Saturday, February 18, 2017

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Counting The Poor In India—Where Do We Stand by C.Rangarajan and S.Mahendra Dev ; Published by Academic Foundation ; Pages 150 ; Price Rs 895/-


Dr.Rangarajan  is Chairman of the Madras School of Economics  and Chancellor of the University of Hyderabad. He was the Chairman of the Twelfth Finance Commission, Governor of Reserve Bank of India and Chairman, Economic Advisory Committee to the Prime Minister. He was President of the Indian Economic Association in 1988 and President of the Indian Econometric Society in 1994.  He was awarded Padma Vibhushan in 2002. 

S.Mahendra Dev is the Director and Vice Chancellor of the Indira Gandhi Institute of Development Research. He is the recipient of the coveted Malcolm Adiseshiah  Award for outstanding work on Development.

The book under review contains the Report of the Expert Group appointed by the Government of India to review and take a fresh look at the methodology for the measurement of poverty chaired by Dr. Rangarajan. A number of issues cropped up after the Report was released and these are studied in four articles.

How does one measure poverty?. The most appropriate is the one prescribing a minimum level of income or consumption expenditure. Households not achieving this level can be treated as poor households . This is based on the minimum expenditure on food and non-food items. Non-income indicators such as education,health, situation, drinking water, child mortality, etc can be monitored over time along with income or consumption poverty.

Many committees studied the methodology to measure poverty. The original methodology evolved by Prof.Y.V.Alagh was modified by the Lakdawala Expert Group and again by the Tendulkar  Expert Group. The latest Expert Group has Dr.Rangarjan as the Chairman and it makes several improvements over the Tendulkar committee’s poverty line. It reverts to the practice of having separate All India rural and Urban basket lines and deriving state level rural and urban estimates from these. The Tendulkar Committee took urban poverty as given and used it as the common basket for rural and urban household.The Rangarajan Committee derived the food component of the poverty line basket by reference to the average requirements of calories, proteins and fats based on the ICMR norms differentiated by age, gender and activity for all-India rural and urban regions to derive the minimum normative levels of nourishment.

Accordingly, the energy requirements was arrived at 2155 kcal per person in rural areas and 2090 kcal per person in urban areas. The Committee computed a fresh basket in the light of the most recently available minimum requirement of food. Also minimum non-food requirements for certain categories were included in determining the basket.

The Rangarajan Group recommended that the beneficiaries under target group oriented schemes of the Government may be selected from the deprivation specific ranking of households.

The Group noticed a two-fold approach to ameliorating poverty. First—Growth. Poverty ratios come down faster during periods of higher growth.As growth occurs it affects  all sections of society. A strong growth increases the resources available to the public authorities  and this leads to higher social sector expenditures. The Group affirms that the very fact that poverty ratio still hovers around 30 per cent means that growth by itself will not be adequate to reduce poverty. It is imperative that Governments launch specific programmes which go directly to help poorer groups and vulnerable sections of society.
Policy should work towards not only to reduce the number of people below the poverty line but also ensure that people in general enjoy a much higher standard of living. Policy makers must follow the twin strategy of letting the economy grow fast and directly attacking poverty through poverty alleviation programmes.Increased public expenditure on health,education and other social services will have to be taken into account while assessing trends in poverty.

The four special articles deal with comparison of Social Economic Caste Census data, Estimates of Poverty using different cut-off points and the impact of public expenditure on health and eradication of poverty and Poverty estimation.

According to the Rangarajan Group, the MOCC (Monthly Per Capita Consumption Expenditure) of Rs 972 in rural areas and Rs 1407 in urban areas is treated as the Poverty Line at the All India level in 2011-12.

A number of tables throw light  on the parameters analysed in the Report of the Rangarjan Group. There is an excellent bibliography of immense use to those who wish to study more of the subject.

This is a very valuable book which enables us to understand the level of poverty and the steps taken to alleviate poverty.


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