Time to redefine the yardstick

The government will soon revise the contentious poverty line upward from Rs.27.20 in rural areas and Rs.33.40 in urban areas after it receives the report of the Rangarajan committee that is examining the validity of the current yardstick. After political parties debunked the expenditure limit of Rs.27 and Rs.33 per person per day as a benchmark for defining poverty, the government said the line had not been cast in stone. The problem for the government lies in the perception that these figures reflect embarrassingly low consumption limits, particularly in the context of persistent high inflation India has been witnessing. An upward revision of the poverty line carries the risk of millions of people slipping back into poverty in terms of an official head count and this is not a comfortable prospect for any government. The Tendulkar committee’s formulation continues to guide official calculations with the latest poverty line for 2011-12 indexed to inflation. The $1.25 a day calculation as a bare minimum expenditure amounts to Rs.75 at current rates and this measure will almost certainly push a large section of the population below the poverty line. It has been estimated 70% of Indians live on less than $2 a day but official sources contend that even if this is the case, observational and empirical evidence suggests that this is not translating into poverty on a massive scale.