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Thursday, June 27, 2013

Poverty levels decline; less than 25% poor: NSSO

NEW DELHI: Poverty level in the country may have declined significantly between 2009-10 and 2011-12, the latest government survey on household consumer expenditure indicates, giving something to the beleaguered UPA government to hard sell ahead of elections next year.

Back of the envelope calculations by ET suggest that poverty levels have fallen to less than 25% of population because of a sharp rise in rural incomes and decent performance by the agricultural sector. Adjusted for price rise, the poverty line for 2011-12, based on the Tendulkar committeecalculations for 2009-10- comes to 803 per capita per month for rural areas and 1038.6 for urban areas.

Applying these cut offs to the expenditure estimates released by the National Sample Survey Organization last week shows percentage of rural poor is likely to have fallen to 24.5% in 2011-12 from 29% estimated for 2009-10. The fall in the urban areas was flatter, from 16% in 2009-10 to 15.5% in 2011-12.

Yes, poverty has declined. But to say by how much I would wait for the Planning Commission figures for that. The purchasing power of people has gone up which shows in the consumption story," said TCA Anant, chief statistician and secretary of Ministry of Statistics and Programme Implementation.

The decline is largely because agriculture sector performed well during fiscal year 2011 and 2012 against a drought situation in 2009. Agriculture sector expanded by 7.9% in 2010 -11 and 3.6% in 2011-12.

"During 2009-10, agriculture performed poorly as it was a drought year. Poverty in rural areas is closely linked to agriculture. Whereas 2011 was a normal year, we experienced highfood inflation, which explains high purchasing power with the rural population and hence increase in consumption expenditure," said Pronab Sen, chairman, National Statistical Commission.

Agriculture sector expanded only by 0.8% in 2009-10. Also, rural wages have risen faster than urban wages, due to NREGA, Sen added. More people moving out of agriculture may also be a factor in the depleting poverty in rural areas, Amitabh Kundu, economics professor, JNU suggested.

Share of population engaged in agriculture came down to 49% in 2011-12. In rural areas, 59% of the men were engaged in agriculture as against 63% in 2009-10. The share in secondary activities like manufacturing went up to 22% instead of 19% among rural men.

Similar was the case with rural women. The cumulative effect was that overall wages rose by 29% in rural areas between 2009-10 and 2011-12 against 23% in urban areas. The reduction in poverty also explains the reduction in share of expenditure on food and a similar rise in non-food expenditure. The share of expenditure on food declined substantially from 53.6% to 48.6% in rural areas and from 40.7% to 38.5% in the urban areas. "In 2011-12, rural demand was very robust, which saw many corporates draw up strategies for the rural areas to tap that growing demand," said Soumya Kanti Ghosh, chief economic adviser,State Bank of IndiaBSE -0.73 %.

Despite the drastic fall in poverty in rural areas, still the average urban monthly per capital expenditure was 84% higher than average rural MPCE for 2011-12. And income disparities in rural areas have risen.

The expenditure of the top 10% in rural areas was 6 times that of the bottom 10%, higher than 2009-10, when the expenditure of the top-most decile was only 5.5 times that of the bottom-most decile.

In absolute numbers, according to the latest estimates, there were about 260 million poor in India in 2011-12, down from about 290 million in 2009-10. But the number of poor could rise as the Tendulkar Committeepoverty line has come under criticism for being too low at 28 a day for urban areas and 22 a day for rural areas. A panel chaired by C Rangarajan has been asked to review the poverty line. Even if the poverty line is set higher, in relative terms there will be a decline in these years because of the rise in incomes.

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