No. 64, December 2016

No. 64
(December 2016):

Why The Poor Do Not Count

Why the Poor Do Not Count

-- Manali Chakrabarti (manalichakrabarti[at]

According to the World Bank, India’s nominal GDP crossed the $ 2 trillion mark in 20141, and is slated to grow at close to 8 per cent annually in 2016 and 20172. To put this in perspective: In 1991, the year the Indian economy was opened up and we embraced neoliberal policies, the Indian GDP was about $275 billion, which by the turn of the century had doubled to $481 billion. But the really rapid growth of the Indian economy has been in the last 15 years, which saw GDP increase by almost four-and-a-half times. One needs to remember that these include years which saw the greatest global recession since the 1930s. Thus, for the economy as a whole the promised ‘achche din’ seem to be happening and there are numbers to prove it. The policymakers who have been rooting for further opening up and freeing of the economy have been justifiably sporting a smug expression with this quantitative endorsement of their position.

However, one vexing question for them is that some people continue to claim that all this growth has not translated into alleviation of poverty–the ‘poor’ have been stubbornly impervious to this stunning growth of the economy. And this is disturbing, particularly given that the officials have not even been able to decide how many poor people exist and, more importantly, how to identify them.

The ‘Poverty Line’ and a Brief History of Poverty Level Calculation
While definitions of poverty in India have a long history, the last decade has witnessed a flurry of activity among academics and policymakers in trying to determine what constitutes poverty, and where to draw the line below which people can be termed ‘officially’ poor. Popular media and academic journals have produced a plethora of articles on the various definitions of poverty and poverty lines.

As is evident from Figure 1 the poverty line seems to be a rather subjective concept with anywhere from around 12 per cent to almost 80 per cent of the population estimated to be under it. The NCAER study (2008) claims 15.6 per cent people to be poor, the Rangarajan Committee 2014 records every third Indian to be poor, while the Economic Survey 2014-15 claims every fifth Indian to be poor. The Saxena Report (2009) instituted by Ministry of Rural Development assesses every second Indian to be poor while the Arjun Sengupta Committee Report sensationally claims that four out of five Indians are poor or vulnerable! Let us delve briefly into the history of poverty measurement in India to make sense of this elusive poverty line.

Monthly Per Capita Consumer Expense (MPCE) poverty line

The Planning Commission had been seeking to measure the number of poor in the country since the 1960s and in the early 1970s a group of experts decided that the appropriate line should be set according to a minimum consumption basket, including average monthly food consumption of 2,400 calories of food per capita per day in rural India and 2,100 calories per capita per day in urban India.3

FIg 1

But subsequently, the poverty line has simply been updated annually by adjusting for the inflation determined by the consumer price indices without updating the basket of commodities to those actually consumed in subsequent years. And over the years, the numbers ceased to reflect the actual food (calories) consumption. This is because not only has the pattern of food consumption changed drastically over the decades, the cost of other components of the basket have risen disproportionately higher4, resulting in a situation where even the cost of minimum food required is not covered by the ‘official’ poverty line. That is, instead of being anchored in a particular level of calorie consumption, as originally was the case, the poverty line is anchored in an outdated basket of commodities.

As a result, irrespective of whether it is correct or wrong to anchor the poverty line in a particular level of calorie consumption, the new lines are not comparable to the earlier poverty line and cannot be used to show a reduction in poverty, as the Government and various scholars are making out. And yet the use of that line has been defended by the Government and policymakers by simply assuming that the families have chosen to buy other items rather than the minimum required nutrition. These poverty lines also drew a lot of flak for focussing exclusively on food consumption norms, and ignoring expenditure on health, education and other basic needs.

Tendulkar Committee Report 2009
To address some of the issues raised, the Planning Commission set up an Expert Committee under Professor Suresh D Tendulkar in 2005. It was to review the methodology for official estimation of poverty and recommend changes in the existing procedures5. The Committee submitted its report in 2009. The Tendulkar Committee moved away from a purely calorie-based assessment of poverty to include other expenses like health, education, durable goods and entertainment. But the Committee reduced the calorie intake requirement from 2100 to 1776 calories in urban areas and 2400 to 1999 calories in rural areas per person per day. This was apparently based on6 the FAO (Food and Agricultural Organisation, a UN body) directive which calculated that calorie intake norm of 1770 calories was a Minimum Dietary Energy Requirement (MDER) for a person engaging in ‘light physical activity’. An example of this kind of activity is “a male office worker in urban areas who only occasionally engages in physically-demanding activities during or outside working hours”. It would be ridiculous to expect that a poor person in India would have the luxury to do sedentary office work. Most of them would be involved in very hard manual labour for inhumanly long hours to eke out subsistence wages. The Tendulkar report also overlooked inclusion of the aged, destitute, primitive tribal groups, the disabled, single women, widows and pregnant and lactating women in the category of the poor–groups that the Supreme Court has already directed the Government of India to automatically include.
The total population in poverty worked out to 37.2 per cent for 2005 with these measures. Predictably, this new measure was decried by many as a ‘destitution line’. This led to setting up of another Expert Committee in 2012 chaired by C Rangarajan (who headed the Prime Minister’s Economic Advisory Council at the time).

Rangarajan Committee’s Poverty Estimates 2014
The Rangarajan Committee, which submitted its report in July 2014, determined poverty based on certain normative standards for adequate nourishment, clothing, house rent, conveyance and education and also some class-based behaviourally-determined levels of other non-food expenses. The energy requirement as calculated by Rangarajan is 2,155 cal per person per day in rural areas and 2,090 cal per person per day in urban areas. This is higher than the Tendulkar committee measures, but significantly lower than the 2,400 cal in rural areas and slightly less than 2,100 cal in urban areas used by the earlier MPCE-determined poverty levels. The new poverty line, translates to a monthly per capita consumption expenditure of Rs 972 in rural areas and Rs 1,407 in urban areas in 2011-12, or Rs 32 in rural areas and Rs 47 in urban areas on a per capita daily basis.7 Like the Tendulkar Committee report, this report too evoked several responses, both vehemently disagreeing and equally forcefully justifying the poverty measurement. We daresay that another ‘official’ Expert Committee is on its way to resolve this ongoing conundrum!

Other Estimates Of Poverty: Saxena Committee, NCEUS Report and World Bank Report
Three other Indian estimates are relevant here. In 2008, the Union (national) Rural Development Ministry set up a commission with N.C. Saxena as chair to examine alternative methods of estimating poverty. The Commission reported its findings in late 2009. At the outset, the Commission felt that monetary amounts specified by the Planning Commission for a minimal diet were too low. Instead of Rs 356 a month per person in rural areas, Rs 700 was considered necessary (Rs 1000 in urban areas). The Commission recommended that the proportion of the rural population living below poverty be raised to at least 50 percent. But even that figure was achieved by lowering the rural calories requirement to 2,100, the same as in urban areas, and if the 2,400 calories criterion had been kept, the percentage of India's rural population living in poverty would have risen to about 80 percent. 8

The National Commission for Enterprises in the Unorganised Sector (NCEUS) was established in 2004 under Prof Arjun Sengupta, to examine ways to provide the welfare of the country’s unorganised workforce. More than 90 per cent of the workforce and about 50 per cent of the national product are accounted for by the informal economy. Most of them work as low paid agricultural workers, or in small manufacturing units and shops and as hawkers or delivery men and have no social security and little or no job security. In its study, NCEUS set an overall minimum of Rs 20 per day per person in 2004-05 as its cut-off for defining the “poor and vulnerable”, and calculated that 77 percent of Indians fell below this cut-off.

The World Bank's poverty cutoff of $1.25 realigned by PPP estimate pegs Indian poverty at around 26% in 2011. A recent World Bank research note titled Ending Extreme Poverty and Sharing Prosperity: Progress and Policies (October, 2015) seems to have already achieved its stated goal on paper by simply employing a modified methodology. The more ‘accurate’ measurement method has pegged India’s poverty rate at 12.4 percent in 2011-12. Further this dramatically low estimate‘will set the baseline for future India and global poverty estimates’.9 This ingenious solution would in fact miraculously bring down the global poverty rate too, as India constitutes over 1/6th of the world population!

And then that still leaves the UNDP report and several other national and international attempts to estimate poverty. See Boxes Inconvenient Reality – Just Move the Line   and This Is Not a ‘Poor Family’. (The main text continues after the boxes.)

Inconvenient Reality? -- Just Move the Line
The whole exercise of estimating the poor and setting a poverty line reminds me of a very telling incident in the iconic novel Catch-22, probably the most influential piece of literature about the meaninglessness of war and its losses. Set in the Second World War, in this episode a disgruntled unit of air force bombardiers is dreading going over another meaningless mission to capture a godforsaken Italian town called Bologna. Untimely rains are delaying the mission and contributing to the already heightened emotions of the unit, who seem to be spending most of the day anxiously looking at the bomb line on the map, indicating the location of Bologna.

When night fell, they (the bombardiers) congregated in the darkness with flashlights, continuing their macabre vigil at the bomb line in brooding entreaty as though hoping to move the ribbon up by the collective weight of their sullen prayers.10

One of the pilots exclaims in exasperation to his fellow unit member Yossarian (the hero of the novel):

“I really can’t believe it”, Clevinger exclaimed to Yossarian in a voice rising and falling in protest and wonder. “It’s a complete reversion to primitive superstition. They’re confusing cause and effect. It makes as much sense as knocking on wood or crossing your fingers. They really believe that we wouldn't have to fly that mission tomorrow if someone would only tiptoe up to the map in the middle of the night and move the bomb line over Bologna. Can you imagine? You and I must be the only rational ones left.”

In the middle of the night Yossarian knocked on wood, crossed his fingers, and tiptoed out of his tent to move the bomb line up over Bologna.11












This Is Not a ‘Poor’ Family
To get a sense of reality, away from the wonderland of poverty lines, I tried to assess the monthly expenditure of the family of a contract worker in Kanpur city. The worker and one of his sons (not yet an adult) are the primary earning members of the family, which is constituted of two adults and three children. Besides, the wife of the worker also contributes through regular piece-rate work which she does from home, besides managing the housework. As is evident, the family does not buy any milk, nor any green vegetables, and have clubbed medicine, fruits and sweets together, indicating that these expenses are a luxury only availed of by the sick. The family buys two pairs of clothing per person, including uniforms for the children. They do not have access to electricity and do not have a toilet either. For this bare minimum existence, the per capita expense works out to Rs 68 per day per person – 50 per cent more than the ‘urban’ poverty line devised by Rangarajan Committee for 2011-12. And this is afforded only by the three individuals working, including the son, who missed out on education to ensure subsistence for the family. The self-employed worker works for at least 12 hours every day. As is also evident, any unforeseen expense, including a minor illness, would cut into food and/or school fees. The family has no savings and hence, should there be any major contingency (medical or otherwise), it would mean they would have to rely on moneylenders, with whom the going rate of interest is 10 per cent per month. For every Rs 100 borrowed Rs 10 is deducted beforehand as the interest for the first month.12

Box 2

Why Is There So Much Noise Regarding the Poverty Line?
Poverty has been estimated for several decades now, but till very recently, it remained an academic exercise, not provoking much discussion beyond the experts. So why has it suddenly become so fashionable to speak about, debate about, contest and justify the poverty line? Probably the reason is that in 1991, the policymakers and the Government ushered in liberalisation with a lot of fanfare, claiming that this would be the dawn of a new era in the country’s economy. For the last 25 years policymakers have been diligently implementing some of the standard  neoliberal policies (recommended by international financial institutions and applied uniformly irrespective of national contexts) like “privatization, fiscal austerity, deregulation, free trade and reductions in government spending in order to enhance the role of the private sector in the economy”. 13 It is significant that changes of political regime either at the Centre or in the States have had no effect on either the speed or the thrust of these policies and all the governments have claimed credit for completely obliterating the stigma of the ‘Hindu Rate of Growth’.

Annual growth in GDP per capita has accelerated from just 1¼ per cent in the three decades after Independence to 7½ per cent currently, a rate of growth that will double average income in a decade.14

India’s economic growth reached dizzying heights, averaging 9 per cent for the period between 2003 and 2007. It then slowed when the global economy came crashing down in 2008.15 There seemed to be nothing to mar the party except for a vexing question asked in some quarters – do the advantages of this ‘miraculous’ economic growth reach all sections of society, especially the ‘poor’? The official poverty estimates published by the Planning Commission conveniently showed a decline in absolute poverty levels from 36 per cent in 1993-94 to 26 per cent in 1999-2000 and the recent Economic Survey claims that only a fifth of the population are poor. And yet the visual evidence of widespread poverty, distress and squalor remains an irksome negation of the official claims of ‘India Shining’. And not only visual evidence but statistical evidence indicates that the magnificent growth of the Indian economy has not trickled down to the poorest, if anything it seems to have gushed up even more wealth to the elite. Even as measures of income have shown a rise, some other measures of well-being have stagnated or deteriorated.

Let us briefly see the effect of neoliberal policies on various sections of the population.

The Majority:

  • According to the latest Human Development Report (2015), India’s HDI (Human Development Index)16 is 0.609, which places it 130th among 188 countries. Adjusting HDI for inequality (IHDI),17 it falls by around a fourth of its value with education contributing the highest inequality. Further, according to the Multidimensional Poverty Index (MPI),18 over half the population of India are multidimensionally poor and an additional 18 per cent are near multidimensional poverty – making the total poor count close to over two-thirdth of the population.19, 20
  • Nearly two million children under five die every year in India, one every 15 seconds –more than half die in the month after birth and 400,000 in their first 24 hours.21 In 2010, the Infant Mortality Rate22 of India was reported to be 47 at the national level, and varied from 51 in rural areas to 31 in urban areas.23 Around 28 per cent of child deaths are linked just to poor sanitation and unsafe drinking water.24 Nearly half of India's children – approximately 60 million – are underweight, 45 per cent have stunted growth (too short for their age), 20 per cent are wasted (too thin for their height, indicating acute malnutrition), 75 per cent are anaemic, and 57 per cent are deficient in Vitamin A.25
  • Among its other dubious distinctions, India recorded the highest number of cases of tuberculosis (TB) in the world according to the World Health Organisation’s Global Tuberculosis Report 2015. Around 9.8 million new TB cases were registered and nearly 1.5 million people died in 2014, including 140000 children.26

The status of urban industrial worker is worse than ever before.

  • The pattern of wage to profit ratio (a basic indicator of distribution of economic prosperity) in this period captures the rate of exploitation of the industrial working class in the post reform era. From around 2.73 in the late 1980s the wage to profit ratio has declined to 0.25 in 2012 – a spectacular 10 fold decline.27
  • Out of the 472 million workers in 2011-12, 92 per cent are informal workers i.e. they are employed either in the informal sector (83 per cent) or are contingent workers (accounting for 58 per cent of the total organised sector employment) in the organised sector. This implies that these workers do not even get the legal minimum wages (which itself is barely subsistence wages), let alone other facilities to ensure a dignified existence including health, education, housing, sanitation, safe work conditions.28
  • Much of the hue and cry for labour law reforms are aimed at the organised manufacturing sector which employ merely 3 per cent of the total workforce. The contention is that they are not subject to the infallible laws of competitive labour markets and enjoy high wages and job security because of the plethora of labour laws which protect their privileges. This has been used to justify the large scale contractualisation and capital intensification in the organized manufacturing sector. There has been a secular trend in capital intensification across industries – not only in capital intensive industries but also in labour intensive ones. In fact the growth in the former has been much higher in the recent years. This is incomprehensible in a country with large pool of workers seeking employment.29 And yet a closer look at the supposed high wages of the ‘labour aristocrats’ reveal that, despite high productivity, the real wages have grown slower than per capita income growth. A study evaluating trends in wages and earnings data (1981-82 to 2011-2012) reveals that organized sector workers’ real wages have increased by 0.82 percent per annum compared to per capita income growth of 3.6 percent per annum. While their non-wage benefits have actually declined at the rate of 0.18 percent per annum.30

The agrarian sector has been in a state of crisis for decades now.

  • The media was agog over the reasons behind the unfortunate suicide of a farmer during a recent Aam Admi Party rally. But Indian farmers have been committing suicide with alarming regularity for years now. A total of 296,438 farmers have killed themselves in India since 1995. Most farm suicides have been linked to debt, a sharp rise in input costs, serious water crises, price volatility and crop failure due to pest attacks and disease.31 In 2011, it was assessed that the suicide rates among Indian farmers is 47 per cent higher than among the rest of the population.32
  • Between 1991 and 2001, over seven million people for whom cultivation was the main livelihood, quit farming. The next decade, 2001-2011, witnessed one of the largest migrations from rural to urban India, in a scale not seen in ninety years in the country. As economist  K Nagaraj, professor at the Asian College of Journalism, Chennai puts it, “The migrations of these past 15-20 years are overwhelmingly distress driven, footloose and often disruptive of the lifestyle, roots and family bonds of the migrant”.33These personal sufferings do not show up in any official measure of poverty; rather, the higher earnings of migrant workers, even amid the worst urban squalor and psychological distress, show up in the data as a reduction of poverty. This is borne out by the secular increase in morbidity over the years (the data pertains to last two decades from 1995-96 to 2014) and the significantly higher morbidity in urban than in rural areas.34

The tribal and Dalit population have been the worst hit because of ‘development’.

  • Between 60 and 65 million people are estimated to have been displaced in India since Independence, the highest number of people uprooted for development projects in the world. “This amounts to around one million displaced every year since Independence and of these displaced, over 40 per cent are tribals and another 40 per cent consist of dalits and other rural poor.35 Many of them have been displaced multiple times and only a 20-25 per cent of them ever get resettled.”36
  • Millions of people are displaced regularly due to violence and armed conflicts which have been on the rise in the past decades. An estimated 526,000 internally displaced persons (IDPs) were there in the country till 2013, states a UN-backed report. The report further said that this  under-represents the real number of people displaced, since in India, IDPs no longer tend to be counted, once official camps are closed, even if they remain in displacement. The report also states that IDPs lack access to clean water, adequate shelter, food security, clothing and health care.37

The dots above do not add up to a vibrant shining India aspiring to be a superpower. Instead, in many parameters, the country seems to be worse than the poorest regions of the world. So how does one reconcile a $2.1 trillion economy with very high growth rates with this picture? We cannot unless we consider the other section of this country – the elite. Let us see how the elite have fared in the last two decades.

The Elite

  • India’s richest 10 per cent have been getting steadily richer since 2000, and now hold over three-quarters of total wealth. India’s 1 per centers – its super-rich – has been getting richer even faster. In  2000, India’s top 1 per cent held around 36.5 per cent  of the country’s total wealth;  the latest Credit Suisse report reveals that at present their share has gone up to 53 per cent of the total wealth equivalent of the country’s annual GDP.38 According to Credit Suisse, India’s wealth increased by $2.284 trillion between 2000 and 2015, of which the top 1 percent cornered 61 per cent; the top 10 per cent claimed over four-fifths of the increase; whereas the remaining 90 percent mopped up the leftovers.39 Figure 2 captures the extremely skewed wealth distribution of India.
  • According to the Forbes billionaire list, in the mid-1990s, there were only two Indian billionaires with a combined net worth of $3.2 billion. This number rose by 2012 to 46, with a combined net worth of $176.3 billion; by 2014, it reached 55, with a combined net worth of $191.5 billion. But even better days were to come as Forbes jubilantly announced: For the first time the top 100 are all billionaires, with combined wealth of $346 billion, up more than a third from 11 months ago.40
  • According to a wealth report by the Kotak group and Ernst & Young,41 the number of ultra-high-networth individuals (UHNIs) having an investible surplus of over Rs 25 crore (Rs 250 million) rose 16 per cent to 1.17 lakh in 2013-14, and this is estimated to triple to 3.43 lakh in the next three years. The wealth of the UHNIs, which also includes professionals having an annual income of over Rs 3 crore, grew 21 per cent to Rs 104 trillion (Rs 104 lakh crore), and is estimated to grow four times to Rs 408 trillion in the next three years.

Fig 2
Source: Credit Suisse’s Global Wealth Databook 2015.42

  • An important aspect of the wealth estimation quoted above is that it only covers disclosed wealth, and does not account for illegally held wealth. As per the latest estimates released by Global Financial Integrity (GFI), the cumulative illicit money moved out of the India over a ten-year period from 2003 to 2012 amounts to $439.59 billion (Rs 28 lakh crore). Obviously, this is also held by the super-rich population, further widening the wealth gap.43

Why Are the Poor Poor?

When I give food to the poor, they call me a saint. When I ask why the poor have no food, they call me a communist.

― Hélder CâmaraDom Helder Camara: Essential Writings

As is evident from the above data, India is not truly one nation. In fact there are two extremely diverse nations in one geographical confinement – one of the rich (about 5 per cent, which in our country translates to over 6 crore people) and the other (95 per cent) of the poor and the abjectly poor. This explains the apparent contradictions of various parameters of the economy. And we would like to argue further that the disparities in the economic access of these ‘two’ Indias are not unrelated; in fact they are mutually responsible for the status of each other. The whole exercise of counting the poor is, in fact, an eyewash to hide the real issue of extreme inequality which has been increasing exponentially since the economic reforms.44

Poverty is not a condition afflicting the poor; it is not a quantitative measure of how to provide subsistence existence to the poor which, if perfected, would lead to gradual alleviation of the poor. It is not even merely a question of economic deprivation; it is actually a political issue. The poor have no say in the political dispensation of the economy, which is evident by the various policies affecting them.

Jobless Growth
First of all, most of the growth did not even translate into jobs as is evident from Fig 3 below. Note that as the graph of GDP growth rises, the graph of employment growth falls. In fact, in the highest growth years 2004-5 to 2009-10 the share of agricultural jobs shrank by over 6 per cent, manufacturing  sector shed 5 million jobs and services created only 3.5 million jobs. Between 2005 and 2010, only one million jobs were created for almost 60 million new entrants to the labour market. And even these employment figures are inflated because they do not show disguised unemployment of various kinds.45 Unemployment or underemployment itself cripples the majority of the population.

Fig 3
Source: Papola and Sahu Growth and Structure of Employment in India: Long-Term and Post-Reform Performance and the Emerging Challenge, ICSSR, 2012, pp4-8

Let us briefly look at some of the recent policies, laws and budget allocations to further substantiate our point.

Government Spending on Social Protection and Health
In a country where (by any reasonable definition) the vast majority of the people are poor and do not even have access to basic amenities, one would expect that this would be the top priority for the Government. And yet, as Figure 4 below shows, India has one of the lowest allocation for social protection and health in the world, including sub-Saharan Africa.

Fig 4

The Finance Minister claimed that social sector was one of the key areas of this year’s budget, in fact he starts off with a noble quote by Vivekanada to substantiate his point “No amount of politics would be of any avail until the masses in India are once more well educated, well fed, and well cared for”.46 But even a cursory glance at the major heads of the recent budget 2016-2017 shows that whatever be the rhetoric of the present regime ‘aam aadmi’ is not their priority and they are definitely not trying to usher in ‘achche din’ for all. Anyway, of the Rs 20 lakh crore budget, a fourth is accounted for by interest payments and another fifth by ‘security’ – i.e., the military and police. Thus the finance minister’s efforts to meet up the expectations of the various sections of the population had to be a jugglery of allocations restricted to barely 55 per cent of the budget.

Decline in Budget Allocation for all Sectors and Schemes Affecting the Poor
The budget allocation for MNREGA at Rs 38,500 crores has been touted as the highest ever, but even in nominal terms it is lower than the 2010-11 budget when it was Rs 40,100 crores. Obviously the allocation for the most ambitious scheme for right to employment by the government has in real terms significantly declined over the years.  Actually this seems to be the pattern for schemes aimed at the most deprived sections of the population. There has been a marginal increase in nominal terms (should one adjust for inflation and population growth much of this increase too would disappear). But to put this in perspective one should note the massive cuts in these schemes in the last budget (2015-16). So in real terms the allocations are in fact much lower than what they were several years earlier. Table 1 would amply illustrate the point made here.

Table 1

Finance Minister Arun Jaitley claimed in his Budget speech that “After universalisation of primary education throughout the country, we want to take the next big step forward by focusing on the quality of education.” And yet in spite of such lofty sentiments the honorable Finance Minister had in fact massively reduced the budget allocation to school-related schemes in the last budget: For  Sarva Shiksha Abhiyan (by 21 per cent), Rashtriya Madhyamik Shiksha Abhiyan (30 per cent)  and Mid-Day Meal Scheme (by 31 per cent). This year these schemes have been offered a token increase which is nowhere close to what was allocated in 2014-15.

In the case of health, the flagship scheme National Health Mission (NHM) allocation has also declined over the years both in real terms as well as nominal terms as is evident from the table above. The overall budget allocation for Department of Health and Family Welfare has been reduced from Rs35,16347 crore in 2014-15 to Rs 29,65348 crore in 2015-16 and in this budget it has been marginally increased to Rs 31,300 crore.49

Swachh Bharat is an umbrella programme which covers the National Rural Drinking Water Mission (NRDWM) and Swachh Bharat Abhiyan (SBA). The budget allocation for NRDWM in 2014-15 was Rs 11,000 crore and Rs 4,260 crore for Nirmal Bharat Abhiyan (which later was transformed to SBA), a combined budget of Rs 15,260 crores. In 2015 the Prime Minister started the Swachh Bharat Abhiyan and the budget for Swacch Bharat including NRDWM and Swacch Bharat Abhiyan was slashed by Rs 9,000 crore! The message probably was that if one does not drink water one would not need to use the toilet either – an ingenious way to handle two problems drinking water and access to sanitation. This year the total allocation is 14,000 crore but two third of it is towards Swachh Bharat Abhiyan and only Rs 5000 crore is for drinking water!

About 2.3 crore children in India are malnourished, and still the scheme that deals with malnourishment–the Integrated Child Development Scheme (ICDS) – has seen a decline of over 55  per cent  in allocation in the 2015-16 budget. This year it has been raised to Rs 14,000 crore and yet it is even nominally 25 per cent less than the allocation in 2014-15, as seen in Table 1. Overall there was a 55 per cent reduction in the budget for the Ministry of Women and Child Development from Rs 21,100 crore in 2014-15 to Rs 10,286 crore in 2015-16.50,51 And in keeping with the pattern the present allocation of Rs 17,300 crore is 20 percent less (nominally) than the budget allocation two years ago. An oft repeated argument to justify these cuts in allocation is the devolution of tax revenues to the states. But if allocations are slashed simultaneously with devolving of revenues it would merely shift the responsibility of social sector spending to the states and in effect defeat the supposed benefits of devolution. This changed Centre-State financial relation has in fact adversely affected states with large poor population (the BIMARU states) requiring significant social spending. The long term effect of this arrangement would be evident only in a while but even a cursory assessment reveals that the poor maybe worse off than before: For example, Bihar’s share in central tax pool has increased by 21 per cent, but the central grants that the state received dipped by 42 per cent. As a result, there is a net loss of around Rs 4,000 crore in the state’s budget. For Rajasthan, the share in tax pool went up by 27 per cent while it saw a dip of 28 per cent in Central grant-in-aid.52

Even more alarming is that the Government seems to be dismantling offices which gather information on the poor and the marginalised. The Union Health Ministry has shut down the National Nutrition Monitoring Bureau (NNMB) which generated data on the nutritional status of socially vulnerable groups. The Bureau, under the Indian Council of Medical Research (ICMR), had been critical in informing the government’s poverty alleviation interventions with periodic assessments of nutrient deficiency among tribal communities, pregnant women, adolescents and “at-risk” elderly population in India.53 But unfortunately for the rulers “absence of evidence is not always evidence of absence”, especially for a phenomenon ubiquitously evident in our country. 

Budget allocation to agriculture consistently  inadequate
The budget presented this year has been widely acclaimed as pro-farmer as the allocation for the Ministry of Agriculture and Farmers’ Welfare which was about Rs 16,000 crore last year has gone up by over 127 per cent to about Rs 36,000 crore this year. This special focus by the Finance Minister would be expected of a sector which supports over half of the country’s population and feeds the whole population, and which has been in extreme distress for several years now. And yet the both the Budget allocation and the growth rate in this crucial sector has been consistently declining over the years. But should one look more closely into the figures one discovers that of the total allocation Rs 15,000 crore is interest subsidy on short-term credit which was earlier under the Department of Financial Services, thus is not an increase but merely a transfer. Last year the corresponding amount was  Rs 13,000 crore. It is distressing that a financial jugglery has been flaunted as a proof of enormous magnanimity of the government towards the farm sector.

The finance minister also claimed that it was the government’s ambition to double the income of the farmers by the year 2022. But, as Devinder Sharma points out, the average monthly income of a farmer across 17 states in the country is Rs 1,666, hence doubling it would be merely Rs 3,300 per farming family over the next 5 years.54One dares say that a large portion of this promised increase would be taken care of by inflation itself!  In fact a measure which would have gone a long way to alleviate the state of the farmers would be to offer adequate Minimum Support Prices (MSP) for grain. The government has backtracked from its commitment to increase MSP by 50 per cent, bowing to the ruling class argument that it would lead to skyrocketing of food prices. If indeed food prices would rise with MSPs, which would trigger a demand for higher wages in the non-agrarian sectors too. Such a situation would be definitely unacceptable to the rich and powerful. Thus the farm sector is deliberately impoverished to subsidise the elite of this country.

See Box How to Feed a Billion for an argument for universal Public Distribution System.

How to Feed a Billion55
A Tehelka article argues for universal subsidy and claims that the Food Security Bill is not an expenditure; it is an investment, crucial for India’s future and growth. Relating field experiences in UP and Chhattisgarh, the article notes that unlike a complete mess in UP, in Chhattisgarh almost every citizen was getting his/her food entitlement simply by the State removing the practice of targeting subsidies. 

In the current PDS system, there are 13 parameters to determine who is poor: how many sets of clothes a person has, whether they live in a kachchaor pucca house, whether they own a patch of land; possess a cow, and so on. This is then marked on a scale of 0-5 and a percentage of the poor who make it to that scale are computed as ‘worthy’ to receive subsidies. No wonder, then, the present sorry state of affairs in most states.

In Chhattisgarh, because of the system of universalised beneficiaries, anybody who needs foodrains can use the PDS. The state has taken away fair-price shops from private operators and has given them to cooperatives, panchayats or women’s self-help groups; raised the commission earned by these mediators; set up computerised ledgers in godowns. Further, it has sent out a diktat that all food-related grievances must be settled by district magistrates within 15 days and apparently, this has led to decline of leakages from 40 percent to four.

The benefits also are visible, as a woman in Sarguja told Tehelka:

For the first time in our life, we are sure we have enough to eat. So instead of spending 15 hours a day trying to find money to buy roti and salt, we have started a cooperative and are running a dairy.

It should be noted that perhaps the principal reason why the BJP-led government of Chhattisgarh, in contrast to the policy of the BJP-led government at the Centre, has instituted these reforms in the PDS is to counter the political challenge it faces from the insurgency in its tribal regions.

A continuing theme of the present Government is that in spite of being committed to the objective of ‘Wiping every tear from every eye’ the efforts are thwarted because of leakages56 of subsidies. It claims to have made an ‘accurate quantification’ of various heads which do not reach the poor.57 And yet the policymakers find adequate resources to subsidise the wealthiest of this country – individuals and corporations.

Subsidies to the Super Rich

The revenue foregone by the central government for the financial year 2015-16  is a whopping Rs 6,11,128.31 crore, a figure higher than the fiscal deficit of Rs 5.20 lakh crore projected for this financial year.58,59 As Sainath sums it up, ‘But budgets only started carrying that annexure (revenues foregone) a few years ago, and we only have the data from 2005-06 to 2013-14. In those nine years, the corporate karzamaafi amounted to Rs 36.5 lakh-crore…For those stricken by number-crunchitis: that works out, on average, to Rs 1,110 crore every day—for nine years. That’s one hell of a free lunch."60 If we add up the figures for 2014-15 and 2015-16, it amounts to around Rs 49 lakh crore or Rs 1,237 crore per day for 11 years. To add to this, the Union Budget 2015-2016 has proposed cutting basic rate of corporate tax to 25 per cent from current 30 per cent over the next four years,61 making corporate tax lower than personal tax. At present the effective tax rate is only 23 per cent, as against a statutory rate of 32-33 per cent. Further, due to distortions in taxation system, the benefits that accrued to large companies with higher profits are substantially higher than those to smaller units.62

Jan Dhan Yojana and the Non Performing Assets
In January 2016, seventeen months into the ambitious financial inclusion scheme (Jan Dhan Yojana) announced by the Prime Minister on 15 August 2014, it was officially announced that the scheme has  reached all households in the country, bringing 200 million new families into the banking system.63 And yet, nine months into the campaign, around a third of the accounts have zero balance64 and many in fact are duplicate accounts.65 One of the most important drawbacks of the scheme is lack of access to credit. As C Rangarajan, former Chairman of the Economic Advisory Council to the Prime Minister, rightly pointed out, “There are two aspects to financial inclusion. One is bank account and the second is access to credit. The scheme announced by the Prime Minister addresses the first problem. The issue of making credit available to small borrowers remains."66

At the other end of the spectrum,over 433 borrowers had outstanding loans of more than Rs 1,000 crore each, amounting to Rs 16.31 lakh crore. The top ten defaulters on loans from public sector banks account for Rs 28,000 crore.67

The media these days is agog with the case of liquor baron Vijay Mallya, who is facing legal charges for willful default by his group to the tune of Rs 9,000 crore. Of this, Rs 7,000 crore is owed by the defunct Kingfisher Airlines. Not surprisingly, this money is owed to public sector banks, and they have collectively been able to recover a mere Rs 6 crore. To add insult to injury, Mallya was hoping to whisk away a severance package of Rs 515 crore from Diageo, which has bought over the group’s flagship company UB Spirits. But this is just one fish in a barrelful of rotten fishes.  In fact the total Non Performing Assets of PSU banks have risen five-fold in four years, from Rs 71,000 crore in 2011 to 3.6 lakh crore in 2015.68 And this is after periodical ‘cleaning up’ of financial statements of banks – between 2013-2015, twenty-nine public sector banks wrote off as much as Rs 1.14 lakh crore of bad debts.69 The perilous exposure of public sector banks indicates the complete unaccountability of the State to the public. As Mallya has rightly pointed out, even the State Bank of India was also culpable, as the bank knew of his company’s financial position and still lent to it.

Other major policies which would further disenfranchise the poor and are being pushed by the present regime include:

Dilution of Labour Laws

In October 2014, the Prime Minister unveiled a programme titled‘Shrameva Jayate’, to support his ‘Make in India Campaign’. As part of this programme, the Ministry of Labour and Employment has developed a unified web portal 'Shram Suvidha', which offers a single online common return facility for firms under 8 of the 10 Central Labour Laws/rules.70 It also does away with the system of labour inspection; instead the employers are required to submit a self-certification of compliance online!

The Labour Ministry proposes to ‘simplify and rationalise’ labour laws by doing away with 44 existing central labour laws and instead implement 4 codes of labour.71 Experts claim that safeguards of workers’ rights, already very poor, are going to be eroded further by this restructuring.72

The new regulations would render superfluous the role of the existing enforcement authorities such as the Employees’ Provident Fund Organisation (EPFO), the Employees’ State Insurance Corporation (ESIC), the Labour Welfare Department and even the Chief Labour Commissioner. Further, the Small Factories (Regulation of Employment and Conditions of Services), exempting units employing up to forty workers from at least fourteen basic laws, including the Factories Act, the Industrial Disputes Act, the ESI Act and the Maternity Benefits Act, was also slated to be put before the Cabinet for vetting.73 In fact the Ministry of Labour and Employment had announced that it wants to table and get passed nine bills in the  winter session of Parliament last year.74 But amid opposition by all trade unions the Government has shelved its ‘ambitious’ labour reform bill for the time being.75 Instead, it has taken the route of getting BJP-led state governments to carry out changes at the state level.

Land Acquisition Ordinance 2015
Seven decades after independence and as a result of several movements, agitations, resistance and sacrifices by the poor of this country, the UPA government was forced to replace the colonial-era Land Acquisition Act of 1894. The new Act, named  Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, was framed after consulting various quarters over seven years and two Parliamentary Committees. Even this Act had its serious lacunae from the point of view of peasant and environmentalist organisations. But even before the Act was implemented by either the State or the Union government, representatives of the NDA government ‘convinced’ the President to sign on an Ordinance76 to amend the LARR Act.77

With a stroke of pen, rather than a parliamentary process, the present Government has compromised the safeguard provided for millions of affected people. Briefly the ordinance:

* Exempts special categories of projects from social impact assessment and obtaining consent from affected families.

* Dilutes the requirement of utilization of land within five years of acquisition, else to be returned to the owner.78

* Distinction between fertile/unfertile and irrigated/non-irrigated land has been done away with for acquisitions which would have serious impact on agricultural labourers and share croppers.79

In August 2015 the ordinance was allowed to lapse by the government due to continued opposition by various constituencies and political parties. It was also viewed as a tactical retreat in face of Bihar elections.80 And yet the Government seems to be committed to implementing the provisions of the LARR Ordinance 2015 in a piecemeal fashion – state by state. In fact it seems to have already been revived by the government of Gujarat by passing the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Gujarat Amendment) Bill, 2016 in its state assembly. According to activists on the ground the tenor of the Gujarat Bill is almost identical to the LARR ordinance, 2015.81

Dilution of Forest Rights Act

Predictably, the government has also brought key changes diminishing the applicability of Forest Rights Act (FRA) for seeking statutory forest clearance for projects. The Environment Ministry has exempted plantations, notified as forests after December 1930,82 and not having tribal population as per 2001 and 2011 census, from the requirement of obtaining environmental clearance. It would mean that the FRA provisions would not apply to a large chunk of forest areas such as the one which the Odisha government has acquired for India’s biggest foreign direct investment project — the Posco Steel Plant in Jagatsinghpur, despite sustained resistance from locals.83 The Government has carried out numerous other dilutions of environmental and forest laws in this period.84

As is evident from the data above, the ‘economically’ poor in our country not only have to deal with abject poverty and undignified existence; they are also completely disenfranchised in the present dispensation. Their lack of political voice in the formal system denies them any possibility of meaningful alleviation of their situation. In fact, the system is geared to further accentuate the inequality. The almost unbridled power of the rich makes their sense of entitlement ‘inhuman’, reflected most aptly by the twitter reaction to Salman Khan’s conviction for killing one person in a hit and-run case:

Kutta rd pe soyega kutte ki maut marega, roads garib ke baap ki nahi hai I ws homles an year nvr slept on rd @BeingSalmanKhan @sonakshisinha85

— abhijeet (@abhijeetsinger) May 6, 2015

Having no avenues in the formal system has pushed many of the most vulnerable to forces outside the system. Probably, not surprisingly, the years of the most spectacular growth in the Indian economy coincides almost entirely with ever louder and ever more militant dissenting voices from all over the country, the most significant being those of the Maoists in Central India.

In a meeting of Chief Ministers in 2010, the then prime minister, Manmohan Singh, reasserted that “Naxalism remains the biggest internal security challenge facing our country” and that “it is imperative to control Left-wing extremism for the country’s growth"86 This, of course, was an assurance to big business, whose sentiments maybe summed up by the following quote from Anil Agarwal, the executive Chairman of Vedanta Resources, a global diversified metals and mining company headquartered in London:

If Left-wing extremism continues to flourish in parts which have natural resources of minerals, the climate for investment would certainly be affected.87

And the Home Minister of the time, P Chidambaram, assured that: “The government was confident that the problem of Left-wing extremism would be overcome in the next three years.88

What is uncanny is that in spite of a change of government, there has been no change in policy. Apparently, the present Union Home Minister Rajnath Singh has also claimed that he can finish the Maoists in “three years” by flooding Chhattisgarh with troops.89 And history continues to repeat itself – just ahead of the Prime Minister’s visit to Chhattisgarh in May 2015, to sign two significant MoUs worth Rs 25,000 crore, there were reports of re-launching of the notorious State sponsored militia, the Salwa Judum.90,91 On 9 May 2015, business papers assured us that “in a big push for infrastructure development in Chhattisgarh, MoUs worth Rs 24,000 crore were signed at Dantewada in the presence of Prime Minister Narendra Modi."92

Governments may come and go but the actual show definitely must go on. And the ‘poor’seem to have no say in it – they only foot the bill. And should they defy the rulers, there is always the iron fist – the military apparatus of the State, to clobber them to submission.


For over two decades now, the Government, the policymakers and the media, in tandem have been raving about ‘Roaring India’,93‘Shining India’,94‘Growth Miracle of India’.95 India is apparently poised to leap into a Superpower status.96

And yet, all these accounts have to grudgingly admit that in spite of the stupendous economic growth for over a quarter of a century now, majority of the Indians are miserably poor. In fact, the country seems to have been bifurcated into two different and mutually exclusive nations – one of the super rich comparable to the global elite and the other comparable to the poorest regions of the world.

One third of the world’s 1.2 billion poorest people live in India, according to the latest Millennium Development Goals report by the UN.97

The rulers have been trying to do away with this embarrassment by redefining the ‘poor’. But such exercises do not do away with the reality of abysmal conditions of existence for the majority of people. In this article, we have tried to argue that the persistence of poverty and extreme inequality are merely the symptom of a deeper malaise afflicting Indian society. The poor are poor and continue to be so because they have no political voice in the present system. Therefore, trying to implement targeted poverty alleviation measures is akin to attempting to cure chicken pox by addressing every individual blister. This effort, even if it were pursued honestly, would be doomed to fail. In fact, the whole exercise of defining poverty and identifying the poor to avoid ‘leakages’ obfuscates the real issue. As long as the structural political disparity exists (the disease) in Indian society, which disparity in turn is based on control of the means of production, poverty (the symptom) will also exist. Therefore, till that power equation changes the poor of the world will remain ‘without breakfast’ and all other rights essential for a dignified existence, as this young child ‘learned’ what they did not teach him at school.

When I was young, I went to school,
and I learned what is mine, and what is yours.
And when all had been learned,
it seemed to me that it was not all.
And I had no breakfast to eat,
and others, they had:
And thus in the end I learned all, indeed
about the nature of the class enemy.
And I learned, why and for what reason
there is a rift across the world.
And it remains between us, since the rain
falls downwards

And history has taught us that the ruling classes have never willingly shared political power with the masses.


A response

The following came in response to Manali Chakrabarti’s piece, which initially appeared in the RUPE blog,, in May 2016.

I was very happy to read the piece ‘Why the Poor Do Not Count’ for its coherent presentation of data.
And yet, like some others, it has not made clear that the mechanism in favour of the rich through
1. revenue foregone
2. natural resource(land) transfer
3. inability to generate employment/jobless growth are themselves the outcome of this growth process.

It breeds more inequality and perverts both the GDP growth in terms of composition of output as well as the democratic process. More importantly, our so-called growth and our increasingly expensive popular representation act for democracy feed these mechanisms mentioned above in a two-way
4. Inflow of foreign capital is a fourth mechanism, linked to black money abroad.

Best wishes,
Amit Bhaduri




1. (back)

2. (back)

3. (back)

4. (back)

5. (back)

6. Though the Tendulkar Report does not make any reference to it, the FAO standard has been cited by several experts criticising the report. (back)

7. (back)

8. (back)

9. (back)

10. Heller J, Catch-22, p. 136-137 (back)

11. Ibid. (back)

12. This is a typical case and corroborated by several other workers whom we checked with. (back)

13. accessed on 4.05.2015 (back)

14. OECD report on India, quoted from accessed on 4/05/2015 (back)

15. accessed on 4/05/2015 (back)

16. The HDR defines HDI as a summary measure for assessing long-term progress in three basic dimensions of human development: a long and healthy life, access to knowledge and a decent standard of living. (back)

17. Definition of IHDI in HDR 2014: The HDI is an average measure of basic human development achievements in a country. Like all averages, the HDI masks inequality in the distribution of human development across the population at the country level. The 2010 HDR introduced the Inequality-Adjusted HDI (IHDI), which takes into account inequality in all three dimensions of the HDI by ‘discounting’ each dimension’s average value according to its level of inequality. The IHDI is basically the HDI discounted for inequalities. The ‘loss’ in human development due to inequality is given by the difference between the HDI and the IHDI, and can be expressed as a percentage. As the inequality in a country increases, the loss in human development also increases. (back)

18. Multidimensional Poverty Index (MPI), has been developed by the Oxford Poverty and Human Development Initiative. It measures deprivation on six indicators in the same households in education, health and living standards among others. (back)

19. HDR 2015 (back)

20. (back)

21. 2009/oct/ 04/india- slums-children- death-rate  (back)

22. Infant mortality ratio (IMR) is the number of deaths of children less than one year of age per 1000 live births. The ratio for a given region is the number of children dying under one year of age, divided by the number of live births during the year, multiplied by 1,000. (back)

23. Children in India 2012- Ministry of Statistics and Programme Implementation, GOI (back)

24.  (back)

25.  (back)

26. (back)

27. Annual Survey of Industries quoted from (back)

28. India Labour & Employment Report, 2014 quoted from (back)

29. (back)

30. (back)

31. (back)

32. (back)

33. (back)

34. (back)

35. Working Group on Human Rights in India and the UN (WGHR) quoted from (back)

36. Ibid (back)

37. (back)

38. (back)

39. Ibid. (back)

40. (back)

41. (back)

42. (back)

43. (back)

44. (back)

45. Economic Survey 2013 quoted from (back)

46. (back)

47. (back)

48. (back)

49. (back)

50. (back)

51. (back)

52. (back)

53. (back)

54. (back)

55. The entire box is from the article in Tehelka (back)

56. Obviously a leakage also implies that the benefit of the subsidy is cornered by the ‘non poor.’ (back)

57. (back)

58. (back)

59. (back)

60. (back)

61. (back)

62. (back)

63. (back)

64. Ibid. (back)

65. (back)

66. (back)

67. (back)

68. (back)

69. Ibid. (back)

70. (back)

71. (back)

72. (back)

73. (back)

74. (back)

75. (back)

76. Actually on 31st December, 2014 so that it got enforced before the dawn of the new year! (back)

77. Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement, 2013 (back)

78. A CAG report on SEZ tabled in November 2014 found that of the 45,635 hectares of notified land 38 per cent remain unutilized. (back)

79. Data quoted from (back)

80. (back)

81. (back)

82. That is areas not recorded by the British as a Forest. (back)

83. (back)

84. See Nitin Sethi, “PMO ordered 60 changesto green clearances, environment ministry delivered on most”, Business Standard, 20/1/2015. (back)

85. (back)

86. (back)

87. For a detailed treatment of big business assessment of Maoism, please refer to Varman & Chakrabarti,‘Big Business and Indian Maoists’ Alternate Economic Survey, 2011, pp 127-144 (back)

88. (back)

89. (back)

90. Salwa Judum in Chhattisgarh, which claimed to be a ‘peace’ movement, between 2005 and 2009 forcibly, evicted 3.5 lakh Adivasis from 640 village. Many Adivasis were incarcerated in ‘camps’ run by Judum members and State forces and subjected to brutal forms of torture and sexual violence. Further, when it was succeeded by the State-led Operation Green Hunt from September 2009 onward, the Judum members found new identities as SPOs (Special Police Officers) who accompanied the security forces in ‘area domination exercises’, a euphemism for State terror. The Supreme Court in 2011 held that SPOs were unconstitutional and demanded their immediate disbanding but a significant section had already morphed itself into Koya Commandos  and the rest were regularised as police personnel by the state government. (back)

91. Chhavinder Karma, son of the slain Mahendra Karma, made this announcement on 5 h May 2015 (back)

92. (back)

93. (back)

94. (back)

95. (back)

96. (back)

97. (back)

98. Bertolt Brecht: The Song of the Class Enemy (back)


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