POVERTY: India: How to Keep Poverty Low

Devinder Sharma.: March 21, 2011 .
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, and is in reality increasing in a geometric proportion.
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. Whether we like it or not, poverty has proved to be robustly sustainable.
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.
In India, what the Supreme Court finds astonishing is that as per the National Sample Survey Organisation (NSSO) 2004-05 report those spending less than Rs 12 (1 US $ = Rs 45.18) a day in rural areas and those spending less than Rs 17 a day in the urban areas were categorised as poor. This is what has baffled the Supreme Court. After all, how can the planners be so blind to the ground realities? How can they presume that someone can survive in such a paltry amount? Where in the world can they meet their minimum calories requirement by spending a mere Rs 17 a day?
Later, a panel headed by Suresh Tendulkar, formerly chairman of Prime Minister's Economic Advisory Council, reworked the formula by adding certain items like food, sanitation and education to the poverty criteria. It, however, used lower calorie consumption norms of 1999 kcal for rural areas and 1776 for urban areas. By lowering food expenditure and adding some new items to the daily expenditure list for the poor, it based its calculations on estimates of Rs 15 for the rural areas and Rs 19 for the urban centres.
This too is a grossly unrealistic estimate. You cannot bring up even a pet dog in the same amount.
It makes me wonder as to why economists fail to realise that the indicators adopted for measuring poverty are inadequate, and do not reflect the prevailing realities. Nor do economists stand up and challenge the flawed head count of the poor. I don't know why they feel that by hiding the number of poor they are doing a service to the nation. That is why the Supreme Court had to step in.
What makes all these poverty estimates look unrealistic is the 2007 Arjun Sengupta committee report that I talked about ealrier (officially the report of the National Commission on Enterprise in Unorganised Sector), which had estimated that 77 per cent of the population or 836 million people were unable to spend more than Rs 20 (less than 50 US cents) a day. This is more or less a correct reflection of the extent of prevailing poverty, and therefore needs to be accepted as the new poverty line. If India were to accept this as poverty line, the UN estimates of global poverty too would come under the scanner.
The recommendation of the Tendulkar committee, which estimates 37.2 per cent of the population living below the poverty line, is actually a reflection of acute hunger that prevails. Knowing that Rs 19 a day cannot feed a human being in urban centres, the Tendulkar committee estimate should constitute the food insecurity or the hunger line. It means 37.2 per cent of the population is seriously food insecure and needs emergency food aid programmes to meet the challenges of hunger.
In other words, India's existing poverty line is actually a euphemism for severe food insecurity. I only hope the Supreme Court directs the government to draw two estimates -- a poverty line at 77 per cent of the population as suggested by the Arjun Sengupta Committee, and a food insecurity line at 37.2 per cent, which comprise people faced with absolute hunger and living in abject poverty.
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. Rest all is statistical jugglery.
http://www.huffingtonpost.com/devinder-sharma/how-to-keep-poverty-low_b_838329.html

Why 300 million more people are suddenly poor

By Jina Moore, November 17, 2010

Kigali, Rwanda

In November, 300 million more people around the world were suddenly poor – on paper, at least. The latest numbers on poverty from the United Nations, released Nov. 4, include a new measurement for poverty and reveal some surprises.
The Multidimensional Poverty Index (MPI) raises the number of poor by 21 percent, to more than 1.7 billion. According to the MPI, sub-Saharan Africa is still home to the greatest proportion of the world's poor, but more than half of the total number of poor lives in South Asia.
These numbers, and the new index that produced them, are part of the UN's annual Human Development Index (HDI), a statistical touchstone. It covers everything from the number of women who die in childbirth to how many people have Internet access and can sway decisions on US policy, influence where nonprofits spend money, and help determine where donors give.
For years, the HDI has set the standard for just how little a person has to live on to be considered poor. The answer? $1.25. But some researchers have long said income alone doesn't define poverty.
"There are some things money can't buy," says Sabina Alkire, cocreator of the index and director of the Oxford Poverty and Human Development Initiative, which launched the index in collaboration with the UN. "It might not buy electricity; it might not buy a public health system, or an education system."
Ms. Alkire's index looks at poverty more experientially. It uses existing survey data and categorizes households as poor if they lack three or more of the 10 poverty indicators, which are spread across health, education, and basic standards of living. "For the first time ever, it measures poverty by looking at the disadvantages poor people experience at the same time," she says.
Examining more than income changes the equation. It doubles the poor in Ethiopia, where 39 percent of people live on less than $1.25 a day. But 90 percent are "multidimensionally poor," or lacking at least three of the 10 indicators.
"The point is you can have rapid progress on the income poverty side without commensurate progress on other side," says Jeni Klugman, director and lead author of the Human Development Report, where the index debuted.
That's true even in the developed world. Hungary is categorized as a "high human development" country, and fewer than 2 percent of its people live on less than $1.25 a day. But under the MPI, that number triples.
Some specialists have raised objections to the new index, including the director of research at the World Bank, which publishes its own income measure for poverty. Among the criticisms is that the measure is still a single standard, even if it looks at many factors.
"If my bosses were to ask for my recommendation on using the MPI as a factor in allocating USAID resources among countries or programs, I would recommend against doing so," says Don Stillers, an economist for the US Agency for International Development, in an e-mail message. "Rather, I would emphasize the ongoing need to pay attention to evidence on each major dimension of poverty in each country we work in."
Duncan Green, head of research at Ox­fam International and author of "From Poverty to Power," says the measurements are a mixed bag. "There's a wealth of single indices … that cram too much into one pot, but governments notice them, and they notice if they're doing better than their neighbors."
Aid workers say the MPI can help them spend their program money more efficiently – and argue to donors to give those dollars more persuasively.
In the aid world, "[W]e've known for a long time that while a country might look like it's doing fine on a national level, there are great disparities when you look below the surface," says Carlisle Levine, a senior technical adviser for CARE. "For us, it's added information that helps us back up our arguments for making the sort of investments we make."
But Mr. Green says the new measure doesn't go far enough. "The good thing is there's a better picture of what poverty is really about," he says. "But it's a crude measure in terms of how poor people talk about their lives."
Indeed, Alkire of HDI admits her index isn't perfect. She acknowledges that good data are hard to come by, and not all types of data that researchers want even exist. "These are messy numbers, and comparisons are fraught with danger," she says. But she also thinks her approach gives existing information more context and helps correct misperceptions.
"India alone has more people than the 37 sub-Saharan African countries," she says. Comparing countries with big-picture data treats each country equally, but that can literally change how each person inside the country is valued.
"I wanted to look at poor people with an equal weight wherever they lived," she says, "instead of letting the size of their country dictate how much we care about them." 
 http://www.csmonitor.com/World/Global-Issues/2010/1117/Why-300-million-more-people-are-suddenly-poor

POVERTY: Half of India’s population lives below the poverty line

August 5th, 2010
According to a new Oxford University study, 55 percent of India’s population of 1.1 billion, or 645 million people, are living in poverty. Using a newly-developed index, the study found that about one-third of the world’s poor live in India.
The Multidimensional Poverty Index (MPI) has been developed by the Oxford Poverty and Human Development Initiative and the United Nations Development Program (UNDP) as a more precise and comprehensive means of estimating poverty levels. It will replace the Human Poverty Index that has been used in the UNDP’s annual Human Development Report since 1997.
The MPI assesses a range of factors or “deprivations” at the household level as well as income and assets. These include: child mortality, nutrition, access to clean drinking water, sanitation, cooking fuel, electricity, and years of schooling and child enrolment. “A person is considered poor if they are deprived in at least 30 percent of the weighted indicators,” the study states.
As measured by the new index, half of the world’s poor are in South Asia (51 percent or 844 million people) and one quarter in Africa (28 per cent or 458 million). While poverty in Africa is often highlighted, the Oxford research found that there was more acute poverty in India than many African countries combined. Poverty in eight Indian states—Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh, and West Bengal—exceeded that of the 26 poorest African countries.
The study examined poverty across 28 Indian states, concluding that “81 percent of people are multidimensionally poor in Bihar—more than any other state. Also, poverty in Bihar and Jharkand is most intense—poor people are deprived in 60 percent of the MPI’s weighted indicators. Uttar Pradesh is the home of largest number of poor people—21 percent of India’s poor people live there. West Bengal is home to the third largest number of poor people.”
The last figure is particularly significant as West Bengal has been ruled since 1977 by a Left Front coalition government led by the Communist Party of India-Marxist (CPM). Far from being “socialist” or “Marxist”, the Stalinist CPM has been responsible for implementing the pro-market agenda of economic restructuring carried out in other states and nationally by openly bourgeois parties. The result has been a decline in living standards for the majority and a deepening divide between rich and poor.
The Oxford University research also exposed high levels of poverty among India’s oppressed castes and tribal peoples. The poverty level among India’s so-called Scheduled Tribes is 81.4 percent. “The intensity of poverty is also very high among Scheduled Tribes, who are deprived in 59.2 percent of weighted indicators on average,” the study stated. The MPI for Scheduled Castes was 65.8 percent and for Other Backward Castes (OBC) was 58.3 percent.
The figures expose the Congress-led government’s claim that India’s economic growth has been “inclusive”. In fact, successive Indian governments led by Congress and the Hindu supremacist Bharatiya Janatha Party (BJP) are responsible for economic policies that have boosted the profits of big business and the wealth of a tiny layer at the expense of the working class and rural poor.
By focussing on a broader range of factors, the Oxford University study has highlighted the continuing lack of basic facilities for the majority of the Indian population. Governments at the national and state levels have failed to provide even the most rudimentary assistance for hundreds of millions of people. Moreover, existing public services have been further undermined by the policies of privatisation and restructuring.
Only 31 percent of India’s population had access to improved sanitation in 2008. As a result of the lack of health care and food, 61 million children in India are stunted, the largest figure for any country, according to a UNICEF report. It also stated that the health of children suffers not just due to poor hygienic conditions and lack of nutritional food but also because mothers often suffer from anaemia and malnutrition during pregnancy.
Sharply rising food prices, including an average 83 percent increase since 2008, have been devastating for the country’s poor. Their situation has been further aggravated by recent fuel price hikes announced by the Indian government. The United Nations World Food Program (UNWFP) recently painted an alarming picture, reporting that nearly 350 million people—roughly 35 percent of India’s population —was food insecure and consumed less than 80 percent of their total energy requirements.
More than 1.5 million children in India are estimated to suffer from malnourishment and 43 percent of children under five years of age are underweight, according to the latest UNWFP report. The proportion of anaemic children has increased by six percent in the last six years, with 11 states reporting 80 percent child anaemia rates.
Another study that used a household income of $US2 a day as the poverty benchmark found that India not only has more poor people than sub-Saharan Africa, but also has a higher level of poverty. In India, 75.6 percent of the population, or 828 million people, live below the poverty line as compared to 72.2 percent, or 551 million people in sub-Saharan Africa.
On the other end of the scale, the wealthy few in India have amassed great riches. While impacted by the global financial crisis, the number of US dollar billionaires in India on the Forbes list rebounded to 49 in 2010, after falling to 24 last year. The figure falls just short of the record high of 53 in 2008.
The Financial Express commented that year: “The wealth amassed by Indian billionaires—estimated at 340.9 billion dollars by the US business magazine Forbes—is nearly 31 percent of the country’s total GDP. This gives them nearly three times more weight in the economy than their American counterparts and over ten times of those in China. The GDP share of Indian billionaires’ wealth is more than four times of the global average.”
The situation is similar this year. While 49 individuals preside over what for most Indians is unimaginable wealth, the majority of people are struggling to survive from day to day. In India’s financial capital of Mumbai, more than six million desperately poor people, half of the city’s population, eke out an existence in the slums. Mumbai’s gleaming skyscrapers that symbolise India’s economic growth sit alongside makeshift hovels.
Like their counterparts around the world, India’s business elite likes to justify their position in society on the basis of their own personal initiative, acumen and drive. In reality, their wealth is the product of the exploitation of the country’s huge reserves of cheap labour and depends on the continued impoverishment of the rest of the population. This worsening social divide will inevitably produce a rebellion against the appalling conditions created by profit system and the ruling elites that defend and benefit from it.
http://www.daily.pk/half-of-india%E2%80%99s-population-lives-below-the-poverty-line-19568/

POVERTY: Understanding the multidimensionality of poverty

July 21, 2010,
With much of the world’s attention focused on reducing the incidence of poverty, the United Nations Development Programme (UNDP), in collaboration with academics of Oxford University, recently launched a new index to measure poverty levels that will show a multidimensional picture of people living in hardship, and could help target development resources more effectively.
The new measure, the Multidimensional Poverty Index, or MPI, was developed and applied by the Oxford Poverty and Human Development Initiative (OPHI) with UNDP support. To be featured in the forthcoming 20th Anniversary edition of the UNDP Human Development Report, the MPI will replace the Human Poverty Index, which had been included in these reports since 1997.
This year’s Human Development Report will employ the MPI that assesses a range of critical factors or “deprivations” on the household level, from education to health outcomes to assets and services. Taken together, these factors provide a fuller portrait of acute poverty than simple income measures.
In explaining the MPI, the new measure is likened to a high-resolution lens which reveals a vivid spectrum of challenges facing the poorest households. The MPI provides a fuller measure of poverty than the traditional dollar-a-day formulas. It is expected to be a valuable addition to the family of instruments that are used to examine broader aspects of well-being.
The UNDP and OPHI researchers analyzed data from 104 countries with a combined population of 5.2 billion or 78 percent of the world’s total. About 1.7 billion people in the countries covered – a third of their entire population – live in multidimensional poverty, according to the MPI. This exceeds the 1.3 billion people, in those same countries, estimated to live on $1.25 a day or less, the more commonly accepted measure of “extreme poverty.” Half of the world’s poor as measured by the MPI live in South Asia (51 percent or 844 million people) and one quarter in Africa (28 percent or 458 million). Even in countries with strong economic growth in recent years, the MPI analysis reveals the persistence of acute poverty.
The Multidimensional Poverty Index definitely provides a fuller account of a prolonged global problem, allowing global and national leaders a better handle of the woe that needs to be attended to.
http://www.mb.com.ph/articles/268117/understanding-multidimensionality-poverty

POVERTY: India: even worse than Africa

Eight Indian states account for more poor people than in the 26 poorest African countries combined, a new measure of global poverty has found.
The Indian states, including Bihar, Uttar Pradesh and West Bengal, have 421 million "poor" people, the study found.
This is more than the 410 million poor in the poorest African countries, it said.
The Multidimensional Poverty Index (MPI) measures a range of "deprivations" at household levels.
Developed by Oxford Poverty and Human Development Initiative (OPHI) with UN support, it will feature in the upcoming UNDP Human Development Report.
The measure assess a number of "deprivations" in households - from education to health to assets and services.
"The MPI is like a high resolution lens which reveals a vivid spectrum of challenges facing the poorest households," said OPHI director Dr Sabina Alkire.
http://www.bbc.co.uk/news/10609407