Changing benchmarks will not help the poor, reforms will

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Is the new poverty line an economically correct decision?
A panel headed by former PMEAC Chairman C Rangarajan dismissed the Tendulkar Committee report on estimating poverty and said that the number of poor in India was much higher in 2011-12 at 29.5 per cent of the population.

As per the report submitted by Rangarajan to Planning Minister Rao Inderjit Singh earlier, persons spending below Rs 47 a day in cities would be considered poor, much above the Rs 33-per-day mark suggested by the Suresh Tendulkar Committee.

As per the Rangarajan panel estimates, poverty stood at 38.2 per cent in 2009-10 and slided to 29.5 per cent in 2011-12.

This is at variance with the Tendulkar methodology under which poverty was estimated at 29.8 per cent in 2009-10 and declined to 21.9 per cent in 2011-12.

In 2011-12 financial year 3 out of 10 people were poor

The Planning Commission's estimates based on Tendulkar Committee had drawn flak in September 2011, when in an affidavit to the Supreme Court it was stated that households with per capita consumption of more than Rs 33 in urban areas and Rs 27 in rural areas would not be treated as poor.

The Rangarajan Committee was set up last year to review the Tendulkar Committee methodology for estimating poverty and clear the ambiguity over the number of poor in the country.

Who is "poor"

As per Rangarajan panel estimates, a person spending less than Rs 1,407 a month (Rs 47/day) would be considered poor in cities, as against the Tendulkar Committee's suggestion of Rs 1,000 a month (Rs 33/day).

In villages, those spending less than Rs 972 a month (Rs 32/day) would be considered poor. This is much higher than Rs 816 a month (Rs 27/day) recommended by Tendulkar Committee.

In absolute terms, the number of poor in India stood at 36.3 crore in 2011-12, down from 45.4 crore in 2009-10, as per the Rangarajan panel.

Tendulkar Committee, however, had suggested that the number of poor was 35.4 crore in 2009-10 and 26.9 crore in 2011-12.

In 2011-12, the national poverty line by using the said methodology was estimated at Rs 816 per capita per month in villages and Rs 1,000 per capita per month in cities.

This meant that those persons whose consumption of goods and services exceed Rs 33.33 in cities and Rs 27.20 per capita per day in villages were not classified as poor.

What Rangarajan report implies

In 2011-12 financial year 3 out of 10 people were poor. Whereas this number was four in 2009-10. According to the report, the number of poor people have been increased by 9.4 crore in one year.

According to the Commission's estimates based on Tendulkar methodology, released in July last year, the poverty ratio in the country declined to 21.9 per cent in 2011-12 from 37.2 per cent in 2004-05 on account of increase in per capita consumption.

What's on ground?

By changing the benchmark, does the reality also change? Is poverty alleviated by mere change of figures? Well, the problem is by changing the figures is the government really helping to pull the people at the bottom of the ladder out of destitution.

Do you really think a person who earns a mere amount of 47 rupees a day will be able to give quality education to his children and will lead a healthy lifestyle? The answer is known to everyone.

Growth rate (GDP) of India:

As per the Worldbank data, growth rate of India for 2013-21014 was around 4.7 per cent which should ideally have been around 9 per cent for healthy growth of our economy. And for this slow growth we should thank our erstwhile government who suffered from acute policy paralysis and also failed to push reforms.

Strong reforms are needed to bring change in situation on ground. Rather than dragging its feet and shuffling these figures the Government should focus on improving the GDP and should also give a push to Capitalist Economic System which is more liberal rather than the Socialist one which has neither done good to improve the economy nor has done some welfare to society so far.

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