Life-styles have altered among the poor too. One no longer needs that number of calories. Arguing that poverty lines need to change is one thing. After all, India’s poverty line isn’t the same as the American. But disputing poverty figures with an unchanged poverty line is another. Incidentally, the World Bank’s $1 per day isn’t at today’s prices, it is at 1985 prices. It translates into a little more than $1.25 a day at today’s prices. And whether one uses the indigenous poverty line or whether one uses the World Bank’s poverty line, money values are broadly similar, as are poverty numbers. However, that now gets into murky areas of data collection. Globally, these are collected through household surveys. And in many countries, including India, surveys are of expenditure, not income. Consequently, though we want to measure income poverty (percentage of population below an income threshold), we end up measuring expenditure poverty. To make matters worse, in every country, there is a gap between aggregate consumption expenditure obtained through household surveys and aggregate consumption expenditure obtained through national accounts. Stated differently, growth shows up in national accounts. It doesn’t show up that much in surveys, on which we base poverty estimates.

Statistically, the link between growth and poverty reduction is a red herring, unless we adjust for disappearing consumption. But let’s ignore this issue, though it is an important one. What do Indian data show? Satisfactory NSS (National Sample Survey) data are available at infrequent five-yearly intervals, so we are stuck with 2004-05. On a comparable basis, the poverty ratio is 27.5 per cent, with concentration in Bihar, Chhattisgarh, Jharkhand, MP, Orissa and Uttarakhand. While poverty reduction should have been more, there is no denying much-maligned trickle-down works, as long as there is some per capita growth to trickle down. After all, India’s poverty ratio was flat at around 50 per cent for three decades between 1950 and 1980. To state the obvious, poverty reduction isn’t only a function of aggregate growth, but its composition. It’s impossible to have substantial reductions without revamping the rural sector.

... contd.