India may require new estimates for measuring poverty

India may require new estimates for measuring poverty going beyond the decade-old Tendulkar Committee findings, Bibek Debroy, chairman of the Economic Advisory Council to the Prime Minister (EAC-PM), has said.

Speaking at the Ministry of Statistics and Programme Implementation's (MoSPI) data user conference on the Household Consumption Expenditure Survey (HCES), Debroy noted that while the Rangarajan committee report was never officially accepted, the Multidimensional Poverty Index (MPI) does not precisely define a poverty line.

"So the question to ask is, should we now have a new poverty line to which this data can be applied? And by the way, these data are not only being measured, and not only about inequality and poverty, but also a function of various other things," he added.

The Tendulkar Committee, chaired by economist and former chief of the National Statistical Commission Suresh Tendulkar, was established in 2005 by the Planning Commission to reassess the methods for estimating poverty. It submitted its report in December 2009.

According to the report, the rural poverty headcount ratio for 2004-05 was at 41.8%, urban at 25.7%, and the pan-India poverty rate stood at 37.2%.

In 2012, another expert group chaired by economist and former Reserve Bank of India governor C. Rangarajan was formed by the Planning Commission to review the country's poverty measurement methodology.

The Rangarajan Committee, which submitted its report in June 2014, defined poverty as living on less than ₹47 per day in cities and ₹32 per day in villages. It estimated that poverty levels were 19% higher in rural areas and 41% higher in urban areas compared to the Tendulkar Committee's estimates.

The issues 

Debroy said while there are some standard perennial issues about household expenditure surveys, a few are red herrings. “One of those is the aggregate of consumption expenditure. The gap between that and consumption expenditure, as defined by national income accounts. That's an issue that plagues every country in the world. (But) to my mind, that's a bit of a sterile debate.”

Debroay said that state-wise Gini coefficients could be looked at to determine inequality levels, as a countrywide estimate may not present the full picture. However, he also wondered whether both the Gini coefficient and Lorenz curve, which estimates the distribution of income or wealth within a population, should be looked at.

“We seemed to take it for granted that it (decline in Gini co-efficient) is necessarily a good thing. It depends, of course, on the level of the co-efficient." he said. “But we all know as economies grow and prosper, inequalities widen a bit. We are not talking about a Gini coefficient in the neighbourhood of 0.6. We are talking about the Gini coefficient in the neighbourhood of 0.32 and 0.34.”

The Gini coefficient, also known as the Gini index or Gini ratio, is a measure of statistical dispersion intended to represent income inequality, wealth inequality, or consumption inequality within a nation or a social group.

In early June, the National Statistical Office (NSO) released the HCES report, which claims that the value of the Gini coefficient for consumption expenditure decreased from 0.283 in 2011-12 to 0.266 for rural areas, and from 0.363 to 0.314 for urban areas in 2022-23.

Niti Ayog chief executive BVR Subrahmanyam said less than 5% of Indians were expected to be below the poverty line, citing the findings of HCES for FY23.

According to the MPI released by the Niti Ayog, around 248 million Indians escaped multidimensional poverty between 2013-14 and 2022-23. 

Derboy said historically the MoSPI hasn't been good with communicating about its work, and has received its share of criticism. “Sometimes the criticism that emanates is valid, in which case, as I said, to the extent possible it should be taken on board. But sometimes the criticism that emanates is misinformed.” 

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