8 EDITORIAL

THE HINDU I BANGALORE, TUESDAY, JULY 30, 2013

The dishonesty in counting the poor

The Planning Commissions spurious method shows a decline in poverty because it has continuously lowered the measuring standard
TUESDAY, JULY 30, 2013
Utsa Patnaik he Planning Commission has once again embarrassed us with its claims of decline in poverty by 2011-12 to grossly unrealistic levels of 13.7 per cent of population in urban and 25.7 per cent in rural areas, using monthly poverty lines of Rs. 1000 and Rs. 816 respectively, or Rs. 33.3 and Rs. 27.2 per day. These princely amounts will pay for one urban male haircut while they are supposed to meet all daily food and non-food living costs. The poverty decline claimed is huge, a full 8 per cent points fall in rural areas over the two years since 2009-10, and a 7 per cent points fall in urban areas, never mind that these two years saw the aftermath of drought, poor employment growth and exceptionally rapid food price rise. The logically incorrect estimation method that the Commission continues to use makes it an absolute certainty that in another four years, when the 2014-15 survey results become available, it will claim that urban poverty is near zero and rural poverty only around 12 per cent. This will be the case regardless of any rise in actual deprivation and intensication of actual poverty.

Promises to keep

ne nding from the opinion poll that the Centre for the Study of Developing Societies conducted on behalf of this newspaper and CNN-IBN was that the one country Indians trust a great deal is Bangladesh. So it is somewhat ironic, and downright regrettable, that Indias domestic politics is the main reason why the UPA government has been unable to keep two promises to this important neighbour on issues vital to it. The fate of an accord on sharing the Teestas waters which Prime Minister Manmohan Singh was to conclude on his 2011 visit to Dhaka but which was jettisoned due to opposition at the last minute by West Bengal Chief Minister Mamata Banerjee remains uncertain. The 2011 protocol to the 1974 Land Boundary agreement has been signed by the two countries, and ratied by the Bangladesh parliament, but the Indian parliament is sitting on it. The Bharatiya Janata Party has created irrational and unfounded fears around the agreement for the exchange of Indian and Bangladeshi enclaves located in each others territory. Unfortunately, the Opposition has chosen to project the agreement, which would help rationalise the border and help people in these enclaves lead normal lives, as a territorial loss for India. During last weeks visit by Bangladesh foreign minister Dipu Moni, New Delhi tried to make amends by offering a stake in the yet to begin Tipaimukh hydel project in Manipur. Also, Bangladesh is soon set to receive 500 MW of power from India. This, though, is small consolation for the Sheikh Hasina government. Since the Awami League came to power in 2008, the Bangladeshi opposition has lost no opportunity to paint its policies addressing Indian security concerns as a sell-out to New Delhi. Thanks to Dhaka, the United Liberation Front of Assam was neutralised, and there was a clamp-down on other anti-India insurgencies and Islamist extremist groups. If Indians today trust Bangladesh more than any other South Asian state, it is in no small measure due to this. Prime Minister Sheikh Hasina had hoped to ght the proIndia accusation against her by getting something substantial in return from New Delhi. But these hopes have been belied. Meanwhile, her government has been under attack by the religious right-wing on the war crimes trial issue. The Jamaat-i-Islamis violent retaliation to the conviction and sentencing of some of its leaders, provoking a heavy-handed response from the government, has led to more cycles of violence. As Bangladesh prepares for elections in early 2014, in addition to the turmoil over the trials, the failure of the Awami League to keep India to its promises has strengthened the partys adversaries. If New Delhi is unable to pull its act together before Prime Minister Hasinas scheduled visit in September, it can only blame itself for losing an opportunity to help a friend.

T
Substantial rise

salaries were indexed only through dearness allowance. A fairly high level government employee getting Rs.1,000 a month in 197374 would get Rs.18,000 a month today if the salary was only indexed. The fact that indexing does not capture the actual rise in the cost of living is recognised by the government itself by appointing decadal Pay Commissions which push up the entire structure of salaries an employee in the same position today gets not Rs.18,000 but a four times higher salary of over Rs.70,000. Yet those doing poverty estimates continue to maintain the ction that the same standard of living can be accessed by the poor by merely indexing the original poverty line, and they never mention the severely lowered nutritional access at their poverty lines which, by now, are destitution lines.

Worsening deprivation

All official claims of low poverty level and poverty decline are quite spurious, solely the result of mistaken method. In reality, poverty is high and rising. By 2009-10, after meeting all essential non-food expenses (manufactured necessities, utilities, rent, transport, health, education), 75.5 per cent of rural persons could not consume enough food to give 2200 calories per day, while 73 per cent of all urban persons could not access 2100 calories per day. The comparable percentages for 2004-5 were 69.5 rural and 64.5 urban, so there has been a substantial poverty rise. Once the NSS releases its nutritional intake data for 2011-12 we can see the change up to that year, but given the high rate of ination and sluggish job growth, the situation is likely to be as bad, if not worse. Our gures are obtained by applying the Planning Commissions own original denition of poverty line. Given the rapidly rising cost of privatised health care, education and utilities (electricity, petrol, gas), combined with

high food price ination and exclusion of the majority of the actually poor from affordable PDS grain, it is hardly surprising that the bulk of the population is getting more impoverished, and its nutritional level is declining faster than before. What is the basic problem with the Planning Commissions method which produces its low and necessarily declining estimates, regardless of ground reality? The Commission in practice gave up its own denition of the poverty line which was applied only once to get the 1973-74 estimate. After that, it has never looked over the next 40 years even once for deriving poverty lines at the actual current spending level, which will allow the population to maintain the same standard of living in terms of nutrition after meeting all non-food costs even though these data have been available in every ve-yearly NSS survey. The Commission instead simply applied price indices to bring forward the base year monthly poverty lines of Rs 49 rural and Rs.56 urban in 1973-74. The Tendulkar committee did not change this aspect; it merely altered the specic index. Price indexation does not capture the actual rise in the cost of living over long periods. Those doing the poverty estimates would be the rst to protest if their own

The fact is that official poverty lines give command over time to a lower and lower standard of living. With a steadily lowered standard, the poverty gures will always show apparent improvement even when actual deprivation is worsening. A school child knows that if last years percentage of students passing the annual examination is to be compared to this years percentage, the pass mark should be the same. The school principal cannot quietly lower the pass mark without informing the public, say from 50 out of hundred last year to 40 this year, and then claim that the schools performance has improved because 80 per cent of students are recorded as passed this year at the clandestinely lowered pass mark, compared to 75 per cent of students last year. If, at the same pass mark of 50, we nd that 70 per cent of students have passed this year, we are justied in saying that the performance, far from improving, has worsened. If the school is allowed to continue with its wrong method, and lower the pass mark further next year, and again the next year, so ad innitum, it is eventually bound to record 100 per cent pass and zero failure. The case is exactly the same with the official poverty lines as with the pass mark: the poverty lines have been lowered continuously below the standard over a very long period of 40 years. Poverty so measured is bound to disappear from India even though in real(Utsa Patnaik is Professor Emeritus, Jaity it may be very high and worsening over time. The Commissions monthly poverty waharlal Nehru University)

line for urban Delhi state in 2009-10 is Rs.1040 but a consumer spending this much could afford food that gave only 1400 calories a day after meeting all other fast rising expenses. The correct poverty line is Rs.5,000 for accessing 2100 calories, and a staggering 90 per cent of people have been pushed below this, compared to 57 per cent below the correct poverty line of Rs.1150 in 2004-05. Given the very high rate of food price ination plus the rising cost of privatised medical care and utilities, it is not surprising that people are being forced to cut back on food, and the average calorie intake in urban Delhi has fallen to an all-time low of 1756. While a high-visibility minority of households with stable incomes is able to hire-purchase multiple cars per household and enjoy other durable goods, the vast working underclass which is invisible to the rich is struggling to survive. Fifty ve per cent of the urban population cannot access even 1800 calories today, compared to less than a quarter in that position a mere ve years earlier. Why, it may be asked, do the highly trained economists in the Commission ignore reality and continue with their incorrect method? Surely they can see as we do, that their Rs.1040 poverty line gives access to a bare-survival 1400 calories. Part of the answer is that the ramications of using the wrong method extend globally, for the World Bank economists have, for decades, based their poverty estimates on the local currency official poverty lines of developing countries, including India. The World Bank claim of poverty decline in Asia is equally spurious. In reality, under the regime of poor employment growth and high food price ination, poverty has been rising. To admit this would mean that the entire imposing-looking global poverty estimation structure, employing hundreds of economists busy churning out wrong gures, would come crashing down like a rotten termite-eaten house. The rest of the answer is that since the method automatically produces numbers showing spurious poverty decline, it is convenient for arguing that globalisation and neo-liberal policies are benecial for people. Truth will always out, however.

emailed to Letters Letters letters@thehindu.co.in must carry to the the full postal address and the full EDITOR name or the name with initials. people. In view of rampant leftTelangana issue wing extremism in adjacent he possibility of creating an independent state of Telangana has created tensions in Andhra Pradesh and the rest of the country. The contentious issue was in limbo for long, and the UPA has dithered quite often bowing to extraneous pressures. In UPA-I, it was a slip between the cup and the lip for the Telangana Rashtra Samiti, which had almost brokered a deal with the government. It is unfortunate that considerations of political gains and losses have assumed centre stage. While there are mixed examples of smaller States doing justice to their creation, Telangana has always been met with emotionally surcharged reactions as the issue involves regional pride and the biggest bone of contention, Hyderabad. Now that the formation of Telangana appears imminent, the Centre should concentrate on controlling the after-effects of the move.
Ganapathi Bhat,

CARTOONSCAPE

Empowering SEBI the right way

n using the ordinance route to give sweeping additional powers to SEBI, the government is conveying a sense of urgency in plugging loopholes in capital market regulations. The absence or inadequacy of laws should no longer constrain SEBI from taking on the likes of the Saradha group in West Bengal or the Sahara Pariwar. The former failed after collecting huge sums of money through its Ponzi schemes, causing acute nancial and social distress in eastern India. SEBIs case against the Sahara group was buttressed by the Supreme Court, which ordered a refund of more than Rs.20,000 crore to investors. Yet, the company has been outing the courts orders even after being slapped with contempt notices. Down south, nancial shenanigans have surfaced in Tamil Nadu and Kerala in the form of emu farms and dubious investments in solar energy. The Centres expectation is that a suitably empowered regulator would nip such nancial misadventures in the bud. That might still be a tall order given that most recent scams have thrived by exploiting differences in the regulatory jurisdictions of SEBI and the RBI. The Indian nancial code which has been drafted to address inter-regulatory issues has not found universal acceptance and will take time before it is adopted. Hopefully, the Securities Laws (Amendment) Ordinance 2013 will not be allowed to lapse because of the legislative logjam in parliament. SEBI is a relatively young organisation. Both its creation and the grant of additional legal powers along the way have been in response to some crisis or other. During most of its 25 years of existence, it has had to regulate entities such as share brokerages which often have more experience in the capital market. Many of SEBIs early rulings were overturned on appeal, a record which has just started improving. A few urgent tasks confront the newly empowered board. It should strive to build up adequate resources, especially human resources, to effectively exercise its powers. There have been several instances where SEBI has not been able to use whatever limited powers it has had for lack of manpower. For instance, even though it was given permission way back in 2002 to effect searches and seizures after obtaining a magistrates order, it has used these powers just once and that too not very successfully. The new powers, sweeping as they are, ought to make the regulator both responsible and accountable. The governments support to SEBI should be continuous and go well beyond promulgating ordinances.
CM YK

Chhattisgarh, a small state is no wise decision. The idea of Hyderabad as a Union Territory and a common capital is not feasible because there is no territorial connectivity with both the regions if the present boundaries persist. I strongly wish status quo continues. The solution is probably a sub-state with nancial autonomy.
K.A.R. Reddy,

Nellore he carving out of a separate Telangana seems to be directionless. Those who have taken the responsibility of sanctioning it appear to be oblivious to the fact that tagging Kurnool and Anantapur with Telangana will not please the people of the region and will also hurt the people of Rayalaseema. The proposal is a case of utter lack of knowledge of the situation that existed when the Andhra State was formed with Kurnool as the capital. Later, the Teluguspeaking areas of the Nizam state were merged to form Andhra Pradesh. One wonders whose brilliant idea Rayala-Telangana is. It will tear the emotional bre of those who have been living in Rayalaseema for ages. One hopes sanity will prevail on those about to use their inexperienced surgical prowess.
K.N.R. Sastry,

Akola he Congress has proved yet again that its decisions are governed not by principles but by political calculations. If peoples sentiments or aspirations are the basis for dividing a State, the status of Kashmir should be different. The TDP, the BJP and the CPI are equally responsible for the Telangana tangle. None batted for a united Andhra Pradesh.
Y.P. Reddy,

he UPA government is playing politics with peoples emotions. Why has the Congress become the arbiter in the statehood issue? Is there no difference between the party and the government? Should not the Centre take all stakeholders into condence?

R. Kumaran,

Puducherry

crosses the crucial 200 mark, the possibility of the UPA getting the support of regional parties is higher. The elections are 11 months away and there is enough time to change the mood of the electorate and shift the balance. The survey shows that there is a large percentage of undecided voters and that is the crux.
K.V. Ravindran,

hat India, a common law country, is not able to adhere to the principles of natural justice is disappointing. The formation of BCCIs two-member inquiry commission to probe against its own president was a clear violation of the principle of nemo judex causa sua no one should be a judge in his own cause.
Vartika Patel,

Lucknow

Payyanur

Bangalore

Hyderabad he demand for a separate state of Telangana was almost nullied by Indira Gandhi. Subsequently, it lost much steam, thanks to development work in the region and the astute leadership of Y.S. Rajasekhara Reddy. The Telangana movement got rejuvenated after the Congress failed to provide an able successor to YSR. The partys decision to carve out Telangana at this juncture is aimed at short-term political gains, not long-term benets. A separate Telangana will pump massive fuel into the demands for new states across the nation.
N. Sadhasiva Reddy,

Bangalore PA II is stuck between a rock and a hard place. People of neither Telangana nor Seemandhra are ready to part with Hyderabad, which has emerged as the pride of Telugu speaking

t looks like political expediency, not development, is behind the formation of a separate Telangana. The Congress is aware that Chief Minister Kiran Kumar Reddy is from Rayalaseema and has never openly backed the demand for Telangana. It is evident that his views were not taken seriously by the party high command which appears to have made up its mind after the BJPs strident support for the cause. The Congress will gain nothing from its latest move. It has lost its identity in all three regions of Andhra Pradesh. The party leaders from Telangana cannot hope to perform a magic in the region as the TRS, which has been pursuing the demand since 2001, will gain an upper hand. It may well turn out to be a straight contest between the TRS and the TDP. One thing is certain. Andhra Pradesh is heading for a long phase of uncertainty and violence.

ur nation is moving away from the integration of the 1950s. The government should look at creating regional committees, giving special economic packages for the underdeveloped regions, and decentralising governance instead of breaking up States.

he only useful nding is that the UPA is not the favourite. The BJPs fortunes are on the rise. But the trends are uid and will change once the election campaign picks up.

Unfortunate
he suspension of Durga Shakti Nagpal, sub-divisional magistrate of Gautam Budh Nagar, after a dispute related to a religious place is unfortunate. The move is widely seen as action for tightening control on the sand maa. We often talk of the corrupt Indian bureaucracy but officers who are honest and want to end corruption are easily removed from the way by politicians.
Sumit Sharma,

A.R. Karthick,

Padmaneri V. Sivanand,

Bangalore

Tirunelveli

Hung Parliament
he CNN-IBN-The Hindu election tracker survey has predicted a hung Lok Sabha for 2014, which is not a surprise. The 10-year UPA rule has been marked by scams and price rise. But whether the NDA can convincingly present itself as a viable alternative is doubtful. A large section of people not only the minorities but also others in the south and east will not vote for the NDA if Narendra Modi is projected as the Prime Minister. How many regional parties will support a Modi-led NDA is also doubtful. In a situation where neither the UPA nor the NDA

Clean chit
An important principle of justice is no man shall be judge in his own cause. But this principle is rarely followed in India. Politicians act as judges in their own cause and give themselves clean chits. The BCCI inquiry panel, which went into allegations of betting and spot-xing, has done the same thing by giving a clean chit to its president N. Srinivasan, which was only expected. The so-called inquiry was a cruel joke on cricket fans.
T. Anand Raj,

Ludhiana

t is clear that Ms Nagpal has been suspended for a cooked-up reason. The truth is she opposed the sand maa which must have rubbed the vested interests on the wrong side. The manner in which the State is treating upright officers is unfortunate. The young Chief Minister of Uttar Pradesh has shown us that he is made of the same old mould.

V. Sriharsha,

Udita Agrawal,

New Delhi

Chennai

New Delhi

BG-BG