By Yogima Seth Sharma, ET Bureau | 7 Jul, 2014, 04.41AM IST


As per the report submitted by Rangarajan persons spending below Rs 47 a day in cities would be considered poor.
As per the report submitted by Rangarajan persons spending below Rs 47 a day in cities would be considered poor.
NEW DELHI: The number of India’s poor may rise by 100 million if the recommendations of the C Rangarajan committee on poverty, which comes just ahead of the maiden budget of the Narendra Modi government, are accepted by the government.

The Rangarajan committee, which has retained consumption expenditure as the basis for determining poverty, has pegged the total number of poor in the country at 363 million or 29.6 per cent of the population against 269.8 million (21.9 per cent) by the Suresh Tendulkar committee, as per the presentation made by Rangarajan to planning minister Rao Inderjit Singh last week.

The previous UPA government had set up a technical expert group under Rangarajan in 2012 after all-round criticism that the poverty line had been pegged much lower than it should have been by the Tendulkar committee amidst demands to revisit the methodology.

Rangarajan headed the Prime Minister’s Economic Advisory Council at the time. However, the committee hasn’t detailed the methodology used to arrive at the new numbers in its nine-page presentation made to the minister.

The poverty line is significant as social sector programmes are directed towards those below it and will be something that will factor into finance minister Arun Jaitley’s budget-making exercise. The budget will be announced on July 10.

India has 100 million more poor: C Rangarajan Committee
The Rangarajan committee raised the daily per capita expenditure to Rs 32 from Rs 27 for the rural poor and to Rs 47 from Rs 33 for the urban poor, thus raising the poverty line based on the average monthly per capita expenditure to Rs 972 in rural India and Rs 1,407 in urban India.

The earlier methodology, devised by Tendulkar, had defined the poverty line at Rs 816 andRs 1,000, respectively, based on the National Sample Survey Office (NSSO) data for 2011-12. Thus, for a family of five, the all-India poverty line in terms of consumption expenditure, as per the Rangarajan committee, would amount to Rs 4,760 per month in rural areas and Rs 7,035 per month in urban areas.

The Tendulkar committee had pegged this at Rs 4,080 and Rs 5,000. As per the Rangarajan committee, the percentage of people below the poverty line in 2011-12 was 30.95 in rural areas and 26.4 in urban areas as compared to 25.7 and 13.7, according to the Tendulkar methodology.

The respective ratios for the rural and urban areas were 41.8 per cent and 25.7 per cent, respectively, and 37.2 per cent for the country as a whole in 2004-05. It was 50.1 per cent in rural areas, 31.8 per cent in urban areas and 45.3 per cent for the country as a whole in 1993-94.

Experts said the difference could be explained by variations in assumptions, such as increased expenditure on health and education or following the system of developed countries where the poverty line is defined as a fraction of the average expenditure level or purely going by normative expenditure, thus ignoring actual expenditure on health and education.

Lowering the poverty line could cut out those who need assistance. But reducing the number of poor means governments can claim success for welfare programmes. The Planning Commission had last year released poverty figures based on the Tendulkar methodology, which had claimed a reduction of 137 million persons over a seven-year period. In 2011-12, India had 270 million persons below the Tendulkar-stipulated poverty line as compared to 407 million in 2004-05, the commission had said.