A prosperous India is at pains to identify its poor for subsidies
By Rama Lakshmi,
NEW DELHI — Counting India’s soaring number of billionaires is fairly straightforward: 49 last year, according to Forbes. But deciding who is poor has set off a fierce debate and led some to ask: Is the government trying to lower the tally to reduce its welfare burden?
Ahead of a survey of India’s poorest people this month, economists, officials and activists are embroiled in a debate over how to define poverty, which will determine how this prospering economy redistributes its newfound wealth among the poor.
Later this year, India plans to begin depositing cash into the bank accounts of poor people instead of giving them subsidized fuel and fertilizer. The government is also writing a food guarantee bill that promises cheap grains for the poor in a country where 46 percent of children are considered malnourished.
Officials say such moves make identifying the poor all the more important, but some analysts say the prevalent definition could exclude too many.
Estimates of the number of poor in India have swung wildly in the past decade, from 280 million to more than 800 million, depending on how poverty is defined.
Advocates of economic reforms that began in 1991 say economic growth has lifted millions out of desperate poverty, but critics say the gap between rich and poor has widened.
India’s Planning Commission recently declared that poverty declined from 37 percent in 2005 to 32 percent of India’s 1.2 billion people last year. At current Indian prices, the commission defines the urban poor as those who spend 65 to 75 cents a day or less and rural poor as those who spend 50 to 55 cents daily or less.
But many Indians say that is too low and that millions of poor people are excluded from government benefits, including inexpensive food, cooking fuel, low-cost housing and health care. Six Indian states have disputed the central government’s poverty estimates, saying millions more should be included.
The Supreme Court has asked the Planning Commission to explain the basis of its poverty number and why several state governments are disputing it.
“We used to look at intake of calories per person to define the poor. Now we look at income and consumption to set the poverty line,” said Pronab Sen, a senior adviser to the Planning Commission. “But some states want a multi-dimensional approach to poverty that includes questions like, do you send your children to school, do you own land, do you belong to a lower caste, do you have access to water and toilet?”
At the center of the debate are people like Ramvati Singh, a mother of six who earns about $1.50 a day as a manual laborer on construction sites in the capital. She cannot afford to send her children to school, she said, and rising prices are making it difficult for her to buy enough food.
But according to the Indian government, Singh is not poor because she earns more than the official poverty line.
“We give our blood and sweat to feed the family every day,” Singh said, sitting at her wood stove kneading dough. “Someone come and ask me what poverty is. I experience it every day.”
About 100 activists recently protested outside the Planning Commission office in New Delhi, carrying boxes of groceries to demonstrate what 75 cents can buy in the capital. Each box contained a potato, an onion, a pencil, a bus ticket and the cheapest variety of rice.
“We wanted to let the officials know that this amount gets you precious little. There is rampant fraud in who gets into the official poverty list. Millions of poor do not have a voice and do not manage to get listed,” said Nikhil Dey, one of the protesters and a member of a farm workers group.
But analysts say that differing political ideologies have prevented Indians from agreeing on the number of poor.
“India must be the only economy in the world where the government spends over $116 billion to alleviate poverty without clarity on the magnitude of poverty,” said Shankkar Aiyar, a newspaper columnist who writes on economy and governance.
“Poverty figures in India are trapped between competing compulsions — that economic liberalization has reduced poverty, and the politicians’ need to extract election benefits by exaggerating the poverty numbers and offering more subsidies.”
The National Advisory Council, a government-appointed watchdog, argues that the government should extend social support to all citizens because the Indian economy can now afford it.
But the impending cash transfer system, Sen said, makes precise targeting of the poor crucial.
“We have finite public resources. We can only give cash handouts to the real, unambiguous poor. If we cast the net wider, then the whole subsidy program becomes ineffective,” Sen said.