July 2, 2009 ☼ Economy ☼ India ☼ poverty ☼ Public Policy ☼ rural development ☼ UPA government

All poor, all backward

When the not-so-poor label themselves poor, the really poor suffer

This is an archived blog post from The Acorn.

“If numbers are anything to go by,” Mint says in today’s editorial, “the second incarnation of the United Progressive Alliance (UPA) is likely to notch an unenviable record: an upward march in the number of poor in India.” Why? Because an “expert” committee appointed by the ministry of rural development “felt” that the actual number of rural poor are much higher than the 28.3% that the Planning Commission claims. Based on this “feeling” they upped it to 50%. One gets the feeling that they were feeling a little too ungenerous, for surely, there are people who feel that more than one in two people that they meet in villages are abjectly poor.

This cannot be mere statistical quibbling: A big increase in the number of poor in any country is a political matter. It raises interesting questions. Was the UPA-I’s record so unenviable that five years of its rule has made more people poor than any recent interval of our history? More remarkably, how did the UPA succeed at the hustings with such a disastrous record? [Mint]

Not only is the feeling-based poverty rate setting dubious, the methodology to identify the poor is more so.

Anyone who doesn’t spend large sums of taxpayer’s money based on feeling will know that if the expert committee’s recommendations are accepted, a whole lot of people will claim to be below the poverty line. Many will figure out ways to declare themselves abjectly poor, thereby increasing corruption at local government levels. (Look what happened in Karnataka). Political entrepreneurs will quickly figure out how to secure votes by promising to make their voters poorer. Just as more and more communities aspire to become backward or scheduled castes, more and more communities will aspire to become poor. Oh, their social standing, political empowerment and economic wealth will have nothing to do with these labels, of course.

So what? Well, without accurate measures of how many really poor people there are in India, it is very hard to devise policies to actually help them. Properly targeted policy measures will become harder, if not impossible. Besides, those who genuinely need government assistance will find themselves in competition with better-connected opportunists. Raising the poverty line wrongly is a good way to trample those who are really below it.

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