Opinion New study suggests that poverty remained low during pandemic. In absence of reliable data, it raises some questions

Estimating poverty and inequality in India has been a controversial and contentious process. Opinions diverge not only on the data which forms the basis of the estimation, the methodologies to be followed, but also on the trends over the past few decades. In recent times, the withdrawal of the 2017-18 consumption expenditure survey, and the uncertainty in measuring the economic fallout of the pandemic, have served to further polarise the debate. In the absence of reliable and timely data in the public domain, various economists have put forth their assessments of poverty and inequality in India during these years. One such recent exercise suggests that contrary to popular belief, extreme poverty in India was as low as 0.8 per cent in 2019, and that the “doubling of entitlements” during the pandemic “helped maintain extreme poverty at the low 0.8 per cent” in 2020. Considering its implications, this conclusion is likely to generate heated debate.

The IMF working paper draws on the 2011-12 consumption expenditure survey, but makes adjustments using data from the national accounts and also “incorporates” in-kind transfers (food subsidy data) to arrive at its estimates. This approach raises several concerns. For one, while the growing divergence between the consumption expenditure estimates arrived at from the national accounts and the household surveys has been well documented, the two estimates are not exactly comparable owing to differences in methodologies and definitions. Further, an exercise that involves adjusting the survey estimates using the national accounts data will perhaps assume that the household expenditure distribution remains the same over time. This is unlikely to be the case. Also the underestimation in consumption expenditure estimates available from the household surveys is unlikely to be distribution neutral. In fact, according to a recently released World Bank policy research working paper which draws on the Consumer Pyramid Household Survey, the “extent of poverty reduction during 2015-2019 is estimated to be notably lower than earlier projections based on growth in private final consumption expenditure reported in national account statistics.” These results also contradict an earlier study, based on the consumption expenditure survey that was withdrawn, which had shown that poverty had increased between 2011 and 2017. And while the provision of free foodgrain did undoubtedly bring relief to the financially vulnerable, questions will be raised about the study treating it as a “cash transfer”.

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In large part, such debates over the state of the Indian economy can be traced to the absence of timely and accurate public data. In fact, even though India has a rich statistical tradition, paucity of data has often been the bane of policy making. Its absence makes the job of the government harder, more so during times of acute uncertainty. Given that data should form the bedrock of responsive policymaking, the government must work towards addressing the glaring data gaps.