Governance Now
Nov 1-15, 2011
Junking poverty line and removing caps on the number of beneficiaries of social welfare schemes are good policies to follow, except that the government is less than keen to live up to its own words
What is poverty line?
It is the planning commission that fixes the ‘poverty line’. As per the planning commission’s last affidavit before the apex court, this line represents an “expenditure” of ` 32 per head per day on food, health and education (but not house rent) in the urban areas and ` 26 per head per day in rural areas – both at June 2011 price level.
For a family of five, this works out to be ` 4,824 per month in urban areas and ` 3,905 per month in rural areas. Any family spending this or a lower amount a month is considered a below poverty line (BPL) family.
The calculations are based on the Tendulkar committee’s recommendations of 2009 which drew the line at ` 18 per head per day of expenditure in urban areas and ` 15 per head per day of expenditure in rural areas, at the 2004-05 price level. This was scaled up to the June 2011 price level to reach the current poverty estimate.
The scaling up means the BPL population has gone up to 40.74 crore from a little more than 37 crore earlier.
The Tendulkar committee worked out the poverty estimate from the data collected by the national sample survey organisation (NSSO). This means, it was an indirect assessment and not actually based on a direct survey of the poor families.
In 2002, an attempt was made to identify the BPL families directly on the basis of 13 socio-economic indicators but it got mired in litigations and eventually came unstuck.
What is socio-economic and caste census of 2011?
This is a first of its kind census being carried out at the moment to identify the BPL families directly by generating “information on a large number of social and economic indicators relating to households across the country”.
It will do the following: (a) rank households based on their socio-economic status, so that the states and union territories can objectively prepare a list of families living below the poverty line in rural and urban areas; (b) make available authentic information on the caste-wise breakup of population in the country and (c) provide the socio-economic profile of various castes.
Three sets of parameters are being used for the purpose of identifying the BPL families – automatic exclusion, automatic inclusion and ranking based on seven deprivation indicators.
It is the findings of this census, to be available sometime next year, that will form the basis for identifying the beneficiaries of various welfare schemes, as per the October 3 joint press briefing by planning commission deputy chairman Montek Singh Ahluwalia and rural development minister Jairam Ramesh.
Controversy over poverty line
The planning commission was accused of doing a lazy job, when it merely scaled up the old Tendulkar committee’s poverty estimate, which several leading economists and food right activists said best suited to benchmark the “destitution line”, rather than the poverty line. The paltry sums – of ` 32 in urban and ` 26 in rural areas – were not sufficient to provide healthy living conditions and good education in the current economic conditions, they argued.
Ground realities are quite stunning. Forty-six percent of the country’s children below the age of three continue to be malnourished, according to a government report. A recent World Bank report said 2.4 crore Indians are pushed into poverty every year because of the unbearable health-care expenses. And India continues to remain in the bottom pile (ranked 67 among 81 countries in 2011) in the global index of hunger.
Therefore, when Ahluwalia and Ramesh said on October 3 that the poverty line was being junked, it gladdened the hearts of many. They announced two policy changes: one, from now onwards the planning commission’s poverty estimate would ‘not’ be used to select the beneficiaries of the social welfare schemes and, two, there would be ‘no’ capping on the number of beneficiaries. The beneficiaries would be henceforth determined on the basis of the socio-economic and caste census 2011 findings.
But a few days later, Ahluwalia reversed his stand, provoking another round of uproar. In a letter to attorney-general Goolam Vahanvati, who will represent him in the supreme court in connection with the right to food, he said he was not abandoning the poverty line and that the beneficiaries of subsidised foodgrains would be capped to “fit” the provisions of the food security bill.
The bill proposes food entitlement to be capped at 75 percent in rural areas – of which 46 percent will be “priority households” or the BPL families – and 50 percent of urban population – of which 28 percent will be “priority households” or BPL families.
Incidentally, the October 3 briefing had also introduced an element of ambiguity by adding that “an expert committee will be appointed to ensure that this methodology is consistent with the provisions of the food security bill as it finally emerges”. Its import was clear only when Ahluwalia wrote the letter to Vahanvati later insisting that the number of beneficiaries will be subject to the provisions of the food security bill.
Why is poverty line or BPL tag important?
Right now, a large number of welfare schemes of the union and state governments are linked to the poverty estimate and the beneficiaries are selected on the basis of their BPL status. Some of such central schemes are: public distribution system, national old age pension, Indira awas yojna, national family benefit scheme, pradhan mantri gramodaya yojna, swarnajayanti gram swarozgar yojna, Jawahar gram samrudhi yojna, rashtriya swasthya bima yojna and so on. The state governments have an equally impressive number of such schemes.
What is the way out?
Going by the policy statement of October 3, by Ahluwalia and Ramesh, the logical step is to remove the cap proposed in the food security bill.
The socio-economic and caste census will provide more accurate data to identify the needy requiring help. It, therefore, makes little sense to adhere to an arbitrarily fixed poverty line.
The natural question that follows from this is: why is then Ahluwalia not proposing what seems to be the next logical step but creating confusion? The answer lies in his continued insistence on keeping the subsidy under a tight leash – but only when it comes to social welfare schemes, never when it involves industry. For example, he has never uttered a word against “revenue foregone” on the corporate income tax that amounted to more than ` 80,000 crore for the financial year that just ended. n
feedback@governancenow.com
Nov 1-15, 2011
Junking poverty line and removing caps on the number of beneficiaries of social welfare schemes are good policies to follow, except that the government is less than keen to live up to its own words
What is poverty line?
It is the planning commission that fixes the ‘poverty line’. As per the planning commission’s last affidavit before the apex court, this line represents an “expenditure” of ` 32 per head per day on food, health and education (but not house rent) in the urban areas and ` 26 per head per day in rural areas – both at June 2011 price level.
For a family of five, this works out to be ` 4,824 per month in urban areas and ` 3,905 per month in rural areas. Any family spending this or a lower amount a month is considered a below poverty line (BPL) family.
The calculations are based on the Tendulkar committee’s recommendations of 2009 which drew the line at ` 18 per head per day of expenditure in urban areas and ` 15 per head per day of expenditure in rural areas, at the 2004-05 price level. This was scaled up to the June 2011 price level to reach the current poverty estimate.
The scaling up means the BPL population has gone up to 40.74 crore from a little more than 37 crore earlier.
The Tendulkar committee worked out the poverty estimate from the data collected by the national sample survey organisation (NSSO). This means, it was an indirect assessment and not actually based on a direct survey of the poor families.
In 2002, an attempt was made to identify the BPL families directly on the basis of 13 socio-economic indicators but it got mired in litigations and eventually came unstuck.
What is socio-economic and caste census of 2011?
This is a first of its kind census being carried out at the moment to identify the BPL families directly by generating “information on a large number of social and economic indicators relating to households across the country”.
It will do the following: (a) rank households based on their socio-economic status, so that the states and union territories can objectively prepare a list of families living below the poverty line in rural and urban areas; (b) make available authentic information on the caste-wise breakup of population in the country and (c) provide the socio-economic profile of various castes.
Three sets of parameters are being used for the purpose of identifying the BPL families – automatic exclusion, automatic inclusion and ranking based on seven deprivation indicators.
It is the findings of this census, to be available sometime next year, that will form the basis for identifying the beneficiaries of various welfare schemes, as per the October 3 joint press briefing by planning commission deputy chairman Montek Singh Ahluwalia and rural development minister Jairam Ramesh.
Controversy over poverty line
The planning commission was accused of doing a lazy job, when it merely scaled up the old Tendulkar committee’s poverty estimate, which several leading economists and food right activists said best suited to benchmark the “destitution line”, rather than the poverty line. The paltry sums – of ` 32 in urban and ` 26 in rural areas – were not sufficient to provide healthy living conditions and good education in the current economic conditions, they argued.
Ground realities are quite stunning. Forty-six percent of the country’s children below the age of three continue to be malnourished, according to a government report. A recent World Bank report said 2.4 crore Indians are pushed into poverty every year because of the unbearable health-care expenses. And India continues to remain in the bottom pile (ranked 67 among 81 countries in 2011) in the global index of hunger.
Therefore, when Ahluwalia and Ramesh said on October 3 that the poverty line was being junked, it gladdened the hearts of many. They announced two policy changes: one, from now onwards the planning commission’s poverty estimate would ‘not’ be used to select the beneficiaries of the social welfare schemes and, two, there would be ‘no’ capping on the number of beneficiaries. The beneficiaries would be henceforth determined on the basis of the socio-economic and caste census 2011 findings.
But a few days later, Ahluwalia reversed his stand, provoking another round of uproar. In a letter to attorney-general Goolam Vahanvati, who will represent him in the supreme court in connection with the right to food, he said he was not abandoning the poverty line and that the beneficiaries of subsidised foodgrains would be capped to “fit” the provisions of the food security bill.
The bill proposes food entitlement to be capped at 75 percent in rural areas – of which 46 percent will be “priority households” or the BPL families – and 50 percent of urban population – of which 28 percent will be “priority households” or BPL families.
Incidentally, the October 3 briefing had also introduced an element of ambiguity by adding that “an expert committee will be appointed to ensure that this methodology is consistent with the provisions of the food security bill as it finally emerges”. Its import was clear only when Ahluwalia wrote the letter to Vahanvati later insisting that the number of beneficiaries will be subject to the provisions of the food security bill.
Why is poverty line or BPL tag important?
Right now, a large number of welfare schemes of the union and state governments are linked to the poverty estimate and the beneficiaries are selected on the basis of their BPL status. Some of such central schemes are: public distribution system, national old age pension, Indira awas yojna, national family benefit scheme, pradhan mantri gramodaya yojna, swarnajayanti gram swarozgar yojna, Jawahar gram samrudhi yojna, rashtriya swasthya bima yojna and so on. The state governments have an equally impressive number of such schemes.
What is the way out?
Going by the policy statement of October 3, by Ahluwalia and Ramesh, the logical step is to remove the cap proposed in the food security bill.
The socio-economic and caste census will provide more accurate data to identify the needy requiring help. It, therefore, makes little sense to adhere to an arbitrarily fixed poverty line.
The natural question that follows from this is: why is then Ahluwalia not proposing what seems to be the next logical step but creating confusion? The answer lies in his continued insistence on keeping the subsidy under a tight leash – but only when it comes to social welfare schemes, never when it involves industry. For example, he has never uttered a word against “revenue foregone” on the corporate income tax that amounted to more than ` 80,000 crore for the financial year that just ended. n
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