Thursday, February 22, 2007

Is Government’s Data on Poverty in India Acceptable?

Abraham M. George

The World Bank's definition of the poverty line for developing countries like India is US$1 per day/person or US $365 per year. According to the Indian government, poverty line is based on the cost of consuming certain number of calories in food intake -- for the urban areas it is Rs.296 per month and for rural areas it is Rs.276 per month. That works out to less than Rs.10 per day. Based on this measure, the government claims that less than 29 percent of the national population is poor.

It is hard to believe that anyone can live on Rs.10 per day ($0.22) and claim to be not poor. My personal observation of the population we serve in the 17 villages of Hosur Taluk in Tamil Nadu has convinced me that a great majority are indeed poor by any reasonable standard. Without arguing about at what income level poverty should be defined, our foundation decided to survey the four villages close to our projects at different income levels. This house-to-house survey by our social workers was conducted in January-February 2007. The results are as follows:

The above data shows that 83 percent of the population is below the World Bank’s definition for poverty at $1 per day. However, as per the government’s definition of poverty at $0.22 per day, less than 16 percent of the population is poor – a far better scenario than the national average of 29 percent. This significant difference can be explained by the fact that Tamil Nadu is a more prosperous state than most others. (Note that the four villages surveyed are only 40 km from Bangalore, the technology center of India, and 15 km from Hosur, one of the industrial cities in South India).

However, if 83 percent of the population in the same four Tamil Nadu villages is below $1 per day, it is very likely that a higher percentage of the nation’s population is poor by the same definition.

This blog does not attempt to define the income level at which poverty should be defined. The World Bank has set those levels at $1 and $2 respectively as per its narrow and broad definitions. Successive national governments in India have defined poverty very differently, and have achieved a lower level of poverty in India.

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