India: Poverty Line at $0.14 per Day per Capita?

by Sanjeev Kulkarni

Econintersect:  A statement in September by the Planning Commission of India determined any expenditure above of Rs 32 per capita in urban areas and Rs 26 per capita in rural area is considered to be above poverty line.  This comes to Rs 11,680 per year or approximately $ 250 per year at approximately Rs 46 to a dollar.  The Planning commission had filed an affidavit with Supreme Court of India to this effect.  In a more bizzare twist Hindustan Times reports that “the panel says the expenditure should be considered for a family of five, instead of per capita”.  This comes to $ 50 per year or 14 cents per day, an absolutely unbelievable figure.As reported in Hindustan Times, top economists have termed the Planning Commission’s benchmark — per capita expenditure of Rs 32 in urban areas and Rs 26 in rural areas — for measuring poverty as “unacceptable’.

Unacceptable is very diplomatic way of criticizing one of the most bizarre statement, ever to come from the Indian Planning Commission who seem to be living in their own cocoon far removed from reality.

According to a report October 3 by IBN Live, the commission has backed away from their earlier statement.  From that report:

Following the controversy, Ahluwalia met Prime Minister Manmohan Singh yesterday and discussed the issue to prepare for today’s planned clarification.  He said that the Tendulkar poverty line was not meant to be an acceptable level of living for the ‘aam aadmi’ (common man) by the Planning Commission.  “It is actually the standard of living of those at the poverty line in 1973-74.”

In a very frank admission Kamal Nath, Union Cabinet Minister of Urban Development, last year had remarked that both the Indian Planning Commission and the International Monetary Fund have lost their relevance and become virtually ineffective.

Is the latest episode one more example of the famous Indian babus or Bizarre Babu Economics?

Editor’s note: Babu is a term of respect and of derision, depending on the context.  From the Free Dictionary:

ba·bu also ba·boo

n. pl. ba·bus also ba·boos

1. Used as a Hindi courtesy title for a man, equivalent to Mr.
2.
a. A Hindu clerk who is literate in English.
b. Offensive A native of India who has acquired some superficial education in English.

[From Hindi, father.]

Sources:

Experts rap govt over poverty line:  Hindustan Times

Planning Commission needs structural change: Kamal Nath:  The Indian

Battling the Babu Raj:  The Economist

Hasty babu retreat:  IBN Live