Subscribe
India will finally have its official poverty figure in the second half of this year. The National Statistical Office (NSO) is currently rolling out the consumption expenditure sample survey, which is used to measure poverty level. The survey will continue through July 2023 and preliminary results are expected by the end of the year.
Going by the buzz in official corridors in Delhi, “the world would be surprised by the dip in poverty figures.” Many experts concur in private that India would have “eradicated” extreme poverty already.
Besides other reasons, most of them point towards two developments that would have helped reduce poverty: The slew of cash transfers under various programmes like the rural employment guarantee and the subsidised fuel under the Ujjawala Yojana.
Add to it the free foodgrains provided under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) from March 2020 till December 2022 and the recent government decision to provide foodgrains free under the National Food Security Act (NFSA) till the end of this year.
The premise on which these programmes’ impact on poverty level is measured is like this: People have received employment thus the income from wage, cheaper gas means saving on fuel (a major household expenditure) and free foodgrains means saving that in turn would have added to people’s saving and thus income.
All these would have increased expenditure on other items. India’s poverty is measured based on monthly per capita consumption expenditure — expenditure is used as a proxy for income.
Last year, Surjit Bhalla, the executive director for India, Bangladesh, Sri Lanka and Bhutan at the International Monetary Fund (IMF), had examined how the food subsidies under NFSA and the pandemic-specific PMGKY had impacted extreme poverty and inequality level during the COVID-19 pandemic.
“Extreme poverty was as slow as 0.8 per cent in pre-pandemic year 2019, and food transfers were instrumental in ensuring that it remained at that low level in the pandemic year 2020,” Bhalla’s research claimed.
Soon after the government decided to make foodgrains free under NFSA from January this year, sporadic reports by experts appeared on how this would impact the overall inflation in the country and positively help in reducing poverty.
By the time surveyors of NSO actually reach the doorsteps of sampled households, most of them would have enjoyed free foodgrains for four to five months under the new scheme.
Whether the survey questionnaires include or try to monetise the free foodgrains and also other subsidised items like cooking gas, we don’t know. But, if this is the way the survey would be conducted, there are chances that these added to people’s earnings.
An analysis by Soumya Kanti Ghosh, the Group Chief Economic Adviser to the State Bank of India, in its research publication Ecowrap released January this year, looked at how these schemes have added to people’s income using data for the period 2019-2021.
The four schemes this research paper included are Pradhan Mantri Kisan Samman Nidhi (PM Kisan), Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Pradhan Mantri Ujjwala Yojana (PMUY) and saving from PMGKAY. These schemes together increased a person’s monthly income by Rs. 2,111.
“Schemes like PM Kisan, MGNREGA, PMUY and PMGKAY are increasing the per person per month rural income by Rs 437. When the per person per month rural wages (Rs 662) are combined with transfer payments (Rs 437) received from the government through various schemes results into per person per month rural income of Rs 1,099, which is above the rural poverty line number, resulting into government’s efforts of removing extreme poverty,” said this research.
The NSO survey on consumption expenditure is a robust one. Whether these economic surmises would be proven through this survey will be speculative.
But, what appears prominently is that government wants to monetise all its supports to claim an increase in household income, even though figuratively. This is a new way of erasing poverty, at least on official papers. Notwithstanding, the NSO survey would throw a “surprise”.