Terming the new poverty estimates as more reasonable, C Rangarajan, former PMEAC chairman, said it is based on a partially different methodology. In an interview with Surabhi, he also pointed out that apart from the monthly consumption expenditure, a household’s well-being must be measured in the context of government spending on public services. Excerpts:
How different is the methodology used by your panel from the previous Tendulkar committee for estimating poverty?
The difference comes from the fact that in the non-food consumption expenditure, certain norms have been included. The non-food consumption expenditure includes spending on education, medical care and clothing has both a normative component and component of observed consumption pattern. Even in consumption expenditure for food, there is some link with calorific values although we have also included proteins and fats as part of the diet.
There is a sharp increase in the poverty estimates made by your committee…
Yes, the poverty estimates for rural areas has increased by over 19 per cent and for urban areas by 40 per cent when compared with the Tendulkar committee report. But the better way to look at the poverty line is through the monthly consumption expenditure per household rather than the per person per day measure. Even the NSSO data on consumption expenditure is on a household basis.
Do you think the poverty estimates suggested by your panel is more reasonable?
Yes, the poverty line as defined by our panel for a family of five is at a reasonable level. In terms of purchasing power parity, it amounts to $2.44 per person per day, which is a shade higher than the World Bank estimates.
Your report also mentions government expenditure on health and education …
It is essential to remember that the poverty estimates are based only on private consumption expenditure and does not include public expenditure on services such as health and education.