Business, Economics and Jobs

TomJoad: India scraps controversial poverty line


The Indian government scrapped its current definition of the poverty line and promised to set up a new committee to revise its methodology for determining the numbers of the poor, following a controversy over the latest figures.



The (now) infamous new poverty statistics unveiled by India's Planning Commission earlier this week appear slated for an early grave, thanks to widespread outrage over the low income levels required to officially qualify as poor.

The government has moved to scrap the current method for defining poverty, admitting that the end result of the calculations simply weren't realistic, the Hindustan Times reports Friday.

Readers of this blog know that I had to eat crow (sort of) after accusing the Planning Commission of fudging the numbers in order to achieve a stealth budget cut following the finance minister's failure to make any of his own. In fact, though the commission did lower the cut off for poverty from figures it had proposed in September, the poverty line was raised significantly between 2004-05 and 2010-11. But many remained unconvinced by the Planning Commission's use of those figures to claim a 7 percentage point reduction in India's poor.

The latest development is that “The government has taken a decision to set up a technical group to revise the methodology for estimating poverty in a manner consistent with the current realities,” according to minister of state for planning Ashwini Kumar -- who pretty much threw Planning Commission Chairman Montek Singh Ahluwalia to the wolves. (If you're curious, the Hindustan Times also has a good recap of the way the Planning Commission has juggled the figures in the past).

Kumar also announced that all government entitlement schemes could be linked to the new poverty line, once it is determined, except for the food subsidies to be provided under the proposed National Food Security law, the paper said.

That last bit is interesting, as there has been a good deal of back-and-forth over the degree to which relief measures are tied to the poverty numbers. While some sought to downplay the link, The Times of India, for instance, lays out how the government uses the poverty line to allot money to the states for social programs like old-age pensions.