What happened to poverty estimation in the country
The tenure of the incumbent National Democratic Alliance (NDA) government has seen a sharp deterioration in the quality and credibility of the official statistical system. This has been the case for most variables, including data on agriculture, national accounts and other information on macroeconomic aggregates. A clear example of this is the case of the employment-unemployment data of the National Sample Survey Office (NSSO), which has been withheld. It is now more or less certain that the report will not be released before the general elections are over, with the government setting up a committee to examine the findings of the survey report. While there has been some debate and public outcry on several of these statistical reports, one aspect of the economy which has gone almost unnoticed is poverty estimation.
Although there is some idea on job losses and the extent of unemployment, the issue of poverty estimation has been given a quiet burial by this government. Unlike the raging debate on the extent of jobs created, based on privately conducted surveys and information reported by the Business Standard newspaper, there is no debate on what happened to poverty after 2011-12. Information on poverty is complementary to the two current issues of job losses and agrarian crisis. However, similar to the employment-unemployment report, the survey on consumer expenditure, which was conducted along with the periodic labour force survey as part of the 75th round of NSSO surveys, is unlikely to be released until the elections are over. Which also means that this will be the first government that is going to polls without any information on what happened to poverty during its tenure.
Poverty estimates are not just important for academic purposes but are also crucial to gauge the impact of various government policies such as demonetization. But, more importantly, these will also be useful to understand the extent of the crisis in the rural economy. But the government has refused to acknowledge the last report on deprivation in the country. The committee on estimation of poverty, chaired by C. Rangarajan, was set-up after a furore on the poverty estimates of the Suresh Tendulkar committee under the United Progressive Alliance (UPA) government. The Rangarajan committee submitted its report in July 2014, soon after the NDA government assumed office. But there has been no information on whether the government has accepted or rejected the report. As a result, the Tendulkar poverty estimates for 2011-12 still remain the last estimate of poverty. One result of this is that almost all rural development programmes and other fiscal transfers based on poverty estimates continue to rely on outdated estimates.
Consumer expenditure surveys are not only the crucial database on which poverty is estimated but also form the only database for estimating inequality. Unfortunately, unlike the employment-unemployment surveys for which there are alternative estimates such as the Labour Bureau surveys and the Centre for Monitoring Indian Economy (CMIE) database, there are no alternatives for consumption expenditure surveys.
The reason for the government’s reluctance to acknowledge the Rangarajan committee and release the consumption surveys is obvious. Similar to the employment-unemployment surveys, all other data clearly point out to the government’s dismal record on poverty alleviation. While no direct measures are available, the information on farmers’ income and rural wages are the best available source for tracking rural poverty levels. Among these, wages have been known to be the best indicator and in some ways better than official estimates. The UPA government, despite its shortcomings, did manage to lift millions of people out of poverty. In fact, it has the best record of poverty reduction. Its tenure also saw the fastest increase in real wages at more than 5% per annum. With real wages slowing down to their lowest level during this government’s tenure, there is credible evidence to show that poverty would have remained high or at best declined marginally. According to the latest data from the Labour Bureau, wage rate growth has slowed to 1.15% for agricultural labourers and 0.44% for non-agricultural labourers in the five years to December 2018. This is not surprising given the rural crisis. In fact, these are confirmed by data on agricultural incomes and jobs in the informal economy where the bulk of the poor work.
It is this fear of bad news which has led this government to junk poverty estimation altogether. But this approach is not new and the government has shown this attitude on many such indicators where its performance is doubtful. While the lack of reliable poverty estimates may hurt policymaking and an informed debate on what happened to poverty over this decade, the issue of what happened to the livelihood of people is unlikely to be ignored by the political discourse.
It is also likely that the government of the day will benefit politically from the absence of hard evidence on poverty, inequality and jobs, but the damage to the statistical system and its independence is unlikely to be repaired easily.
Himanshu is associate professor at Jawaharlal Nehru University and visiting fellow at the Centre de Sciences Humaines, New Delhi.