In a startling affidavit to the Supreme Court today, the Planning Commission claimed that the Tendulkar rural poverty line of Rs 447 per capita per month (about Rs 15 per day) at 2004-5 prices, equivalent to roughly Rs 25 per day today after adjusting for inflation, “ensures the adequacy of actual private expenditure… on food, education and health” (Para 5).
Incidentally, in the Tendulkar poverty-line basket, the allowance for health expenditure is less (in fact, much less) than one rupee per day – barely enough to buy an aspirin.
In the Tendulkar report, the alleged “adequacy” of this benchmark is based on a wholly circular argument.*(see note below)
Roughly speaking, one rupee per day is the “median expenditure” on health, that is, the level of expenditure such that half of the population spends less than that on health. How this benchmark can be interpreted as “adequacy” is not explained.
Similar circular arguments are used to conclude that “the proposed poverty lines have been validated by checking the adequacy [sic] of actual private expenditure per capita near the poverty lines on food, education and health by comparing them with normative [sic] expenditures consistent with nutritional, educational and health outcomes” (Tendulkar Report, p. 2, quoted in approval in the Planning Commission’s affidavit).
In the same affidavit, the Planning Commission pleads for the continued use of this poverty line “for the public distribution services”.
The affidavit filed by Planning Commission is as following–
IN THE SUPREME COURT OF INDIA
CIVIL APPLELLATE JURISDICTION
WRIT PETITION (C) NO. 196 of 2001
IN THE MATTER OF:
People’s Union for Civil Liberties & Others
Union of India & Others
Affidavit on behalf of the respondent planning commission in clarification of the orders dated 29.3.2011, 14.5.2011 and 22.07.2011 passed by this hon’ble court.
I, B D Virdi s/o Late Shri. J R Virdi presently working as Adviser, Planning Commission at New Delhi do hereby solemnly affirm and declare as under:
1. That I am currently working as Adviser in the Repsondent – Planning Commission and as such I am competent to swear, affirm and file the instant affidavit on behalf of the respondent herein, as per records maintined in the normal course of business and made available to me and believed by me to be true and correct. I am fully conversant with the facts of the case, and hence competent to swear this present affidavit.
2. That this Hon,ble Court vide its order dated 14.05.2011 was pleased to direct that:
“ ….According to the Tendulkar Committeee, with the price level of 2011, it is impossible for an individual in an urban area to consume 2100 calories in Rs.20 and an individual in a rural area to consume 2400 calories at Rs.15. The Planning Commission may revise norms of per capita amount looking to the price index of May 2011 or any other subsequent dates”.
3. That on 22.07.2011 thia Hon’ble Court perused an earlier affidavit dated 10.05.2011 filed on behalf of the Planning Commission, in compliance of the order dated 29.03.2011 of this Hon’ble Court, and expressed its reservations at the fact that the poverty line at the national level fixed by the Planning Commission i.e. at Rs.579 per capita per month consumption expenditure for the urban areas and Rs.447 per capita per month for the rural areas are fixed at 2004-05 prices. The Court vide its order dated 22.07.2011, further directed that:
“….since we are adjourning the matter, learned counsel for the Planning Commission would be at liberty to file additional affidavitm if any, within two weeks….”
4. It is respectfully submitted that the Expert Group headed by Prof.Suresh Tendulkar recommended to move away from anchoring the Poverty Line (PL) in calorie norm and the relevant extracts from the report are reproduced as under: “…a conscious decision was taken by the Expert Group to move away from anchoring the Poverty Line in calorie norm as in the past because (a) there is overwhelming evidence of downward shift in calorie Engel curves over time and (b) calorie consumption intake calculated by covering the consumed quantities in the last 30 days as collected by NSSS has not been found to be well correlated either over time or across States with the nutritional outcomes observed in other specialized nutrition outcomes such as National Family Health Surveys (NFHS) ; (pages 7-8)
The report also mentions that:
i. “Even while moving away from the calorie norms, the proposed povetry lines have been validated by checking the adequacy of actual private expenditure per capita near the poverty lines on food, education and health by comparing them with normative expenditures consistent with nutritional, educations and health outcomes.”
ii. “….although those near the poverty line in urban areas continue to afford the original calorie norm of 2100 per capita per day, their actual observed calorie intake form 61st round of NSS (2004-05) is 1776 calories per capita per day. This actual intake is very close to the revised calorie intake norm of 1770 per capita per day recommended by Food and Agriculture Organisation (FAO). The actual observed calorie intake of those near the new poverty line in rural areas (1999 calories per capita) is higher than the FAO norm.
5. It is, therefore, respectfully submitted that as evident from the above mentioned para, the Poverty Lines recommended by Tendulkar Committee are not anchored in calorie intake norm; although, the Committee has not discounted its relevance. The recommended poverty lines ensure the adequacy of actual private expenditure oer capita near the poverty lines on food, education and health and the actual calories consumed are close to the revised calorie intake norm for urban areas and higher than the norm in rural areas.
6. It is most respectfully submitted that the poverty line of Rs.579 per capita per month consumption expenditure in the urban (and correspondingly Rs.447 for the rural areas) is the value of the consumption expenditure determined at 2004-05 prices. The Tendulkar Committee also set out a procedure to revise these poverty lines in order to adjust for inflation.
7. On the basis of this procedure the poverty lines would be computed for 2009-10 using the data obtained from the large sample survey on Household Consumer Expenditure conducted by NSSO during 2009-10, which are now available.
8. In the meanwhile, on applying price increase using Consumer Price Index for Industrial Workers ( CPI-IW) for urban areas and Consumer Price Index for Agricultural Labourers (CPI-AL) for Rural Areas at all India level, which are readily available, the poverty line at June 2011 price level can be placed provisionally at Rs. 965 per capita per month in urban areas and Rs. 781 per capita per month in rual areas. At June 2011 price level, for a family of five this provisional poverty line would amount to Rs.4,824 per month in urban areas and Rs.3,905 per month in rural areas. However, final poverty lines following the Tendulkar Committee will only be available after completion of the 2011-12 NSS Survey and these will vary from state to state because of price differentials.
9. It is respectfully submitted that the above poverty lines of Rs. 4,824 (urban) and Rs. 3,905 (rural) roughtly worked out at June 2011 price levels as directed by the Hon’ble Justice Wadhwa Committee for identification of poor people for the distribution of additional foodgrains at BPL prices. It may be noted, however, that this reference is to family income whereas the poverty line is in terms of consumption. There are no surveys on income conduced by the NSS or any other official organization.
10. It is also submitted that the 61st Round of NSS data for 2004-05 reveals that the average per capita consumption of cereals of persons falling in the range of Monthly Per Capita Expenditure(MPCE) near the poverty line was 12.16 kg in rural areas and in urban areas it was 10.24 kg per capita per month. Assuming the average family size of five, the average per family consumption of cereals by families falling in the MPCE of poverty line works out to be 60.80kg per month in rural areas and 51.20 kg per month in urban areas. Similarly, the consumption of pulses and pulse products was 3.22 kg per family per month in rural areas and 3.31kg. per family per month in urban areas.
11. It is further submitted that the Planning Commission estimates the Head Count Poverty Ratio after every five years based on the large size sample survey on household consumption expenditure conducted by the National Sample Survey Organisation (NSSO). The last poverty estimates based on
NSSO 2004-05. The next round of large sample survey has been conducted in 2009-10. As hereunder, the Planning commission is in the process of estimating the revised poverty lines taking into account changes in the price level as per the Tendulkar Methodology using the 2009-10 data, which is now available.
12. It is respectfully submitted to the Hon’ble Court that the total BPL population presently being used for the public distribution services works out to be 35.98 crore. If the Tendulkar poverty ration for 2004/ is applied to the projected population of the Registrar General of India as on 1st March 2005, the total BPL population would be 40.74 crore. The poverty estimates for 2009/10 are being worked out on the basis of the detailed NSSO data which has become available and the provisional estimates suggest that the total BPL population as per 2009/10 estimation may be lower than that which would have emerged Tendulkar ratio on 2004/05 projection.
13. It is most respectfully submitted that this Hon’ble Court may be pleased to consider the clarifications given hereunder with regard inter alia to its orders of 14.5.2011 and 29.3.2011. The Planning Commission most solemnly undertakes to provide any further information this Hon’ble Court may call upon it to do so.
14. No part of this affidavit is false and nothing material has been concealed thereto.
Verified at New Delhi on this 20th day of September,2011 that the contents of the above affidavit are true and correct. No part of it is false and nothing material is concealed therefrom.
*– “For normative consumer expenditure on health (NCEH for short), two components are distinguished, namely, (i) that on non-institutional health care (NCEH-N), that is, on treatments not requiring hospitalization in 15 days preceding date of interview and (ii) that on institutional health care (NCEH-I) requiring hospitalization during 365 days preceding date of interview. Median cost per treatment and per case of hospitalization has been derived from the 60th round (January-June 2005) NSS by state/rural/urban population. Age-specific incidence of treatment/hospitalization reported in the same survey has been multiplied by age-distribution of the population to derive average incidence of treatment/hospitalization. Since onset of illness and hospitalization are contingent events, the average incidence of treatment/hospitalization can be regarded as probability of onset of illness requiring treatment/hospitalization. When we multiply the average incidence by the median cost of treatment/hospitalization, we get expected normative expenditures to get treated/hospitalized which provide us with NCEH-N and NECH-I respectively sum of which gives us NCEH by state/rural/urban population.” (Tendulkar Report, page 9)