Why in the news? 

• NITI Aayog’s B.V.R. Subrahmanyam stated that less than 5% of Indians live below the poverty line based on HCES(Household Consumption Expenditure Survey) 2022-23 findings.

Context:

• According to the World Bank, in India, 21.9% of the population lives below the national poverty line in 2011.
• In 2018, almost 8% of the world’s workers and their families lived on less than US$1.90 per person per day (international poverty line).
• About HCES (Household Consumption Expenditure Survey): The HCES is usually conducted by the National Statistical Office (NSO) every 5 years. It is designed to collect information on the consumption of goods and services by households

How the Poverty line is defined in India? Does the poverty line need to be raised?

• The poverty line in India: Historically based on the Tendulkar Committee observation, the poverty line, currently approximates ₹1,500 in rural and ₹1,800 in urban areas. However, it lacks a clear conceptual basis, diverging from traditional calorie-based metrics. Additionally, there’s no officially declared poverty line presently.
• Poverty Line Calculation: NITI Aayog’s task force calculates the poverty line in India using data from the National Sample Survey Office, which is part of the Ministry of Statistics and Programme Implementation.
• Need for raising the Poverty line: In 2011-12, India’s poverty rate was 12.5%, but it has decreased to 5% by 2022-23. Using the Tendulkar poverty line, poverty levels are around 2%, indicating the need to increase the poverty line. Extreme poverty has been reduced, but raising the poverty line is necessary, as indicated by different calculations.

What is the Criticism faced along the lines of income rise parity?

• Real Wage Growth: Contrary to claims of wage growth, numerous studies indicate that real wages have grown by less than 1% annually since 2017, and have even declined for construction workers.
• Employment Data: The celebrated increase in employment shown in the latest PLFS survey for 2022-23 is misleading, as it primarily stems from a rise in unpaid family helpers rather than genuine job creation.
• Unpaid Workers: The prevalence of unpaid family helpers, particularly among women, has increased significantly, with 37.5% of women workers now being unpaid, up from 32% in previous years.
• Paid Employment Rates: When considering only paid employment (those receiving compensation for work), the rates are notably low, with only 48% for men and 13% for women, indicating a lack of genuine employment opportunities and wage growth for most working families.
• Stagnant Demand for Mass Consumption Goods: Despite overall consumption growth, demand for mass-consumption goods and fast-moving consumer goods (FMCGs) remains stagnant, suggesting limited improvement in the purchasing power of the majority of the population.
• Two-Wheeler Sales: Sales of two-wheelers, a key indicator of consumer demand, have not recovered to pre-demonetization levels (pre-November 2016), indicating persistent challenges in the broader economy affecting consumer spending habits.

The Other side of the coin- 

• Concerns with Private Sector Data: There is skepticism regarding the quality of data provided by private sector entities like CMIE, particularly regarding indicators such as female labor force participation rates.
• Female Labor Force Participation Rate: CMIE data suggests a significantly low female labor force participation rate in India, with only 9% of women reportedly working, raising questions about the accuracy and reliability of these statistics.
• Comparison with Other Countries: The data implies that India’s female labor force participation rate is lower than that of countries like Yemen and Iraq, highlighting the severity of the issue and prompting concerns about the credibility of the data.

Way Forward: Measures to improve the data and poverty line – 

• Revising Poverty Line Definition: Develop a clear conceptual basis for defining the poverty line, moving away from historical metrics like the Tendulkar poverty line towards more comprehensive and inclusive criteria, such as calorie-based metrics or multidimensional poverty indicators.
• Official Declaration of Poverty Line: Establish an officially declared poverty line, supported by rigorous research and consultation with experts, to provide clarity and consistency in poverty estimation efforts.
• Enhanced Monitoring and Evaluation: Strengthen monitoring and evaluation mechanisms to regularly review and update the poverty line based on evolving socio-economic conditions, ensuring its relevance and accuracy over time.

Conclusion:

The poverty line in India, historically based on the Tendulkar poverty line, needs revision due to its lack of conceptual basis and the absence of an official declaration. Despite reductions in extreme poverty, concerns persist over stagnant wage growth, misleading employment data, and the need for improved poverty measurement methodologies.

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