The release of the NSSO’s 2022-23 Household Consumption Expenditure Survey encouraged academics to estimate poverty and inequality trends, exposing data comparability and measurement difficulties.
Trends in poverty and inequality:
1. Poverty declined based on various committees:
- Poverty ratios fell from 29.5% in 2011-12 to 10% in 2022-23 (1.77 percentage points per year) using the Rangarajan Committee’s poverty standards.
- Poverty ratios fell from 21.9% in 2011-12 to 3% in 2022-23 (1.72 percentage points per year) using the Tendulkar Committee’s poverty standards.
- Earlier estimates based on the Tendulkar Committee’s poverty lines showed a decrease from 37.2% in 2004-05 to 21.9% in 2011-12 (2.18 percentage points per year).
2. Inequality declined :
- According to Subramanian’s estimations, the Gini coefficient fell from 0.278 to 0.269 for rural regions and 0.358 to 0.318 for urban areas between 2011-12 and 2022-23.
- Bansal et al. see similar trends: the Gini coefficient for rural regions fell from 0.284 to 0.266, and for urban areas from 0.363 to 0.315 throughout the same time.
- Between 2011-12 and 2022-23, urban inequality decreased significantly as compared to rural regions.
Measurement problems for poverty lines and consumer expenditure:
- Moving Away from Calorie Norm-Based Poverty Line: The Tendulkar Committee recognised the limitations of a calorie-based poverty level. Instead, the Tendulkar Committee used calorie standards indirectly by adopting the urban poverty level from the Lakdawala Committee’s approach, which contained calorie norms.
- The Rangarajan Group emphasised the need for a new consumption basket that includes both appropriate sustenance and critical non-food products, as well as behaviorally influenced non-food expenditures.
- Estimating this new poverty basket necessitated a new technique rather than just updating an existing basket with new costs.
- Incomplete Capture of Public Expenditure: Despite efforts to impute values for public expenditure items, the imputation procedure only captured a small portion of overall public expenditure on subsidised or free products.
- Poverty measurement is complex since there is no globally accepted approach, resulting in heterogeneity in estimates.
To enhance consumption reporting, the NSSO has gradually adjusted the reference or recall period of data collection.
Three consumption estimates are offered based on the memory duration of various categories of expenditure:
- Uniform reference period (URP)
- Mixed reference period (MRP)
- Modified mixed reference period (MMRP).
Conclusion:
The Tendulkar Committee acknowledged the inadequacies of calorie-based poverty limits, highlighting the need for more comprehensive methods that take into account changing consumption patterns and critical non-food items.
Source: https://www.thehindu.com/opinion/op-ed/declining-poverty-ratio-a-continuing-trend/article68171094.ece#:~:text=Trends%20in%20poverty%2C%20inequality&text=The%20estimated%20poverty%20ratios%20declined,the%20Tendulkar%20Committee's%20poverty%20lines.