Monday, August 5, 2013

Poverty, Suresh Tendulkar and the $1 poverty line

Just in case people missed reading Planning Commission member Mihir Shah in The Hindu on the poverty line controversy. Shah says: "Suresh Tendulkar...computed poverty lines for 2004-05 at a level that was equivalent, in purchasing power parity (PPP) terms, to one U.S. dollar per person per day, which was the internationally accepted poverty line at that time". 
This is so outrageous a misrepresentation by the Planning Commission member! What are the facts?

Fact 1

The Tendulkar poverty line was drawn by taking the all-India urban poverty line as the basis for estimating every other poverty line in the country. With the urban poverty line as the basis, the parity levels at the State-level for rural and urban areas were separately estimated using a PPP method. Thus, the new State-level rural and urban poverty lines were at those levels at which the average national urban consumption levels can be attained (my old summary here). What is so "international" here?

Fact 2: 

There is NO methodological relationship between the Tendulkar poverty line and the international poverty line. Even Tendulkar did not claim it. There is only one sentence in the whole of the 39-page Tendulkar report that refers to anything in dollar terms, and that has nothing to do with its new method. That sentence in page 8 of the report is as follows: "the new poverty line happens to be close to, but less than, the 2005 PPP $1.25 per day poverty norm". Shah is making a virtue out of this passing statement!

Fact 3: 

The Tendulkar Committee tried to justify its poverty line based on 2 validating reasons. First, the urban population that corresponded in 2004-05 to the poverty line expenditure consumed 1776 calories per capita per day, which was close to the calorie norm of 1800 calories per capita per day suggested for India by the FAO. Secondly, the actual levels of urban per capita expenditure in 2004-05 were also sufficient to meet a defined “normative level of expenditure on education and health services” (yet, Shah says: "There is no value judgment being made about the adequacy of this amount of money for any meaningful purpose"!!).

Fact 4: 

These 2 "validating reasons" have been literally massacred by Madhura Swaminathan here.

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