The government today set up an expert committee to suggest a new methodology for determining who is poor and who is not, following widespread condemnation of its existing criteria last year.
However, the five-member committee headed by C. Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, will also examine the existing methodology, which was suggested by a previous expert panel formed under Suresh Tendulkar.
Tendulkar’s methodology was solely based on consumption expenditure. The definition of poverty was linked to how much a family spent on food and services such as education and health.
In January last year, the Planning Commission had accepted the Tendulkar panel’s criteria, which suggested a rural citizen be considered poor if he spent less than Rs 447 a month. The cut-off for urban citizens was Rs 578 a month. Both figures had been calculated according to the 2004-05 price index.
Converted to 2011 prices, the cut-offs became Rs 781 per head per month in rural areas and Rs 965 per head per month in urban areas. This pegged the per day, per head expenditure at Rs 26 in rural areas and Rs 32 in urban areas.
After a plan panel affidavit in the Supreme Court brought these criteria under the limelight, there was severe questioning from many chief ministers, food rights activists and members of Sonia Gandhi’s National Advisory Council such as Aruna Roy and former member Jean Dreze. The critics said these cut-offs were arbitrary and much too low. A few activists moved the Supreme Court too.
Bihar chief minister Nitish Kumar and his then Uttar Pradesh counterpart Mayawati wrote to the Prime Minister that this way of estimating poverty would leave many deserving households out of the ambit of welfare schemes.
“Taking note of the various points of view and perspectives expressed in the public domain... the government has decided to set up an expert technical group to revisit the methodology for estimation of poverty and identification of the poor,” the minister of state for planning, Ashwini Kumar, told a news conference today.
However, the government reaffirmed that its poverty estimates would not be used to identify the beneficiaries of welfare schemes.
“The poverty estimate will be used for policy planning and as a reference point to assess improvement in poverty reduction. Such estimates also (make it clear) whether the welfare schemes are helping improve the condition of the poor,” a plan panel official said.
The beneficiaries of welfare schemes will be identified on the basis of the ongoing BPL (below poverty line) survey, officials said.
Ashwini Kumar said the Rangarajan committee would examine whether the definition of poverty should be fixed solely in terms of consumption or whether such criteria as income, purchasing power and quality of dwellings should be considered too.
Nitish Kumar has written to the Prime Minister demanding that a separate BPL commission, set up through an act of Parliament, be tasked with setting the criteria to estimate poverty and identifying the poor. The government has not taken any decision on this.
The other members of the Rangarajan committee are Mahendra Dev, director of the Indira Gandhi Institute of Development Research; K. Sundaram, former professor at the Delhi School of Economics; Mahesh Vyas from the Centre for Monitoring Indian Economy; and K.L. Datta, former adviser to the Planning Commission. The committee has not been set a timetable to hand in its report.