Monday, March 26, 2012
To fix BPL, nix CPL
One Tendulkar makes the big scores. The other wrecks the averages. The Planning Commission clearly prefers Suresh to Sachin. Using Professor Tendulkar's methodology, it declares that there's been another massive fall in poverty. Yes, another (“more dramatic in the rural areas”). “Record Fall in Poverty” reads one headline. The record is in how many times you've seen the same headline over the years. And how many times poverty has collapsed, only to bounce back when the math is done differently.
And so, a mere 29.9 per cent of India's population is now below the official poverty line (BPL). The figure was 37.2 per cent in 2004-05. The “line” is another story in itself, of course. But on the surface, rural poverty has declined by eight percentage points to log in at 33.8 per cent. That's down from 41.8 per cent in 2004-05. And urban poverty fell by 4.8 percentage points from 25.7 to 20.9 per cent in the same period. Millions have been dragged above the poverty line, without knowing it.
Undoing bogus methodology
Media amnesia fogs the “lowest-ever” figures, though. These are not the “lowest-ever.”
“Kill me, I say,” said Prof. Madhu Dandavate in 1996, chuckling. “I just doubled poverty in your country today.” What that fine old gentleman had really done, as deputy chairperson of the Planning Commission, was to jettison the bogus methodology peddled by that body before he came to head it the same year. Even minor changes in methodology or poverty line can produce dramatically differing estimates.
The fraud he undid was “an exercise” bringing poverty down to 19 per cent in 1993-94. And that, from 25.5 per cent in 1987-88. These were the “preliminary results of a Planning Commission exercise based on National Sample Survey data” ( Economic & Political Weekly , January 27, 1996). Now if these figures were true, then poverty has risen ever since. And remember, highlighting that historic fall was an honest Finance Minister. The never-tell-a-lie Dr. Manmohan Singh. One business daily ran a hilarious “exclusive” on this at the time. Poverty falls to record low of 19 per cent, “government officials say.” This was the best news since Independence. But the modest officials remained anonymous, knowing how stupid they'd look. In the present era, they hold press conferences to flaunt their fraud.
The “lowest ever at 19 per cent” fraud was buried in the ruins of the April 1996 polls. So was the government of the day. The “estimate” was not heard of again. Now we have the 29.9 per cent avatar . Surely that's a rise of 10.9 percentage points in 16 years? Or just another methodological fiddle.
However, the new Planning Commission numbers have achieved one thing. They've united most of Parliament on the issue. Members from all parties have blasted the “estimates” and called for explanations.
There's also the Tendulkar report's own fiddles. As Dr. Madhura Swaminathan points out, the committee dumped the calorie norms of “2,100 kcal per day for urban areas and 2,400 kcal for rural areas.” It switched to “a single norm of 1,800 kcal per day.” And did so citing an “FAO norm.” As Dr. Swaminathan observed: “the standards set by the Food and Agriculture Organisation for energy requirements are for “ minimum dietary energy requirements” or MDER. That is, “the amount of energy needed for light or sedentary activity.” And she cites an FAO example of such activity. “…a male office worker in urban areas who only occasionally engages in physically demanding activities during or outside working hours.”
As Dr. Swaminathan asks: “Can we assume that a head load worker who carries heavy sacks through the day is engaged in light activity?” — The Hindu , February 5, 2010.
The media rarely mention that there are other methodologies for measuring poverty on offer. Also set in motion by this same government. The National Commission for Enterprises in the Unorganised Sector (NCEUS) saw BPL Indians as making up 77 per cent of the population. The N.C. Saxena-headed BPL Expert group placed it at around 50 per cent. Like the Tendulkar Committee, these two were also set up by government. While differing wildly, all three pegged rural poverty at a higher level than government did. Meanwhile, we will have many more committees on the same issue until one of them gives this government the report it wants. The one it can get away with. (The many inquiries on farm suicides exemplify this.)
That the Planning Commission thought they could slip the present bunkum by sets a new benchmark for — and marriage of — arrogance and incompetence. First, they sparked outrage with their affidavit in the Supreme Court. There they defended a BPL cut-off line of Rs.26 a day (rural) and Rs.32 (urban). Now they hope to get by with numbers of Rs.22.42 a day (rural) and Rs.28.35 a day (urban).
The same year the government and planning commission shot themselves in both feet in 1996, a leading Delhi think tank joined in. It came up with the “biggest ever study” done on poverty in the country. This covered over 30,000 households and queried respondents across more than 300 parameters. So said its famous chief at a meeting in Bhopal.
This stunned the journalists in the audience. Till then, they had been doing what most journalists do at most seminars. Sleeping in a peaceful, non-confrontational manner. The veteran beside me came alive, startled. “Did he mean they asked those households over 300 questions? My God! Thirty years in this line and the biggest interview I ever did had nine. That was with my boss's best friend. And my last question was ‘may I go now'?” We did suggest to the famous economist that battered with 300 questions, his respondents were more likely to die of fatigue than of poverty. A senior aide of the think tank chief took the mike to explain why we were wrong. We sent two investigators to each household, he said. Which made sense, of course: one to hold the respondent down physically, twisting his arm, while the other asked him 300 questions.
Now to the queue of BPL, APL, IPL, et al. , may I add my own modest contribution? This is the CPL, or Corporate Plunder Line. This embraces the corporate world and other very well-off or “high net worth individuals.” We have no money for a universal PDS. Or even for a shrunken food security bill. We've cut thousands of crores from net spending on rural employment. We lag horribly in human development indicators, hunger indexes and nutritional surveys. Food prices keep rising and decent jobs get fewer.
Yet, BPL numbers keep shrinking. The CPL numbers, however, keep expanding. The CPL concept is anchored in the “Statement of Revenue Foregone” section of successive union budgets. Since 2005-06, for instance, the union government has written off close to Rs.4 lakh crore in corporate income tax. Over Rs.50,000 crore of that in the present budget. The very one in which it slashes thousands of crores from the MNREGS. Throw in concessions on customs and excise duties and the corporate karza maafi in this year's budget sneaks up to nearly Rs.5 lakh crore.
True, there are things covered in excise and customs that also affect larger sections, like fuel, for instance. But mostly, they benefit the corporate world and the very rich. In just this budget and the last one, we've written off Rs.1 lakh crore for diamonds, gold and jewellery in customs duties. That sort of money buys a lot of food security. But CPL trumps BPL every time. The same is true of write-offs on things like machinery. In theory, there's a lot that should benefit everybody: like the equipment hospitals import. In practice, most Indians will never enter the five-star hospitals that cash in on these benefits.
The total write-off on these three heads in eight years since 2005-06: Rs. 25.7 lakh crore. ( See Table ). That's over half a trillion U.S. dollars. Not far from 15 times the size of your 2G scam. Or over twice the Coal Scam, the latest addition to the CPL. Look at the table and think about BPL estimates working on cut-offs of Rs.22.42 a day rural and Rs.28.35 urban. To fix BPL, nix CPL.
To get the Below Poverty Line figures in perspective, we need to closely monitor the numbers driving the Corporate Plunder Line.