Current General Studies Magazine (October 2014)

General Studies - III (Economy Based Article - Rangarajan Committee Poverty Estimates)

The expert group headed by the former PMEAC Chairman estimated that the number of poor in India was much higher in 2011-12 at 29.5 % of the population

Defending his calculation that three out of 10 in India are poor, former PMEAC Chairman C Rangarajan on Monday said poverty numbers provided by him are not conservative estimates and they are at par with global standards.

The expert group headed by Dr. Rangarajan dismissed the Suresh Tendulkar Committee methodology on estimating poverty and estimated that the number of poor in India was much higher in 2011-12 at 29.5 per cent of the population.

As per the Rangarajan panel’s estimates, three out of 10 in India would be poor. Estimates based on Tendulkar committee methodology, had pegged the poverty ratio at 21.9 in 2011—12.

“I dont think that it is conservative (poverty) estimates. In my view it is reasonable estimates. We have derived poverty estimates independently,” Mr. Rangarajan told in an interview to a private channel.

He was responding to the criticism that anyone spending more than Rs 47 per day in cities and Rs 32 in villages would not be poor.

Elaborating further he said, “The World Bank also talks about purchasing power parity terms. The minimum expenditure per day. They are talking about about USD 2 per day whereas our estimates comes to USD 2.4.

Therefore it (our poverty estimates) is in keeping with the international standards“.

He explained that the benefits are not being provided on the basis of any poverty line as in the case of food security law which would benefit 67 per cent of the population.

The noted economist believes that it is measure of poverty and measure of understanding how economy is moving. But apart from it there is no immediate policy implication.

He urged the people to look at the poverty line in terms of a household’s consumption expenditure per month which is estimated at Rs 4,860 in villages and Rs 7,035 for cities for a family of five people.

Apart from the private consumption expenditure, people also benefit from public expenditure on health, education and other facilities, he said, adding: “poverty line is at appropriate level“.

“All of these spendings have gone up in the recent past. That explains why urban poverty ratio is much higher in our estimation,” he said.

As per the report submitted by Mr. Rangarajan to Planning Minister Rao Inderjit Singh earlier, persons spending below Rs 47 a day in cities would be considered poor, much above the Rs 33—per—day mark suggested by the Suresh Tendulkar Committee.

As per Rangarajan panel estimates, a person spending less than Rs 1,407 a month (Rs 47/day) would be considered poor in cities, as against the Tendulkar Committee’s suggestion of Rs 1,000 a month (Rs 33/day).

In villages, those spending less than Rs 972 a month (Rs 32/day) would be considered poor. This is much higher than Rs 816 a month (Rs 27/day) recommended by Tendulkar Committee.

In absolute terms, the number of poor in India stood at 36.3 crore in 2011—12, down from 45.4 crore in 2009—10, as per the Mr. Rangarajan panel. Tendulkar Committee, however, had suggested that the number of poor was 35.4 crore in 2009—10 and 26.9 crore in 2011—12.

(Source- The Hindu)

Question :

1Q. Discuss the highlights of the Rangarajan report on poverty and methodology recommended by the expert group for the estimation of the poverty. (200 words)

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