New state of poverty

#Telangana #EcologicalPoverty

Author: Richard Mahapatra @Richard20711534 

Posted on: 14 Aug, 2013
 http://www.downtoearth.org.in/content/new-state-poverty

It’s time we acknowledged ecological impoverishment as one of the poverty indicators

imageSource: Prashant Ravi

On the face of it, the release of India’s latest poverty estimate and the decision to create the 29th state, Telengana, seem to be two unrelated developments. The media and public dialogues also, though hyper on both developments, did not see any link between the two. The discussion over poverty mostly revolved around what one can buy with Rs 28/day decided as poverty line figure for rural areas. As far as Telengana is concerned, the focus was on how prominent the demand for small states has become. And, of course, some talk about how small states aid development. Ecological poverty, however, failed to find any mention in these discussions. This is how the debate on governance issues in India consistently fails to acknowledge the centrality of ecology.

To join the dots, most of the demands for new states come from areas that are rich in natural resources but high on poverty index. Of the 20 areas demanding state-status from the Union Ministry of Home Affairs, 15 have distinct socio-economic profiles. These areas predominantly depend on natural resources for sustenance. Or, one can say, they are biomass-based economies. Unlike immediately after Independence, now the demands for a separate state are not entirely based on linguistic or ethnic identities. Invariably, poor regions inside a state tend to demand separate administrative units, which could either be a separate state or a new district. Such regions, for years, have been citing regional development disparity as the main reason for their demand for a separate identity. It is a way of redrawing India’s ecological map—resource-rich areas do not want their assets to be used as raw materials for development elsewhere. But does having a separate state guarantee better access to local resources for communities? This is an important question because in such areas most of the poor depend on resources like forests and farms for survival.

Now, let’s look at the three small states created in 2001, when India last created new states after sustained demands. All the three—Chhattisgarh, Jharkhand and Uttarakhand—are rich in forest, water and land resources. Chhattisgarh and Jharkhand are suitable for analysing of whether new identities helped in better access to natural resources. This is because in both the states local ecology has been the economy of the impoverished and the two states together account for a significant proportion of India’s poor population. How have they performed in poverty alleviation as separate states?

The latest poverty estimate shows that despite a sharp drop in poverty, both the states have nearly double the poverty level of national average. Segregated data shows that tribal, forested and other mineral-rich districts contribute up to 70 per cent of the two states’ total poor. Chhattisgarh emerges as the country’s poorest state with around 40 per cent people below the poverty line. This is the same level of poverty that was reported before 2001 when the new states were created. This despite the fact that the state’s economic growth has been more than the national average. However, this is a pan Indian trend—states are reporting high economic growth but not a proportionate decline in poverty levels.

This brings into debate the ecological nature of India’s poverty. Current debates focus on impoverishment entirely as income poverty. Poverty in Chhattisgarh and Jharkhand or, for that matter, rural poverty in general, is ecological since poor depend on the environment for survival. According to various income surveys, close to 70 per cent earning of a poor person comes from ecological sources. In forested areas, forest products contribute 80 per cent of the local people’s income.

With the creation of new states in 2001, India had its first brush with ecological states. Many hoped that control over natural and ecological resources would help redefine the state of poverty in these states. Everybody believed that the new states would, at least, frame policies that reflect the ecological reality. In an anti-climax, both the states first declared industry policy to exploit the vast mineral resources and sold land at cheap rates as a bonus. This reflects in the current state of affairs in Chhattisgarh and Jharkhand. Just like before their formation, there is a sharp division within the new states: two warring groups are fighting over resources. The same old model of development continues. Naturally, the residents of resource-rich areas feel further marginalised. No surprise they continue to be poor.

This is where those euphoric over Telengana need to pause and review the past experiences. The debate over poverty line must get real and accept ecological poverty as the real poverty indicator.

Ignoring the nation’s poor: A political peril in 2012?

In today’s America, one in four Americans live in poverty. Since 2007, number of working families living in poverty or near poverty rose by 25 per cent. The official poverty rate rose to 15.9 per cent this month. This is happening despite the presence of Wal-mart which is supposed to be creating jobs and helps in economic growth. Since 2007, 10.4 million more Americans have had their incomes fall below the official poverty line. I can’t believe this. And we are made to believe that the country must follow the US economic model if it has to grow, to remove poverty and to eliminate hunger. What a fallacy.

This analysis is from an Oxfam report. http://bit.ly/SewjEf

A hungry nation exports food. It can happen only in a democracy

Devender Sharma

http://devinder-sharma.blogspot.com/2012/05/hungry-nation-exports-food-it-can.html

At a time when the total food stocks are likely to swell to a record 75 million tonnes by June 1, out of which nearly 30 million tonnes of the stocks will be piled up in the open for lack of storage space, the demand for allowing exports is already growing. Ministry of Commerce has already started an exercise to know how much quantity of wheat can be allowed for exports.

It is a strange paradox of plenty. While on the one hand India is overladen with mounting food stocks, on the other nearly 320 million people go to bed hungry. The number of hungry and malnourished in India almost equals the entire population of America. When it comes to malnutrition, several studies have pointed out that nearly 50 per cent of children are malnourished. India fares worst than even sub-Saharan Africa. According to the 2011 Global Hunger Index India ranks 67 among 81 countries, sliding below Rwanda.
With the per capita availability of foodgrains – including cereals and pulses – sliding to 441 grams per day in 2010, from a high of 480 grams in 1991 when the economic reforms began, it is quite evident that the extent of hunger is growing. Although an impression is being given that as incomes are seeing a rising trend, more people have shifted from cereals to nutritious foods like eggs, meat and fruits. This is however not correct. According to a 2010 report of the National Sample Survey Organisation (NSSO), the consumption of cereals as well as nutritious foods like fruits, milk and eggs too is falling in urban and rural areas.
Continuously rising food inflation over the past several years has certainly widened the gap between the haves and have nots. Experts agree that for a large section of the population, buying two square meals a day is now becoming more difficult. In other words, hunger is becoming more acute. More and more people are going to bed hungry. I therefore don’t understand the logic of exporting food at a time when millions are living in hunger.
The mounting food surplus is essentially because the poor and needy are unable to buy foodgrains even at below the poverty line prices. Ironically, while the poor live in hunger, India is contemplating exports. In 2011-12, with India’s rice exports touching 7 million tonnes, it has emerged as the biggest exporter of rice in the world. Opening up the export of wheat (it is banned at present) India will certainly join the ranks of the major food exporters, and in the process earn some foreign exchange. But the bigger question remains as to who will feed the hungry living within the country?
There can be nothing more criminal for any hungry nation to export its staple food. It is the primary responsibility of the government, as enshrined in the Directive Principles, to ensure that every citizen is well-fed. Unfortunately what is not being realised is the declining fall in per capita availability of foodgrains matches the availability at the time of Bengal famine in 1943. Isn’t it sad that even after 70 years of Bengal famine, we still live in the shadow of hunger and starvation? How can any sensible nation therefore justify food exports?
Food management essentially means distributing the available foodgrains among the poor and hungry. Export of staple foods therefore must be immediately stopped, and all out efforts have to be made to take the foodgrains to the doors of the hungry millions. This is the primary responsibility of every government. #

ADB: Set up hunger alleviation fund to ensure food security for poor

Economic Times, May 4, 2012
MANILA: Concerned over the impact of rising prices of commodities on the poor, a report on food security released here today suggested a “hunger alleviation fund” by Asia and the Pacific nations to deal with the problem. 

The ‘Food Security and Poverty in Asia and the Pacific’ report, presented at the 5th Annual Meeting of the Board of Governors of Asian Development Bank (ADB) recommended, “the governments to set up a hunger alleviation fund, representing 1 per cent of a country’s gross domestic product, to be used when food prices grow beyond the reach of the poor”. 

“The planet is now home to seven billion people and rising. One of the key challenges for developing Asia will be ensuring food security in the face of competing rural demands, poor agricultural management, and climate change, while not compromising on equitable economic growth,” said Xianbin Yao, Director General of ADB’s Pacific Department. 

The report said the funds could be jointly managed with the private sector, with companies being encouraged to contribute, using incentives such as tax breaks. 

It also stressed upon the need for targeted subsidies for those who need it the most. 

It was also pointed out that reducing food waste and storage losses could close the gap between supply and demand by 15-25 per cent, and a second Green Revolution – one that relies on biotechnology to increase food production – is needed.

Poverty Line: Dialogue Of The Deaf

The furore over the apparent ‘reduction’ of the Poverty Line to Rs 29 is based on muddled assumptions. A higher Poverty Line will only make sense when India’s poor are actually better off
Poverty Line: Dialogue Of The Deaf
Image: Danish Siddiqui/ Reuters

 

The great Mughal emperor Akbar once asked if there was any man in his court unbound by his wife’s command. The huge mass of his courtiers and public was stunned and stood huddled together barring one meek-looking man, who stepped away and stood alone. Akbar was curious and asked how such a submissive fellow was the only one brave enough to defy his wife. “I am not defying my wife, sire. I am standing here because she has instructed me to never stand with the crowd!” the man explained.

Prime Minister Manmohan Singh’s sudden decision to create a new committee to revise India’s official Poverty Line in the face of widespread, but largely ill-informed and misguided, public outburst—the wife in this case—seems to fall under the same category of decision-making. The new committee will replace the method of the committee led by the late Suresh Tendulkar to discover the Poverty Line. A Poverty Line is a basic level of personal consumption expenditure, which governments use as a cut-off level to segregate the poor in the population.

Trouble started when the government policy think-tank, the Planning Commission, released the latest set of poverty estimates on March 19. It said India’s poverty estimates had “declined by 7.3 percentage points from 37.2 percent in 2004-05 to 29.8 percent in 2009-10.” Rural poverty had declined by 8 percentage points from 41.8 percent to 33.8 percent and urban poverty had declined by 4.8 percentage points from 25.7 percent to 20.9 percent. Beyond the percentages, for the first time, even the absolute number of poor in the country had fallen, it estimated.

However, the Poverty Line numbers for the year 2009-10—Rs 29 for urban areas and Rs 22 for rural—led to a sudden groundswell of public outrage.

The numbers were sharply criticised because it appeared that the Planning Commission had ‘reduced’ India’s Poverty Line. That is because last September, the Planning Commission’s Poverty Line was Rs 32 for urban areas and Rs 26 for rural areas based on the price index of June 2011.

Since prices have gone up by roughly 14 percent between 2009 and 2011, it was no surprise that the levels for 2011 data were higher than the Poverty Lines for 2009.

But since they were reported in the reverse order, an impression was created that the government had arbitrarily reduced the Poverty Line, especially because the government is struggling to fund its welfare programmes, many of which are targeted at the poorest. As a result, all hell broke loose. The government’s allies, as well as the opposition parties, stalled Parliament and demanded the resignation of Montek Singh, the deputy chairman of the Planning Commission.

One Member of Parliament, Jay Panda of the Biju Janata Dal, even started a crowdsourcing experiment on his Facebook page to arrive at a new Poverty Line based on the “average of the guesstimates” of fellow Facebookers. At the last count, the people seem to have “voted” for Rs 102 for urban areas and Rs 66 for rural areas as the Poverty Lines. It is unclear how many of the voters have ever actually lived in a village or would be able to survive on Rs 102 in a city. But none of this is the real issue.

The estimation of a Poverty Line is, and always will be, an academic exercise. “We should leave it for the academics. We should not try to arrive at it democratically since there is no end to this approach,” says Himanshu, professor of economics in Jawaharlal Nehru University. “Why don’t we just ask the people what India’s growth rate is and stop calculating that too?”

 

mg_64730_poverty_line_280x210.jpg

Line Politics
Typically, Poverty Lines are not estimated to put a cap on the beneficiaries of government schemes. But with limited resources, poverty estimates came to be used as ceilings for choosing beneficiaries during the 1990s. Thus, instead of a universal public distribution system (PDS), we had the Targeted PDS. The logic was simple: If the government did not cap its programmes at some arbitrary number, its budget deficits would soar, given the high level of ‘poor’ in the country.
 
This incorrect convention of using the Poverty Line to identify beneficiaries or cap the number of beneficiaries has been the real bone of contention.

So, while the Planning Commission justified what many called a ‘starvation line’, activists asked for a higher Poverty Line so that more people could benefit from the government’s anti-poverty schemes.

“We do not want the government to use poverty rates, no matter what the level of the Poverty Line, to cap the number of beneficiaries for welfare schemes,” says Reetika Khera, professor of economics at IIT Delhi and one of the activists. According to her, it is irrelevant whether you raise the Poverty Line or not. What matters is how you demarcate who benefits from the government’s various anti-poverty schemes and subsidies.

Things came to a head last September when the Planning Commission filed an affidavit in the Supreme Court quoting the Tendulkar Report to justify the use of Poverty Lines to cap the beneficiaries for government subsidies.

However, even those who worked in the Committee—which gave its report on the revised methodology of estimating poverty in 2010—say that this was never the intention. “Tendulkar had meant that his method is adequate for broadly measuring the Poverty Line, not for identifying the beneficiaries,” says Himanshu, who worked closely with Tendulkar on the issue.

Eventually, bowing to public pressure, the Planning Commission relented in October last year and announced that Poverty Lines would no longer be used to cap the number of beneficiaries in any government scheme. However, what is crucial is that this decision has not yet been implemented. And with the deliberations on the national food security bill about to get underway, the latest press release seems to suggest the government’s efforts to bring down expectations from the bill.

But there is no point fretting over the Poverty Line. It is only meant to be a pointer, which should be revised regularly. The idea behind a Poverty Line is to choose a number, partly based on some educated assumptions and some sample data, which would capture the picture of the lowest 20-30 percent of the population. This way, the government gets to know the exact standard of living of its poorest population. It can then tailor its anti-poverty programmes more accurately. In a country like India, such a Poverty Line often looks like a ‘starvation line’.

However, a higher Poverty Line will make sense only when India’s poor are actually better off. If we arbitrarily increase the Poverty Line, it would muddy the government’s policy prescription for the poorest people.

Notwithstanding the rationale, even a consummate economist like Manmohan Singh has essentially bowed down to poorly informed public opinion asking for a higher Poverty Line.

To fix BPL, nix CPL : P. Sainath

The Hindu

To get the Below Poverty Line figures in perspective, we need to closely monitor the numbers driving the Corporate Plunder Line.

One Tendulkar makes the big scores. The other wrecks the averages. The Planning Commission clearly prefers Suresh to Sachin. Using Professor Tendulkar’s methodology, it declares that there’s been another massive fall in poverty. Yes, another (“more dramatic in the rural areas”). “Record Fall in Poverty” reads one headline. The record is in how many times you’ve seen the same headline over the years. And how many times poverty has collapsed, only to bounce back when the math is done differently.

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And so, a mere 29.9 per cent of India’s population is now below the official poverty line (BPL). The figure was 37.2 per cent in 2004-05. The “line” is another story in itself, of course. But on the surface, rural poverty has declined by eight percentage points to log in at 33.8 per cent. That’s down from 41.8 per cent in 2004-05. And urban poverty fell by 4.8 percentage points from 25.7 to 20.9 per cent in the same period. Millions have been dragged above the poverty line, without knowing it.

Undoing bogus methodology

Media amnesia fogs the “lowest-ever” figures, though. These are not the “lowest-ever.”

“Kill me, I say,” said Prof. Madhu Dandavate in 1996, chuckling. “I just doubled poverty in your country today.” What that fine old gentleman had really done, as deputy chairperson of the Planning Commission, was to jettison the bogus methodology peddled by that body before he came to head it the same year. Even minor changes in methodology or poverty line can produce dramatically differing estimates.

The fraud he undid was “an exercise” bringing poverty down to 19 per cent in 1993-94. And that, from 25.5 per cent in 1987-88. These were the “preliminary results of a Planning Commission exercise based on National Sample Survey data” (Economic & Political Weekly, January 27, 1996). Now if these figures were true, then poverty has risen ever since. And remember, highlighting that historic fall was an honest Finance Minister. The never-tell-a-lie Dr. Manmohan Singh. One business daily ran a hilarious “exclusive” on this at the time. Poverty falls to record low of 19 per cent, “government officials say.” This was the best news since Independence. But the modest officials remained anonymous, knowing how stupid they’d look. In the present era, they hold press conferences to flaunt their fraud.

The “lowest ever at 19 per cent” fraud was buried in the ruins of the April 1996 polls. So was the government of the day. The “estimate” was not heard of again. Now we have the 29.9 per cent avatar. Surely that’s a rise of 10.9 percentage points in 16 years? Or just another methodological fiddle.

However, the new Planning Commission numbers have achieved one thing. They’ve united most of Parliament on the issue. Members from all parties have blasted the “estimates” and called for explanations.

There’s also the Tendulkar report’s own fiddles. As Dr. Madhura Swaminathan points out, the committee dumped the calorie norms of “2,100 kcal per day for urban areas and 2,400 kcal for rural areas.” It switched to “a single norm of 1,800 kcal per day.” And did so citing an “FAO norm.” As Dr. Swaminathan observed: “the standards set by the Food and Agriculture Organisation for energy requirements are for “minimum dietary energy requirements” or MDER. That is, “the amount of energy needed for light or sedentary activity.” And she cites an FAO example of such activity. “…a male office worker in urban areas who only occasionally engages in physically demanding activities during or outside working hours.”

As Dr. Swaminathan asks: “Can we assume that a head load worker who carries heavy sacks through the day is engaged in light activity?” — The Hindu, February 5, 2010.

Measuring poverty

The media rarely mention that there are other methodologies for measuring poverty on offer. Also set in motion by this same government. The National Commission for Enterprises in the Unorganised Sector (NCEUS) saw BPL Indians as making up 77 per cent of the population. The N.C. Saxena-headed BPL Expert group placed it at around 50 per cent. Like the Tendulkar Committee, these two were also set up by government. While differing wildly, all three pegged rural poverty at a higher level than government did. Meanwhile, we will have many more committees on the same issue until one of them gives this government the report it wants. The one it can get away with. (The many inquiries on farm suicides exemplify this.)

That the Planning Commission thought they could slip the present bunkum by sets a new benchmark for — and marriage of — arrogance and incompetence. First, they sparked outrage with their affidavit in the Supreme Court. There they defended a BPL cut-off line of Rs.26 a day (rural) and Rs.32 (urban). Now they hope to get by with numbers of Rs.22.42 a day (rural) and Rs.28.35 a day (urban).

The same year the government and planning commission shot themselves in both feet in 1996, a leading Delhi think tank joined in. It came up with the “biggest ever study” done on poverty in the country. This covered over 30,000 households and queried respondents across more than 300 parameters. So said its famous chief at a meeting in Bhopal.

This stunned the journalists in the audience. Till then, they had been doing what most journalists do at most seminars. Sleeping in a peaceful, non-confrontational manner. The veteran beside me came alive, startled. “Did he mean they asked those households over 300 questions? My God! Thirty years in this line and the biggest interview I ever did had nine. That was with my boss’s best friend. And my last question was ‘may I go now’?” We did suggest to the famous economist that battered with 300 questions, his respondents were more likely to die of fatigue than of poverty. A senior aide of the think tank chief took the mike to explain why we were wrong. We sent two investigators to each household, he said. Which made sense, of course: one to hold the respondent down physically, twisting his arm, while the other asked him 300 questions.

Now to the queue of BPL, APL, IPL, et al., may I add my own modest contribution? This is the CPL, or Corporate Plunder Line. This embraces the corporate world and other very well-off or “high net worth individuals.” We have no money for a universal PDS. Or even for a shrunken food security bill. We’ve cut thousands of crores from net spending on rural employment. We lag horribly in human development indicators, hunger indexes and nutritional surveys. Food prices keep rising and decent jobs get fewer.

Yet, BPL numbers keep shrinking. The CPL numbers, however, keep expanding. The CPL concept is anchored in the “Statement of Revenue Foregone” section of successive union budgets. Since 2005-06, for instance, the union government has written off close to Rs.4 lakh crore in corporate income tax. Over Rs.50,000 crore of that in the present budget. The very one in which it slashes thousands of crores from the MNREGS. Throw in concessions on customs and excise duties and the corporate karza maafi in this year’s budget sneaks up to nearly Rs.5 lakh crore.

True, there are things covered in excise and customs that also affect larger sections, like fuel, for instance. But mostly, they benefit the corporate world and the very rich. In just this budget and the last one, we’ve written off Rs.1 lakh crore for diamonds, gold and jewellery in customs duties. That sort of money buys a lot of food security. But CPL trumps BPL every time. The same is true of write-offs on things like machinery. In theory, there’s a lot that should benefit everybody: like the equipment hospitals import. In practice, most Indians will never enter the five-star hospitals that cash in on these benefits.

The total write-off on these three heads in eight years since 2005-06: Rs. 25.7 lakh crore. (See Table). That’s over half a trillion U.S. dollars. Not far from 15 times the size of your 2G scam. Or over twice the Coal Scam, the latest addition to the CPL. Look at the table and think about BPL estimates working on cut-offs of Rs.22.42 a day rural and Rs.28.35 urban. To fix BPL, nix CPL.

psainath@mtnl.net.in

We can’t rid India of the tyranny of the poverty line without a struggle

Biraj Patnaik, a right to food activist and principal adviser, Office of Commissioners to the Supreme Court in the right to food case, tells Mukesh Ranjan that the government should avoid being distracted by the concept of the poverty line

* How do you view the Planning Commission’s new definition of the poverty line, namely, daily per capita expenditure of Rs 28 in urban areas and Rs 22 in rural areas?
I have no problem with the Planning Commission or the government coming up with a definition of the poverty line. Unfortunately, the problem that we are facing now is that the poverty line is used (since 1996) as a cut-off in the estimation of the poor who will become eligible for government welfare schemes, and also for inter-state allocation of Central resources.

These new figures are not new but merely an adjustment of the “Tendulkar Committee line” for 2009-10 using the National Sample Survey Organisation (NSSO) data. The Planning Commission has not gone ahead and further reduced the existing per capita per day consumption on the basis of a new formula, as is being made out in some sections of the media.

Of course, having a “minimalist starvation line”, like the one that the Planning Commission has come up with for targeting benefits to people, is outright perverse; hence the public outrage that was also reflected in Parliament. Unfortunately, the Planning Commission does not seem to have learnt a lesson from the public outrage in October last year when Rs 32 per day was suggested.

It is the arrogance of a group of economists who think that public opinion, and indeed that of the courts, should be treated with contempt.

* Contradictory statements have come from the deputy chairman of the plan body and the minister of state for planning on whether the new poverty estimate should be linked to welfare entitlements for the poor.
I am not very optimistic that this government will delink entitlements from the proposed poverty line, which people are mocking. This is born out of experience. Therefore, public pressure is necessary. When the National Food Security Bill was placed before Parliament, to our utter disappointment the same Tendulkar caps (plus 10 per cent) found their way into the bill. It was an outright betrayal that, sadly, continued the faulty thinking that the National Advisory Council had gifted this legislation with. This reflects the true intent of the present regime.

On policy flip-flop, and contradictory statements emanating from Yojana Bhavan, I don’t think we should attribute to malice what can so easily be attributable to sheer ineptitude. If truth be told, it is not that the Planning Commission is a body of complete idiots, as some members within it are striving to prove. Yet, they are collectively doing a great disservice to the institution. Never before has Yojana Bhavan been an object of such public derision. That saddens me immensely.

Today, the Planning Commission is at war with itself. Institutional incoherence on critical issues is merely a symptom of a larger malaise. There is an urgent need for the plan panel to collectively reflect on its mistakes, learn lessons from them, fix accountability and try to re-establish its credibility in the public eye. It is way too important an institution to be whittled down. It is our duty as citizens to reclaim it for the poor from the corporate interests it is now perceived to represent.

* How do you see the government’s decision — announced recently following the ruckus on the new poverty line —to constitute a new expert group to look into the methodology of determining the number of poor people in the country?
If we move towards a system of universal state provisioning of basic rights (we have already done this for education and rural employment, and the same is under active consideration for universal healthcare), it should not matter what committee is set up and what the new estimates are going to be. But since ambiguity persists, this move to set up yet another committee can be easily interpreted as a cynical, ad hoc measure to bail the government out from the tight spot it finds itself in, in Parliament.

* Do you think the government succumbed to popular pressure to junk the poverty estimates’ announcement by the deputy chairman of the Planning Commission, Montek Singh Ahluwalia, which he had made just two days before the new expert group was constituted?
I suspect the last word has still not been said on this. I am not very hopeful at this stage that without sustained struggle politically, we can rid this country of the tyranny of the poverty line. Having said that, I am optimistic that sustained public opinion and efforts of the Supreme Court offer a very realistic chance of delinking entitlements from the official poverty line.

* Are you satisfied with the data on poverty collected by the NSSO ? Even Dr Ahluwalia has acknowledged discrepancies in the consumer expenditure data shown in the NSSO’s National Accounts.
I don’t think that the deputy chairperson has questioned the quality of the NSSO data.
It is a very robust set of data and I don’t see an alternative to it emerging in the near future. What he has indeed highlighted is the difference in some expenditure heads between the NSSO data and the National Accounts. This has been known for quite some time now. It is for economists and planners who work closely with these data sets to resolve this over time. I think by questioning the NSSO data we are doing the statistical machinery of India a great disservice. If we do not have faith in any institution, any data, any official body, then the roadmap ahead will only lead us to a fascist psyche, and that is something we must be cautious of.

* What, according to you, would be the right approach or methodology to determine the number of poor people in the country?
In my view, whatever approach we follow, we should not use it for targeting the poor. If the government, for whatever reason, cannot move towards a regime of universal coverage for all rights (legal and extra legal entitlements), it should use an exclusion approach to identification. Rather than spending its energies on identifying the poor, it would be way easier for it to identify the “rich” and exclude them from the entitlements meant for the poor. This approach was suggested by Kirit Parikh, a former member of the Planning Commission, in the context of the Food Security Bill.

Subsequently, Jean Dreze and other eminent economists have also endorsed it. I think that would be a step forward in the right direction.

Barefoot – The other side of life: Living on Rs.26/a day

http://www.thehindu.com/opinion/columns/Harsh_Mander/article2882340.ece#.TzcvZ0PytaE.gmail

HARSH MANDER

Can anyone really live on Rs. 26 a day, the income of the officially poor in rural India? Two youngsters try it out.

Late last year, two young men decided to live a month of their lives on the income of an average poor Indian. One of them, Tushar, the son of a police officer in Haryana, studied at the University of Pennsylvania and worked for three years as an investment banker in the US and Singapore. The other, Matt, migrated as a teenager to the States with his parents, and studied in MIT. Both decided at different points to return to India, joined the UID Project in Bengaluru, came to share a flat, and became close friends.

The idea suddenly struck them one day. Both had returned to India in the vague hope that they could be of use to their country. But they knew the people of this land so little. Tushar suggested one evening — “Let us try to understand an ‘average Indian’, by living on an ‘average income’.” His friend Matt was immediately captured by the idea. They began a journey which would change them forever.

To begin with, what was the average income of an Indian? They calculated that India’s Mean National Income was Rs. 4,500 a month, or Rs. 150 a day. Globally people spend about a third of their incomes on rent. Excluding rent, they decided to spend Rs. 100 each a day. They realised that this did not make them poor, only average. Seventy-five per cent Indians live on less than this average.

The young men moved into the tiny apartment of their domestic help, much to her bemusement. What changed for them was that they spent a large part of their day planning and organising their food. Eating out was out of the question; even dhabas were too expensive. Milk and yoghurt were expensive and therefore used sparingly, meat was out of bounds, as were processed food like bread. No ghee or butter, only a little refined oil. Both are passionate cooks with healthy appetites. They found soy nuggets a wonder food — affordable and high on proteins, and worked on many recipes. Parle G biscuits again were cheap: 25 paise for 27 calories! They innovated a dessert of fried banana on biscuits. It was their treat each day.

Restricted life

Living on Rs.100 made the circle of their life much smaller. They found that they could not afford to travel by bus more than five km in a day. If they needed to go further, they could only walk. They could afford electricity only five or six hours a day, therefore sparingly used lights and fans. They needed also to charge their mobiles and computers. One Lifebuoy soap cut into two. They passed by shops, gazing at things they could not buy. They could not afford the movies, and hoped they would not fall ill.

However, the bigger challenge remained. Could they live on Rs. 32, the official poverty line, which had become controversial after India’s Planning Commission informed the Supreme Court that this was the poverty line for cities (for villages it was even lower, at Rs. 26 per person per day)?

Harrowing experience

For this, they decided to go to Matt’s ancestral village Karucachal in Kerala, and live on Rs. 26. They ate parboiled rice, a tuber and banana and drank black tea: a balanced diet was impossible on the Rs. 18 a day which their briefly adopted ‘poverty’ permitted. They found themselves thinking of food the whole day. They walked long distances, and saved money even on soap to wash their clothes. They could not afford communication, by mobile and internet. It would have been a disaster if they fell ill. For the two 26-year-olds, the experience of ‘official poverty’ was harrowing.

Yet, when their experiment ended with Deepavali, they wrote to their friends: “Wish we could tell you that we are happy to have our ‘normal’ lives back. Wish we could say that our sumptuous celebratory feast two nights ago was as satisfying as we had been hoping for throughout our experiment. It probably was one of the best meals we’ve ever had, packed with massive amounts of love from our hosts. However, each bite was a sad reminder of the harsh reality that there are 400 million people in our country for whom such a meal will remain a dream for quite some time. That we can move on to our comfortable life, but they remain in the battlefield of survival — a life of tough choices and tall constraints. A life where freedom means little and hunger is plenty…

Plenty of questions

It disturbs us to spend money on most of the things that we now consider excesses. Do we really need that hair product or that branded cologne? Is dining out at expensive restaurants necessary for a happy weekend? At a larger level, do we deserve all the riches we have around us? Is it just plain luck that we were born into circumstances that allowed us to build a life of comfort? What makes the other half any less deserving of many of these material possessions, (which many of us consider essential) or, more importantly, tools for self-development (education) or self-preservation (healthcare)?

We don’t know the answers to these questions. But we do know the feeling of guilt that is with us now. Guilt that is compounded by the love and generosity we got from people who live on the other side, despite their tough lives. We may have treated them as strangers all our lives, but they surely didn’t treat us as that way…”

So what did these two friends learn from their brief encounter with poverty? That hunger can make you angry. That a food law which guarantees adequate nutrition to all is essential. That poverty does not allow you to realise even modest dreams. And above all — in Matt’s words — that empathy is essential for democracy.

Banks should lead the war on poverty

M. S. SWAMINATHAN

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M.S. Swaminathan, Chairman, M.S. Swaminathan Research Foundation, addressing the BANCON 2011 conference in Chennai on November 6, 2011.
The HinduM.S. Swaminathan, Chairman, M.S. Swaminathan Research Foundation, addressing the BANCON 2011 conference in Chennai on November 6, 2011.

The banking community played an important part in enabling the Green Revolution. It should play such a role in ushering in the era of freedom from hunger.

At BANCON (annual bankers’ conference) 2011 in Chennai, financial institutions explored avenues for greater participation in agriculture and rural development. There are a few areas in need of additional attention and investment.

Green Revolution technologies are scale-neutral but not resource-neutral. Inputs are needed for output; therefore market-purchased inputs become important in providing soil and plant healthcare for higher yields. Social scientists point out that small and marginal farmers will be excluded from the benefits of the Green Revolution since they would not have the financial resource to buy inputs. The Government of India initiated a Small and Marginal Farmers Programme specially to provide credit and other inputs. After bank nationalisation, provision of credit to small and marginal farmers got priority. Without this, the wheat revolution would not have covered all farmers. The smaller the farm, the greater is the need for marketable surplus, so that the family will have cash income to meet their needs.

The emerging phase in agriculture will be based on integrating the principles of ecology and equity in technology development and dissemination. This is the path to an ever-green revolution leading to sustained increase in productivity without associated environmental harm. In recent years, the government has stepped up credit for agriculture. However, the burden of indebtedness is still high in rural India, and the rural masses are exploited in the credit market. Much of the credit intended for farmers goes through indirect channels, and not directly to them.

Problems in the supply of credit to rural families include inadequate supply of formal credit on the whole, imperfect and fragmented rural credit markets, and unequal distribution of credit, particularly with respect to region, class, caste and gender. In spite of the dominant role played by women in both farming, they are denied credit as they lack land titles. Only a small percentage of Kisan Credit Cards goes to them. Consequently, the major source of credit to rural households, particularly income-poor working households, continues to be the informal sector. Many of the farmer suicides, particularly in the drought-prone areas, are attributed to lack of access to formal credit at reasonable interest rates.

If farmers have to take their lives, then there is something wrong in our economic and social structure. Unfortunately, this issue is being dealt with in statistical terms and not from the point of view of the real state of farming.

Financial inclusion

Apart from the initiatives taken by banks, some of which are commendable, the most important instrument to reach the unreached in terms of access to credit is microcredit. A number of non-banking finance companies have entered the rural microcredit market. Many microcredit agencies have been charging interest rates not very dissimilar to those charged by moneylenders. Borrowing then becomes more to meet pressing consumption needs, rather than for farming or small-scale enterprises. There are examples of micro-enterprises organised by women’s Self-Help Groups with the help of microcredit. Production-oriented SHGs become sustainable if they have backward linkages with technology and credit and forward linkages with the market. The rationale for microcredit is to strengthen the livelihood security of the economically underprivileged sections, and its impact should be measured in terms of reduction achieved in poverty and hunger. Formal financial institutions should provide funds to non-banking finance companies only on the basis of a well-defined code of conduct that will help promote a win-win situation for the lending institution and the SHGs operating market-driven micro-enterprises.

The pervasive nature of malnutrition in India is evident from national and international surveys. International price volatility is high, both due to a continuous rise in petroleum prices, and unfavourable weather conditions. For the poor, including small and marginal farmers, food inflation increases their vulnerability to hunger. India’s food inflation is now over 12 per cent. The Reserve Bank of India has raised interest rates 13 times in 19 months. They are up from 4.75 per cent in March 2010 to 8.5 per cent in October 2011. The inflation rate has been steady since March 2010, despite RBI interventions. A fresh approach is needed, going beyond merely altering interest rates to contain inflation. In measures to contain food inflation, a disaggregated approach is needed. Look at a few commodities:

• Vegetables: Prices have gone up by 63.95 per cent in the last six months. The National Horticulture Mission with an outlay of about Rs. 20,000 crore, meant to increase production of vegetables and fruits, puts emphasis on commercial vegetables, including for export, rather than on malnutrition. For every nutritional malady there is a horticultural remedy. The nutrition and food inflation containment dimensions in the Horticulture Mission should be mainstreamed. Mapping the hot-spots with reference to the gap between demand and supply and planning the production and distribution strategy will help check inflation.

• Pulses: Budget 2011 provided funds to establish 60,000 Pulses Villages. If the programme is implemented holistically, price rise can be halted. Banks can help establish Pulses Seed Villages to provide seeds, as Indian Overseas Bank did over 10 years ago in Tamil Nadu.

• Potato and onion: In a report on managing the prices of perishable commodities submitted to Indira Gandhi in 1982, a detailed strategy for the management of output and prices in the case of crops such as onion and potato was dealt with. The approach suggested was similar to what was done in the case of milk by Dr. V. Kurien and the National Diary Development Board, where the emphasis was on post-harvest infrastructure and management. Unfortunately, the National Horticulture Board has not been able to play a similar role. It is time we developed a mechanism that can ensure remunerative prices.

• Milk: Nearly 80 per cent of the price of milk is accounted for by the cost of feed and fodder. We are exporting concentrates like the soyabean meal while we have nearly one billion farm animals to feed. Often, common grazing grounds are diverted for other uses. Seeds of good fodder varieties are not available. In areas where there are large numbers of dairy cattle, SHGs can organise fodder and feed banks with support from banks.

• Rice, wheat and nutri-cereals: Prices of these staples have remained relatively stable largely because of procurement and public distribution policies. This has a lesson for other crops: food inflation can be contained if a disaggregated commodity-centred approach based on a clear understanding of the causes for price rise is adopted.

Over 60 per cent of India’s population is engaged in agriculture. Our greatest challenge is the technological upgradation of small-farm operations to improve small-farm productivity, profitability and sustainability. There is a growing gap between scientific know-how and field-level do-how. Indian Overseas Bank is helping to organise Farm Schools in the fields of outstanding farm women and men to bring those from other areas to stay for a few days with the farmer-achievers, helping multiply successes. Members of the banking family could take up such activities under their corporate social responsibility programme.

There is a need for greater credit and insurance literacy among farm families. Financial institutions interested in increasing their lending for food security could locate a staff member in Krishi Vigyan Kendras. I initiated the KVK pathway of knowledge and skill empowerment in 1974 with the first one located at Puducherry. Now there are over 500 KVKs operated by the Indian Council of Agricultural Research, agricultural universities and non-government institutions that can provide locations for financial institutions to launch a credit and insurance literacy movement.

If agriculture goes wrong, nothing else will have a chance to go right in India. With a National Food Security Bill on the anvil, we must redouble our efforts to increase farm production on an environmentally sustainable basis. The banking community played an important part in enabling the Green Revolution. It should now play such a role in ushering in the era of freedom from hunger.

(Professor M.S. Swaminathan is a Member of Parliament, Rajya Sabha, and the Chairman of the M.S. Swaminathan Research Foundation, Chennai.)

Rural Poverty Report 2011

The “Rural Poverty Report 2011” was released by International Fund for Agriculture Development (IFAD) sometime back. This compendium is a comprehensive and current assessment of rural poverty across the globe that addresses the importance of managing risk, need for transformation in agricultural markets, creating opportunities in the rural-non-farm economy among other pertinent issues and challenges. 

Chapter 5 of the report in particular takes note of the relevance of Sustainable Agricultural Intensification. It says that improved inputs remain critical for increasing productivity as do supportive polices and investment in agricultural research. However, today’s circumstances require an approach that better preserves the natural resource base and increases resilience of farming systems to climatic changes. It speaks of a growing number of sustainable intensification practices using an agro-ecological perspective with more selective recourse to external inputs. It defines three features – a systemic approach, context adaptation and linking farmers’ plus scientific knowledge as the key to the emerging agenda.

Interestingly, the cover of the Rural Poverty Report 2011 selects a fine adaption from the East Coast Region, Madagascar, portraying farmers who have harvested rice through System of Rice intensification (SRI) – what IFAD spells out as a set of practices that can substantially increase yields, while using less irrigation water and seeds – a system that has been adopted widely and benefits of which have been documented in over 40 countries in Asia, Africa and Latin America. The IFAD Rural
Poverty Report can be accessed & downloaded fromhttp://www.ifad.org/rpr2011/