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Identification and Classification of BPL in India – Evolution & Critique

Introduction

India has long-discussed the issue of poverty. The conventional approach of measuring the poverty line in India has been the estimation of minimum expenditure (or income) to buy basic necessities of livelihood although the interpretation of basic needs varies across dimensions such as socioeconomic status, governmental benefits, employment status etc.

The Expert Committee headed by the chairman of NITI Aayog or previously Planning Commission decides the poverty line on the basis of the consumer expenditure survey by National Sample Survey Organisation (NSSO) of the Ministry of Statistics and Programme Implementation by taking into consideration various factors and adopting various methodologies as discussed below.

Related: BPL Identification in India – Expert Group (Saxena Committee 2009)

Estimation Criteria

The first official poverty line estimation at the national level was in the year 1979 by Y. K. Alagh Committee. This committee was first to come up with the determining criteria, which was minimum nutritional requirements, namely 2,400 daily kcals in rural areas and 2,100 daily kcals in urban areas.

The next committee under the chairmanship of D. T. Lakdawala extended the estimation at the state level in 1993, along with the idea of minimum nutritional requirement the committee came up with state-specific poverty line depending on the Consumer Price Index of Industrial Workers in urban areas and Consumer Price Index of Agricultural Workers in rural areas. But there was no update on the changing food preferences and whether that minimum expenditure is sufficient to buy food with the specific calorie requirement (Ranjan Ray).

Identification and Classification of BPL in India – Evolution & Critique

In 2009 the Tendulkar committee did not continue with the idea of calorie intake or nutritional requirement. Poverty Line Basket (PLB) with basic requirements such as housing, clothing, shelter, education, health and sanitation were considered to make poverty estimation more realistic. Moreover, it used all the India poverty line basket to derive state-level poverty line unlike considering different criteria for state-wise rural and urban. An overall poverty rate of India was considered acceptable which was then worked backwards at the state level to find out the poverty line which generated the same poverty rate.

On the contrary, the Rangarajan Committee went back to the Lakdawala committee estimations, it considered the consumption basket which should contain the specific calorie requirement along with that expenditure on clothing, education, conveyance, housing was also considered.

Graph showing monthly per capita consumption expenditure prices Figure 1: Graph showing monthly per capita consumption expenditure prices. Source: (Task Force on Elimination of Poverty in India)

The graph shows the monthly per capita expenditure (consumption) prices which were considered by different committees at 2011-12 prices. Based on which the percentage population in rural and urban areas falling below the poverty line was decided.

Table 1: Expert committee year of constitution and percentage of people below BPL

Expert Committee Year of constitution of committee Year of Recommendations Submitted by committee/ group Percentage of population below poverty line (India)
Lakdawala Committee 1989 1993 27.5%
Tendulkar Committee 2005 2009 21.9%
Rangarajan committee 2012 2014 29.5%

Justification

The poverty line is not used for the identification of the poor rather its objective is to track the progress of nation against poverty. The Lakdawala report had shortcomings such as it did not consider the changes in consumption patterns, the changing prices due to inflation both spatially and temporally, and it considered health and education as state-led facilities. Looking forward the Tendulkar report made improvements such as considering spatial and temporal changes in price, it took one uniform poverty line basket across rural and urban and it incorporated health and education as private expenditure.

In the Sustainable Development Goals (SDGs), the no poverty goal obligates the signatories to the elimination of poverty as per the common poverty line of $1.25 per person per day (at 2005 Purchasing Power Parity) and halving it according to national definitions (goals 1.1 and 1.2, respectively). The main criticism was that the SDG’s $1.25 poverty line is lower than the Tendulkar poverty line. The Tendulkar poverty line would deprive many households in need of government assistance by classifying them as above poverty line households. But the objective is to assess the households with extreme poverty and those who can afford a bare subsistence level. Monitoring these households is substantial rather if the poverty line is set too high it would be tracking household and individual who have already reached a certain level of comfort. When this fact is taken into consideration, the case against the Tendulkar line is weakened. It must, of course, be recognized that judgments on what represents a basic necessity of life would vary from person to person and this is what makes the choice of a poverty line difficult. (Eliminating Poverty: Creating Jobs and Strengthening Social Programs)

The Tendulkar Committee estimation of population percentage below BPL was rather low as compared to Rangarajan committee estimation percentages. This difference was due to different methodologies adopted for estimation of the poverty line.

Hence ultimately the government decided to continue with considering Tendulkar Committee recommendations as the official methodology for determining the poverty line by NITI Aayog in India.

Effectiveness

The objective of determining poverty line is reduction of poverty which can be achieved through two main pillars employment-intensive sustained rapid growth and anti-poverty programs as stated by NITI Aayog, Government of India.

From 1993 till 2012 India has witnessed a reduction in poverty led by various schemes and programs of the government.

Rural-Urban poverty rates in India 1993-94, 2004-05 and 2011-12

Figure 2: Rural-Urban poverty rates in India: 1993-94, 2004-05 and 2011-12   Source: (Task Force on Elimination of Poverty in India)

The above graph shows the poverty rates in the year 1993-94, 2004-05 and 2011-12. A steep decline in poverty rates is observed and a sharper decline is observed in the seven-year period from 2004 to 2011.

Related: Identification and Classification of BPLs in India – Criteria, Justification and Effectiveness

The poor population of India majorly resides in rural areas where agriculture is the main source of income. NITI Aayog’s paper “Eliminating Poverty: Creating Jobs and Strengthening Social Programs” states various recommendations such as raising productivity in agriculture, giving remunerative prices to farmers, measures aimed at ‘second green revolution’ in rainfed areas in general and eastern India in particular etc. Also the creation of coastal economic zones which can be a focus for export-oriented businesses. Anti-poverty programs in India such as Public Distribution System (PDS), Midday Meal Scheme, MGNREGA and Housing for all focus on poverty elimination at a broader level. The paper gives further recommendations such as in PDS system the beneficiary should be given a choice between cash transfer and in-kind purchases, the inclusion of biometric system etc. Though currently, these recommendations have not come into practice thus the effectiveness of these schemes and programmes for the elimination of poverty is still not at its full potential. (Eliminating Poverty: Creating Jobs and Strengthening Social Programs)

Conclusion:

India has seen over the years various expert committees and their estimation of the poverty line. Though the Rangarajan Poverty line estimation had some few positive things such as the inclusion of calories norm, consideration of non-food requirements etc, however even after such advancement in research in this field and methodological advancements the committee did not consider the multi-dimensional view of poverty deprivation. The committee failed to recognise the increasing inequality in India. The World Bank uses the Multidimensional Poverty Index, which gives a real picture of poverty in India by considering different aspects such as low income, lack of access to basic healthcare, food, nutrition and landholdings.

Poverty has been a major hurdle in economic growth there is need for the government schemes to be more realistic and poverty alleviation programs to be effective. The consideration of the multidimensional approach while policy implementation or poverty line estimation is very important to address the inequality in India.

Author Bio: Muskan, a student of Bachelor of Planning at School of Planning and Architecture, Bhopal, Madhya Pradesh

References

  • (n.d.). Eliminating Poverty: Creating Jobs and Strengthening Social Programs. NITI Aayog, GOI.
  • Ranjan Ray, K. S. (n.d.). Rangarajan Committee Report on Poverty Measurement Another Lost Opportunity.
  • RBI. (2011-2012). Number and Percentage of Population Below Poverty Line. RBI.
  • Satapathy, S. S. (2018). A Study on Poverty Estimation and Current State of Poverty in India.
  • (n.d.). Task Force on Elimination of Poverty in India. NITI Aayog.