Poverty Measures

Paper: II

For Prelims: Poverty Line Basket.

For Mains: Issues relating to Poverty and Hunger.

Context of News:

  • Speaking in Ahmedabad at Namaste Trump Event, President Donald Trump praised India for having lifted “over 270 million people out of poverty” in “a single decade”, and said that “12 Indian citizens are lifted out of extreme poverty every single minute of every single day”.
  • This statement of President led us to questions pertaining to validity of this statement in terms of lifting 270 million people out of poverty.

What is poverty, and how is it measured?

  • Poverty can be defined as a condition in which an individual or household lacks the financial resources to afford a basic minimum standard of living. Economists and policymakers estimate “absolute” poverty as the shortfall in consumption expenditure from a threshold called the “poverty line”. Poverty can be measured in terms of the number of people living below this line (with the incidence of poverty expressed as the head count ratio). The “depth” of poverty indicates how far the poor are below the poverty line.
  • Poverty Line: The conventional approach to measuring poverty is to specify a minimum expenditure (or income) required to purchase a basket of goods and services necessary to satisfy basic human needs and this minimum expenditure is called the poverty line.
  • Poverty Line Basket: The basket of goods and services necessary to satisfy basic human needs is the Poverty Line Basket (PLB).
  • Poverty Ratio: The proportion of the population below the poverty line is called the poverty ratio or headcount ratio (HCR).
  • Committees for Estimation of Poverty:
  • Six official committees have so far estimated the number of people living in poverty in India —
  1. The working group of 1962.
  2. V N Dandekar and N Rath in 1971.
  3. Y K Alagh in 1979.
  4. D T Lakdawala in 1993 .
  5. Suresh Tendulkar in 2009.
  6. C Rangarajan in 2014.
  • Alagh Committee (1979): 
  • Task force constituted by the Planning Commission under the chairmanship of YK Alagh, constructed a poverty line for rural and urban areas on the basis of nutritional requirements and related consumption expenditure.
  • Poverty estimates for subsequent years were to be calculated by adjusting the price level for inflation.
  • Lakdawala Committee (1993): 
  • Task Force chaired by DT Lakdawala, based on the assumption that the basket of goods and services used to calculate Consumer Price Index-Industrial Workers (CPI-IW) and Consumer Price Index- Agricultural Labourers (CPI-AL) reflect the consumption patterns of the poor.
  • Consumption expenditure should be calculated based on calorie consumption as earlier.
  • State specific poverty lines should be constructed and these should be updated using the CPI-IW in urban areas and CPI-AL in rural areas.
  • Discontinuation of scaling of poverty estimates based on National Accounts Statistics.
  • Tendulkar Committee (2009):
  • Expert group constituted by the Planning Commission and, chaired by Suresh Tendulkar, was constituted to review methodology for poverty estimation.
  • Obsolete Consumption Pattern: Consumption patterns were linked to the 1973-74 poverty line baskets (PLBs) of goods and services, whereas there were significant changes in the consumption patterns of the poor since that time, which were not reflected in the poverty estimates.
  • Inflation Adjustment: There were issues with the adjustment of prices for inflation, both spatially (across regions) and temporally (across time).
  • Health and Education Expenditure: Earlier poverty lines assumed that health and education would be provided by the state and formulated poverty lines accordingly.

Why are poverty numbers important?

  • To Adopt Poverty Line Basket:
  • The PLB has been the subject of much debate. The 1962 group did not consider age and gender-specific calorie requirements. Expenditure on health and education were not considered until the Tendulkar Committee — which was criticized for setting the poverty line at just Rs 32 per capita per day in urban India (and at Rs 27 in rural India).
  • Rangarajan Commission was criticized for selecting the food component arbitrarily — the emphasis on food as a source of nutrition overlooks the contribution of sanitation, healthcare, access to clean water, and prevalence of pollutants.
  • To Take Measure for Poverty Reduction:
  • Poverty numbers matter because central schemes like Antyodaya Anna Yojana (which provides subsidided foodgrains to households living below the poverty line) and Rashtriya Swasthya Bima Yojana (health insurance for BPL households) use the definition of poverty given by the NITI Aayog or the erstwhile Planning Commission. The Centre allocates funds for these schemes to states based on the numbers of their poor. Errors of exclusion can deprive eligible households of benefits.

Existing Problems of Poverty Reduction:

  • Chronic Poverty:
  • Despite the dramatic fall in households below the poverty line to 22%, the challenge of chronic poverty remains. Despite a decline in poverty levels, India shelters pockets of deep poverty and these households are geographically clustered. A significant 15% of households that were poor in 2005 remained poor [i]in 2012.
  • Increase in Inequality
  • Inequality across locations and demographic groups has increased. The poverty rate of six of the poorest states in the country is twice that of other states. Seven low-income states ;Chhattisgarh, MP, UP, Odisha, Jharkhand, Rajasthan, and Bihar account for 45% of India’s population but nearly 62% of its poor continue to need strong safety nets programs. Within states, poverty and vulnerability remain highest amongst Adivasis. Women are largely missing from the workforce, and face serious risks to their mobility and well-being.
  • From poor to vulnerability:
  • Majority of India is no longer poor. Instead, half of India is vulnerable. These are households that have recently escaped poverty with consumption levels that are precariously close to the poverty line, and remain vulnerable to slipping back. Programs must ensure that those who’ve escaped poverty are able to sustain improvements.

Way Forward:

  • Country’s social protection system needs to evolve and catch up with the needs of its new demography and risk profile.
  • As families move out of poverty and the middle class grows, social protection programs can no longer be singularly focused on chronically poor households.  Three types of portable tools are needed to prevent the new vulnerable class from falling back into poverty and debt traps — health insurance, social insurance (in case of death, accident and other calamities) and pensions. Portability is key to ensure migrants receive support while they try to build new lives in new places, as state governments often use residency criteria to target benefits.
  • The boost in crop insurance, new pension plans for the elderly, the rise in contributory pensions for those who have the wherewithal to save, and larger coverage of health insurance programs will help India re-balance its social protection architecture to match the needs of the rising numbers of its vulnerable people.
  • Effective safety nets can dramatically reduce the number of poor and the likelihood that poverty will be transmitted from one generation to the next. Strengthening their delivery systems is key, while allowing state governments to choose the optimal mix of preventive and protective programs to suit their state’s needs within an umbrella social protection budget.


Bharat Net all set Miss Deadline Target

Paper: II

For Prelims:  Bharat Net Project.

For Mains: Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.

Context of News:

  • The central government’s flagship scheme to provide internet connectivity to all 2.5 lakh gram panchayats (GPs) has picked up some pace but is still running behind schedule.
  • While the government aimed to make 2.5 lakh GPs service ready by March 2020, under all the phases of Bharat Net, only 1.34 lakh have been made service ready as on January 31, 2020.progress in phase two remains slower with just 13,750 GPs getting optical fiber connectivity out of the target of 1 lakh by March 2020.

Bharat Net Project:

  • Bharat Net is a project of national importance to establish, by 2017, a highly scalable network infrastructure accessible on a non-discriminatory basis, to provide on demand, affordable broadband connectivity of 2 Mbps to 20 Mbps for all households and on demand capacity to all institutions, to realise the vision of Digital India, in partnership with States and the private sector.
  • The entire project is being funded by Universal service Obligation Fund (USOF), which was set up for improving telecom services in rural and remote areas of the country. The objective is to facilitate the delivery of e-governance, e-health, e-education, e-banking, Internet and other services to the rural India.
  • National Optical Fiber Network (NOFN):
  • National Optical Fibre Network (NOFN) is an ambitious initiative to trigger a broadband revolution in rural areas. NOFN was envisaged as an information super-highway through the creation of a robust middle-mile infrastructure for reaching broadband connectivity to Gram Panchayats.
  • The National Optical Fibre Network (NOFN) aims to connect all the 2,50,000 Gram panchayats in the country and provide 100 Mbps connectivity to all gram panchayats (GPs). To achieve this, the existing fibres of PSUs (BSNL, Railtel and Power Grid) were utilised and incremental fibre was laid to connect to Gram Panchayats wherever necessary. Dark fibre network thus created was lit by appropriate technology thus creating sufficient bandwidth at the Gram Panchayats.

Benefits of Baharat Net Project:

  • Modeling electronic world:
  • The BharatNet project would reduce the cost of broadband services in India. The project would have advantages like easy maintenance, faster implementation, and utilization of the present power line infrastructure.
  • Project will provide network to Telecom providers for the transmission of voice, data, video, cable TV etc. in rural areas which will help in digital Services like e-health e-governance, e-agriculture, e-Commerce, e-banking etc. in rural areas.
  • Technology Inclusiveness:
  • Bharat net project will reduce and remove the rural-urban gap of Digital divide due to lack of broadband and internet services in rural areas.
  • It would help in the expedition other schemes like Make In India, Start-up India, Stand-up India etc.
  • Providing Edge to Economy:
  • The BharatNet project would provide a boost to the economy and would generate around 10 crore man-days of employment during the rollout of the project.
  • According to a study around Rs 4.5 lakh, crore can be added to the GDP after the completion of the Bharat Net phase 2. The study suggests that for every 10 percent usage of internet the GDP increases by 3.3 percent.

Challenges in Achieving the Target:

  • Lack of cooperation from states is the major issue that is impacting this project completion on time. The Bharat Net phase 2 involves laying optical fibre cable over electric poles. The participation of state governments becomes important for this purpose. Non-involvement of state governments in the planning and implementation can result in slow progress and delays along with the risk of non-utilisation of the network.
  • Difficult terrain and involvement of anti-social persons in stealing is also a daunting task to be crosses. Laying optical fiber network in some areas are extremely difficult and expensive due to difficult geography and terrain; this poses a big challenge for the project.
  • There is a lack of proper cooperation and coordination between various (CPSUs) RailTel, BSNL, PGCIL due to the diffused control and their relation with BBNL.

Way Forward:

  • Even as the work for connecting panchayats is being fast-tracked, issues have cropped up regarding end-to-end connectivity, which is crucial for providing internet access. End-to-end connectivity means seamless network of optical fibre till the panchayat.
  • It is also being found that of poor-quality fiber. Is being used at many places. Some of this fiber is old, while some was laid during the project’s initial days. Though a field survey is being done to ascertain the exact quality should match for the project requirement but nothing has come in public domain till now.