By M H Ahssan
The government’s announcement of a fiscal stimulus package of approximately Rs 30,000 crore, including foregone tax revenues may not help the economy. A recent FICCI survey has warned that several manufacturing sectors may see production cuts of up to 50 per cent and job cuts of up to 30 per cent in coming months. In any case, if one goes by the new allocations, the stimulus package appears to be meant only for upper middle-class urban Indians, to bail out exporters and such sectors as jewellery manufacturing, housing and automobiles.
The total lack of a humanistic social policy policy to improve the lot of the poverty-stricken majority of this country, as seen from the laissez-faire attitude adopted towards them, is shocking.
The enormity of this institutional neglect can be gauged from the “Report on Conditions of Work and Promotion of Livelihoods in the Unorganised Sector”, released by the National Commission for Enterprises in the Unorganised Sector (NCEUS) in August 2007.
The report says 77 per cent of the population — 836 million people — subsists on less than Rs 20 per day per capita.
Unfortunately, the stimulus package has nothing to offer these people. On the contrary, their numbers have been grossly understated to avoid tarnishing the “India Shining” image, and perhaps also to escape censure for not addressing the concerns of this vulnerable group.
A study of the anachronistic methodology adopted by the government to calculate poverty line of India would expose this bias.
According to the official definition, the poverty line is the monthly cost of a “basket of food” that gives 2,400 calories of nutrition per capita per day in rural areas and 2,100 calories per capita per day in urban areas. In 1973-74, the government fixed this line at Rs 49.09 and Rs 56.64 per capita per month for rural and urban areas respectively. These values were last revised in 1999-2000 to Rs 327.56 and Rs 452.11.
In other words, we are expected to believe that a person who earns Rs 328 a month in a village and Rs 453 a month in a city is not poor, as he is above the poverty line. One does not have be an awardwinning economist to realise how ridiculously low these estimates are.
Astonishingly, these outdated values still form the basis of poverty calculations in our country. A case in point is the March 2007 report of the Planning Commission, which claimed that the number of people living below the poverty line has declined to 21.8 per cent from 26.1 per cent in 1999-2000. But the NCEUS report contradicts this contention.
Therefore, in order to avoid such conflicting and misleading claims the poverty line must be redefined for a realistic evaluation of the number of poor in our country.
In this connection, the methodology used by Australia may be worth studying.
The country takes into account even non-income indicators to calculate poverty and updates its poverty line every quarter. For instance, the Australian poverty line for the June Quarter 2008 inclusive of housing costs was $ 714.27 per week for a family comprising two adults, one of whom is working, and two dependent children. This was an increase of $ 7.08 over the poverty line for the previous quarter, March 2008.
(Source: Melbourne Institute of Applied Economic and Social Research).
Adopting a similar approach, Mohan Guruswamy and Ronald Joseph Abraham of the Centre for Policy Alternatives, Delhi in a February 2006 report, “Redefining Poverty: A New Poverty line for a New India” presented a case for fixing the poverty line at about Rs 840 per capita per month after factoring in costs for nutrition (Rs 573), health (Rs 30), clothing (Rs 17), energy consumption (Rs 55), and miscellaneous expenditure (Rs 164).
Even this figure of Rs 840, they said, would not fully reveal the true state of poverty in India because a person spending more than Rs 840 a month does not necessarily have access to all the fundamental needs of life such as education, health, nutritious food, clean water, clothing, sanitation, transport, housing, and access to national resources.
But there seems to be no effort from the government to initiate targeted measures to eliminate poverty as proved by its apathy towards the Dalits and the Muslims who are the most “capability deprived” (to use Amartya Sen’s phrase) sections of our society as per the Sachar Committee Report.
For instance, in the 2008-09 Union budget the amount earmarked for the Scheduled Castes and Scheduled Tribes is Rs 7,762 crore, which is the sum of a direct allotment of Rs 3,966 crore and 20 per cent of Rs 18,983 crore from other schemes. This works out to just 1.03 per cent of Rs 7,50,884 crore, the estimated total budget expenditure this year.
Muslims find themselves even more neglected as the finance minister could spare just Rs 1,235 crore for all minorities, which included allocations to the ministry of minority affairs (Rs 1,000 cr), post-matric scholarship (Rs 100 cr), National Minorities Development and Finance Corporation (Rs 75 cr) and the Maulana Azad Education Foundation (Rs 60 cr). At 70 per cent of the total minority population the Muslims’ share in Rs 1,235 crore may be taken at Rs 865 crore or 0.1 per cent of the total budget expenditure.
So the Muslims get just 11 per cent of what has been given to the Scheduled Castes and Scheduled Tribes despite being 55 per cent of SC-ST population (2001 census) and equally downtrodden. The bias is obvious. If this is the government’s attitude towards deprived communities, the chances of India staving off recession and becoming a global power are bleak indeed.
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