A new Poverty Line?!

Those spending over Rs.32 a day in rural areas and Rs.47 in cities should not be considered poor, a panel headed by former RBI governor C Rangarajan said in a report submitted to the BJP-led NDA government last week.
The recommendation, which comes just ahead of the Budget session of Parliament, is expected to generate fresh debate over the poverty measure as the committee's report has only raised the bar marginally. Based on the Suresh Tendulkar panel's recommendations in 2011-12, the poverty line had been fixed at Rs.27 in rural areas and Rs.33 in urban areas, levels at which getting two meals may be difficult.
The panel was tasked with revisiting the Tendulkar formula for estimation of poverty and identification of the poor after a massive public outcry erupted over the abnormally low poverty lines fixed by the UPA government.The panel's recommendation, however, has resulted in a nearly 35% increase in the BPL population.
Estimated at 363 million in 2011-12, compared to the 270 million estimate based on the Tendulkar formula--an increase of almost 35%. This means 29.5% of India's population lives below the poverty line as defined by the Rangarajan committee, as against 21.9% according to Tendulkar. For 2009-10, Rangarajan has estimated that the share of BPL group in total population was 38.2%, translating into a decline in poverty ratio by 8.7 percentage points over a two-year period.
The real change is in urban areas where the BPL number is projected to have nearly doubled to 102.5 million based on Rangarajan's estimates, compared to 53 million based on the previous committee's recommendations. So, based on the new measure, in 2011-12, 26.4% of the people living in urban areas were BPL, compared to 35.1% in 2009-10.
In case of rural areas, the rise is 20% to 260.5 million, compared to around 217 million based on the Tendulkar formula. Rangarajan's estimates would put the BPL share of total population in rural areas at 30.9%, compared to 39.6% in 2009-10.
Documents show that the Rangarajan panel has suggested to the government that those spending more than Rs.972 a month in rural areas and Rs.1,407 a month in urban areas in 2011-12 do not fall under the definition of poverty .
If calculated on a daily basis, this translates into a per capita expenditure of Rs.32 per day in rural areas and Rs.47 per day in urban areas in 2011-12.
As per the Tendulkar methodology for 2011-12, the poverty line was Rs.816 in rural areas and Rs.1,000 in urban areas, which if calculated on a daily basis come out at Rs.27 per day in rural areas and Rs.33 in urban areas.

A top government source pointed out that the panel has recommended that poverty ratio should be delinked from entitlements given by the government under social security schemes.
The panel, which examined the existing methodology for estimating poverty based on the suggestions made by Tendulkar, reviewed the divergence between National Sample Survey estimates on consumption expenditure and those put up by the Central Statistical Organization (CSO).