced that poverty percentage has come down by 7.3 per cent, which means from 37.2 per cent in 2004-05 to 29.8 per cent in 2009-2010. And now finally, the data for the eight years the UPA has remained in power shows a magical decline in poverty by 15 per cent.

Interestingly, the reduction in poverty is being flaunted at a time when the Planning Commission is still not sure about the new poverty line. And if my housemaid and helper have crossed the Rubicon of poverty to rub shoulders with the rich and mighty, it is time for a grand celebration. But before that, let's have a reality check. 

Remember the TV serial: "Mungeri Lal ke haseen sapne"

The algebra of poverty. Juggling statistics, India now claims reduction in poverty

There is excitement in the air. I mean in the air waves. For the past two days I have been hearing the TV anchors and the Congress spokespersons repeatedly emphasizing on the latest miracle that they claim has been achieved. Poverty has come down by 15 per cent between 2004-05 and 2011-12.

For a country which loves miracles, this is certainly big.

National Sample Survey Organisation (NSSO) data shows that the percentage of population below the poverty line has come down from 37 per cent in 2004-05 to 22 per cent in 2011-12. Planning Commission has last year (in Mar 2012) announced that poverty percentage has come down by 7.3 per cent, which means from 37.2 per cent in 2004-05 to 29.8 per cent in 2009-2010. And now finally, the data for the eight years the UPA has remained in power shows a magical decline in poverty by 15 per cent.

Interestingly, the reduction in poverty is being flaunted at a time when the Planning Commission is still not sure about the new poverty line. Writing in the Hindustan Times, Chetan Chauhan says: "The politics of poverty is at play with the Planning Commission claiming that the number of poor came down from 29.8i per cent in 2004-05 to 21.9 per cent in 2011-12, but failed to specify the poverty line (No of poor dips, but who is poor remains unclear. Hindustan Times, July 19, 2013. http://bit.ly/15TFG6J)".

Isn't it therefore interesting as well as curious to know how did the Planning Commission arrive at this magical figure when it has junked its earlier methodology of computing poverty at Rs 32 for the urban and Rs 28 for the rural areas. There was a big uproar in the country when the Supreme Court had questioned a very low poverty line. But as the news report said: "The commission’s deputy chairperson Montek Singh on Thursday avoided queries on the new estimates. The poverty number would come down whatever methodology is employed,” he said. If this is the way poverty is calculated I am sure you will agree that we need to revisit the entire methodology and the claims being made on the reduction of poverty.

This reminds me of another interesting fact that I had shared at a number of platforms. Soon after the economic reforms were unleashed in 1991, the then deputy chairman of Planning Commission Pranab Mukherjee (who is now the President of India) had brought down poverty from 37 per cent to 19 per cent in one go. I don't know why the present deputy Chairman of Planning Commission Montek Singh Ahluwalia has not tried to surpass his predecessor. Statistical jugglery could have helped him to reduce poverty not only by 15 per cent, but a more drastic 50 per cent. By doing that, he would have done the UN Millennium Development Goals (MDGs) a big service and at the same time justified the need to continue economic reforms.

In any case, poverty reduction is a miracle considering that inflation as measured through consumer price index (CPI) had remained in the vicinity of 10 per cent for several years now, and at a time when the UPA-II has launched a massive right-based Food Security programme to reach 67 per cent of the population. If only 22 per cent of the population is poor I see no reason why the government should be providing legal food entitlements to 67 per cent of the population.

India's poverty line is amongst the most stringent in the world. Planning Commission can certainly bring down poverty whenever it wishes by simply lowering the poverty line slab. This is what I had said earlier in one of my articles: The Algebra of Poverty (Hindu Business Line, Jan 2, 2002. http://bit.ly/1992e6w). You thought we have learnt something from the past? Well, you can see it for yourself.

My $ 1 Trillion Plan: Enough to wipe out hunger, poverty and disease from India.

Every now and then I read about the desperate need to invest $ 1 trillion in infrastructure projects in India. Prime Minister Manmohan Singh has reiterated this time and again. Addressing the Asian Development Bank at Manila in May, former Finance Minister (and now the President of India) Pranab Mukherjee said: "India needs about USD 1 trillion in the next five years for infrastructure development, out of which at least 50 per cent has to come from the private sector. Therefore, there is a huge scope for investments in India." He of course also said that the focus remains on inclusive growth.

In June 2012, Manmohan Singh outlined his plan (see India's $ 1 Trillion Plan. http://www.energyandcapital.com/articles/indias-1-trillion-plan/2246) while speaking at a meeting of the Ministers and Secretaries concerned with the departments of power, railway, road, shipping, civil aviation, and coal besides of course the Planning Commission. He said:“India is at a critical juncture in its quest for prosperity and eradication of poverty...We are running into more turbulent weather...There is a need to revive business and investor sentiments...and a need to create an atmosphere conducive to investment ... In the short term, development of infrastructure will boost investment rates across the economy. In the long run, it will remove the supply constraints that affect economic activity in agriculture, industry and trade.”
 
If you would have noticed, he began by saying that India is at a critical juncture in its quest for prosperity and eradication of poverty (emphasis mine). In other words, it means the basic purpose of seeking $ 1 trillion investment is to pull the country out of dismal poverty and hunger. Following the trickle down theory, what the Prime Minister is suggesting is that the more investment we make in creating infrastructure the more it will help in removing poverty and hunger. I had posed this question some years back to late Dr Mehbub-ul-Haq, a former Finance Minister of Pakistan, who was also the founder editor of the UN Human Development Report. He replied: "We were wrongly taught that we should take care of GDP and it will automatically take care of poverty. Let us reverse it. We need to take care of poverty and it will automatically take care of GDP." (You can read my Aug 2000 article Poverty: Look beyond GDP growth. http://www.twnside.org.sg/title/2086.htm).

Since 75-80 per cent of the world's poor do not have any social protection, the UN Special Rapporteur on Right to Food Dr Olivier de Schutter has called for a Global Fund for Social Protection (GFSP). Accordingly, 2-6 per cent of global GDP, or $ 1.26 trillion to 3.79 trillion (based on 2010 GDP figures) needs to be ensured for providing comprehensive rights-based social protection schemes that reduce vulnerabilities of local populations and provides them security (See the executive summary at: http://www.srfood.org/images/stories/pdf/otherdocuments/20121009_gfsp_execsummary_en.pdf).

Olivier de Schutter is demanding a minimum of $1.26 trillion to ensure social livelihood protection for the world's poor. For a country like India, which has one-third of the world's hungry and an equal percentage of poverty stricken, plus where 47 per cent children below the age of five continue to be malnourished, its share would be much less. But given the magnitude of the crisis, and knowing that poverty eradication is not as simple and straight forward as is generally made out to be, I still feel that what Mehbub-ul-Haq had said is the ultimate way out. The $ 1 Trillion investment on infrastructure development is not going to make any appreciable dent on poverty removal. It has to be the other way around. Make investments on the human capital -- removing poverty, hunger and disease -- and we will see a stupendous rise in economic growth.

If I were in place of Dr Manmohan Singh, my $ 1 Trillion Plan would be radically different from his. I would aim primarily at removing hunger and poverty. I would begin by first ensuring food security at the household level, ensuring local production, local procurement and local distribution. Food security has to be an integrated part of the cropping system whereby sustainable agriculture would get a massive thrust. Turning farming into an economically viable proposition would sow the seeds of not only reverse migration but also ushering in rural prosperity. I an never forget a Punjabi saying: "Jeede ghar daane, ude bachhe bhi sayanne." Translated it means that he who has ample food in his house, his children would be healthy, wealthy and wise. 

Poverty eradication therefore has to be directly linked with household food security.

My objective here is not to list out the steps that would be required to be undertaken for turning India into a place where happiness resides. All I am trying to say is that $ 1 trillion is what is required to wipe out poverty, hunger and diseases from the country. At present India is a $ 1.3 economy, where only a fraction of the population is gaining from the massive investments being made in Bharat Nirman and urban centre growth. The inequalities are widening with the rich becoming strikingly rich and the poor being further marginalised. This has to be reversed.

Pulling out 320 million people from hunger and an estimated 470 million from below the poverty line is the kind of investments that I would utilise $ 1 trillion for. Of course, several scheme will be woven around the creation of requisite infrastructure (not palatial housing for the stinking rich) providing employment both in the rural and urban areas. Education, health and housing will remain the priority sectors. Such policies will have to be redesigned. These have to be centered around sustainable development, policies which do not lead to exploitation of natural resources, do not contaminate the environment, destroy the soil fertility, pollute water and adds to global warming.   

Real economic growth only happens when no one goes to bed hungry in a nation. This has to be on a sustainable basis. When every policy percolates to minimising hunger and poverty, why not make a direct assault to make hunger and poverty history. My $ 1 Trillion Plan would aim at not only making hunger and poverty history, but also wiping out disease and squalor.            

How can you live for 365 days on 100 days assured employment? MNREGA activists need to explain.

The poverty debate refuses to die down. Stung by public uproar, deputy chairman of the Planning Commission Dr Montek Singh Ahluwalia has decided to revisit the poverty line of Rs 32 a day for urban areas and Rs 26 for the rural areas. Newspaper reports say the Planning Commission may consider redefining the poverty line, at a meeting scheduled on Oct 3. Planning Commission member Mihir Shah has been quoted in Business Standard as saying: "The Rs 32 poverty line to determine who is poor and who is not poor will go".

Another Planning Commission member Abhijit Sen has been strongly advocating for the removal of caps in BPL surveys. "The moment the caps are removed, the poverty line would become redundant as a means of deciding funds given to States for BPL schemes like food distribution. The poverty line would then be something like GDP estimates." [Plan panel to eat its words on poverty definition, Business Standard, Oct 1, 2011. http://bit.ly/pfiHBj].

Well, even if the BPL caps are removed, I don't think the primary issue of what constitutes the poverty line will disappear. It is a bogus estimate that has been deliberately made by economists for over 50 years now. It is not based on common sense, and as I said earlier it is nothing short of a crime that mainline economists have been merrily perpetuating against millions of poor in the country.

Still more amusing is the effort to seek media attention over the faulty poverty line. After the Right to Food campaign suddenly woke up and wrote a memorandum to Montek Singh Ahluwalia (they had never questioned the contours of the poverty line), I got an invite by a TV channel yesterday to be on a show where two members of the National Advisory Council were also to participate. I inquired about the subject that we were to discuss, and I was told it is about an open letter they had written to Mr Ahluwalia challenging him to live on Rs 32 a day.

I was amused, and told the journalist that I would have loved to be on the show but I was far away driving in the hills of Himachal Pradesh. Nevertheless, when I looked at the newspapers a day later, I felt sad. Why do activists have to try these tricks to stay in the news columns? Why can't Right to Food campaign raise some fundamental issues of the inability of the State to reach food to the poor and needy that are so relevant in the debate on hunger? Anyway, take a look at this report: Live on Rs 32 a day: Aruna to Montek. IBNlive, Sept 30. Here is the link: http://bit.ly/r8JQCM.

Enough has been said and written about the guffaw on poverty estimates. There is no denying that the poverty estimates are completely flawed. You cannot live on Rs 32 a day. As I have been repeatedly saying for several years now, you can't even raise a pet dog in the amount the Planning Commission wants us to believe that a human being can be fed adequately. And don't forget, the food component of the Rs 32 cut-off is only Rs 18. So the question that Right to Food campaign should have asked Plan panel members is to explain the basis for treating this (the food component) as 'normatively adequate'.

It is true that Rs 18 a day for food expenses would only qualify the poor to be living in abject hunger.

That brings me to another relevant and related question. Some of the activists named by the media in its headlines were also on the forefront of the MNREGA campaign. The Mahatma Gandhi National Rural Employment Guarantee Act, which recently completed five years of its existence, has been providing 100 days assured income to at least one member of the poor and marginalised families. For a moment, ignore the issue of rampant corruption and how much the MNREGA funds reach the real beneficiaries. I would like to challenge the distinguished activists to live for 365 days on an income they receive for 100 days. If the poor can be expected to survive for a whole year on an income they get for 100 days, why can't other sections of the society also be comfortable with 100 days payment every year?

Will the activists demonstrate the relevance of 100 days assured employment in a year? If the poor are expected to be doing other things for the remaining 265 days, we can also allow you the same benefit. But please show us if you can live for a year on just 100 days employment?

How to Keep Poverty Low

In a significant move, the Supreme Court in India has questioned the very basis of counting the poor in the country. Realising that the poverty line is a gross underestimation, the Supreme Court has done what economists had failed to see all these years.

By deliberately keeping the poverty line low, economists and planners had actually betrayed the poor. These faulty poverty estimates became the foundation of the entire development strategies and programmes. No wonder, 64 years after independence, poverty continues to be robustly sustainable. 

On top of it, there are so many estimates floating around that I have lost count. Most of these estimates are actually drawn on the same faulty assessment criteria, and therefore have failed to make any appreciable impact on mitigating poverty and inequality.

Now take a look. The Planning Commission had worked out poverty at 27.5 per cent in 2004-05. An expert group set up by the Planning Commission again in 2009 to review the methodology for poverty estimates for the same year (2004-05) upped it to 37.2 per cent, which means a mere statistical readjustment added another 100 million people to the count. And if we go by the international poverty norms of people living on less than $ 1.25 per day than over 456 million Indians live in poverty. But if we go by the Arjun Sengupta commiteee report, which I am discussing later, even this estimate may turn out to be too short.

The National Advisory Council simply pegs poverty at 50 per cent. As if this is not enough, we now have the new Multi-dimensional Poverty Index (MPI) developed by the Oxford Poverty and Human Development Initiative for the United Nations Development Programme (UNDP) which pegs poverty in India at 55 per cent. It has added another ten indicators, including child mortality, school enrolment, drinking water, and sanitation.

Before you get lost, let me decipher the criteria that are used to first gauge the prevailing level of food insecurity and hunger. Previously poverty estimates were done using the calorie norms provided by the Indian Council for Medical Research. Accordingly, 2400 kcal in rural areas and 2100 kcal in urban areas formed the basis of the poverty estimates. This was the basis of earlier Planning Commission poverty estimates. I don't know why the UN Food and Agricultural Organisation (FAO) uses lower per capita calories consumption cut-off of 1770 kcal.

By keeping the food consumption norms low, the FAO probably succeeds in hiding its own inefficiencies in reducing global hunger. That is why I have always found the Millennium Development Goals action plan to achieve the eight-point poverty goals to be built on a shaky foundation. Current estimate of global poverty by the FAO for instance at 925 million is in itself an underestimation. A realistic poverty estimate for India alone would be around what the FAO projects. According to Arjun Sengupta committee report, 836 million people in India are unable to spend more than 50 US cents a day, and I am sure no one would disagree that these people are not living in poverty.

Read the full article: How to Keep Poverty Low, Huffington Post, Mar 22, 2011
http://huff.to/eO383J

Who needs poverty estimates?

There is hardly a month when I don't get to see a new estimate of poverty. In fact, there are so many estimates floating around that I have lost count.

At least, I am confused.

And that makes me wonder how long will we go on measuring poverty? When will we instead launch a global initiative to make poverty history? When will we redesign international monetary policies to ensure that we do not add on to poverty?

In India, which lives in poverty, there are a number of estimates doing the round. The Planning Commission had earlier estimated poverty at 26 per cent. Suresh Tendulkar committee had raised to 37.2 per cent. Before that, we had the Arjun Sengupta committee concluding that 77 per cent of the population is unable to spend more than Rs 20 a day. And then there are estimates by people/experts who were actually not asked to measure poverty. N C Saxena for instance has simply used a 'compromise' estimate of 50 per cent.

As if all this is not enough, we now have the new Multi-dimensional Poverty Index (MPI) developed by the Oxford Poverty and Human Development Initiative for the United Nations Development Programme (UNDP) which pegs poverty in India at 55 per cent. Even this estimate I am told is faulty because it relies on the traditional barometer of kilocalories, 2400 for the rural population, that India uses deliberately to keep poverty low. This comes to Rs 356 a month, which is not even generous enough to feed a pet dog. Adding another ten indicators, including child mortality, school enrollment, drinking water, sanitation etc does not do justice if the base remains faulty.

The MPI may be used for calculating the global HDI ranking. But it still hides the reality. If India's poverty estimates are found wanting, I am sure other countries too are not that honest in acknowledging the correct number of poor.

MPI tells us that Delhi fares much better in India (vis a vis the other States) in the poverty index. I don't think I will ever try to vouch for this. I don't know what kind of parameters have the researchers applied, but for someone who lived in Delhi for more than 20 years I find the National Capital to be a virtual cesspool of poverty. Compared to Mumbai and Kolkata, Delhi certainly fares much better. But over the years, I have only seen poverty worsening in the midst of a concrete jungle that is being laid out.

Nevertheless, I think all these estimates are actually being done to demonstrate that poverty is declining because of neoliberal reforms. The World Bank (and also the UN) have been vying to justify its backing for market economy. Such is the desperation that all kinds of permutations and combinations are being applied. There is this story of an Indian research centre which actually fudged the figures to conclude that the social indicators have turned positive after the market reforms began. I will not name the institute, but it will be interesting if ever the Criminal Bureau of Investigation (CBI) decides to launch an investigation into this.

Well, will all these estimates make a difference to the poor? Mercifully, they don't even know which estimate they fit into. What they know for sure is that poverty is their destiny. Only a miracle (or by becoming a crook) can pull them out of the real hell. Rest all is economic jugglery.

55% of India's population poor: Report
http://timesofindia.indiatimes.com/India/55-of-Indias-population-poor-Report/articleshow/6169549.cms

Mainline economists have betrayed the poor; Economic sense has nothing to do with common sense.

Soon after I finished a one-hour panel discussion on poverty on the Lok Sabha TV yesterday, I was deluded with phone calls and text messages complimenting me for having the courage to stand up against the mainline economists. Well, it certainly is a revelation to know that I am not the lone voice.

Yes, I did say that there is a huge gap between economic sense and common sense. And this gap is no where more clearly visibly than the poverty estimates. Economists have actually betrayed the poor by deliberately keeping the poverty line low. And because of that historic blunder the poor will never be able to find schemes and programmes that can actually bail them out.

Let me illustrate this. A person falls in a deep well and cries for help. The well is more than 200 ft deep. An economist passing by hears the cry, and joins the onlookers. He quickly does his arithmetic and asks for a rope that is at least 100 ft long. Onlookers accept because they think an economist knows better. The economist had meanwhile worked out the cost of the rope and the energy that is needed to pull the person out from deep waters, and based on the formula he applied he expects the person to climb the walls of the well for some 100 ft and then catch the rope.

Now you tell me whether it would ever be possible to pull out the person from the deep waters. Wouldn't he eventually drown?

This is exactly what the mainline economists have done. They have estimated poverty in such a stringent manner that even the poor do not realise what has hit them. Some years back, if you remember the estimates, we were told that if a person earns Rs 14 a day in the urban centres, he is above the poverty line. That cut-off line today may be a little higher at Rs 15 or Rs 16. But please tell me how many of you can feed your pet dog in that amount? If you can't raise your pet dog, how do you think a poor person is able to survive in that paltry amount?

Though the economists swear by it, we all know that this imaginary line is meaningless.

It is on the basis of the flawed estimates that the government prepares its programmes and schemes to fight poverty. And as I illustrated with the example of the person who fell in a deep well, the poor can never be pulled out to safety because of the faulty estimates. Most of the programmes and projects would fall short of the real need of the poor.

You can say that the fault lies with that particular group of economists who first gave us the poverty estimates. I agree. But the present crop of economists is no better. They have simply accepted the blunder, and have made no effort to correct the historic wrong. In fact, they go on playing around with the algebra of poverty to suit the powers that be. I am aware that some economists have tried to make an effort but their voice has been marginalised. Their voice of sanity has been simply bulldozed into silence by the mainline economists.

After a lot of wrangling, the Planning Commission has finally accepted Suresh Tendulkar committee's estimates of 37.2 per cent population living in poverty. Earlier the poverty rate was 26 per cent. In the early 1990s, the then deputy chairman of Planning Commission Pranab Mukherjee had reduced it to 19 per cent. I am sure if he had continued to be with the Planning Commission, poverty would have disappeared from India by now!

The economists by and large do not agree with Arjun Sengupta committee's assertion that 77 per cent of the population or roughly 836 million people are unable to spend more than Rs 20 a day. But than that is because there is no convergence between economic sense and common sense. The best and the most realistic estimate of poverty actually came for a retired Supreme Court judge, Justice Wadhwa, who said that anyone earning less than Rs 100 a day should be considered poor. And let us not forget, Justice Wadhwa is not an economist. Probably that's the reason he could be close to reality.