Rangarajan’s new poverty definitions show 1 in 3 Indians poor!

c-rangarajan

Former Prime Minister’s Economic Adviser, Ex RBI Governor C Rangarajan has submitted new estimates of poverty in the country to the planning minister Rao Inderjit late last week. The estimates, if approved by the government, will play crucial role in determining planning and estimates of various public welfare schemes in the budget to be submitted on the 9th.

Rangarajan panel too has taken up the consumption expenditure as the basis for poverty estimates. All figures apply to year 2011-12, and are based on the National Sample Survey Office (NSSO) report on the consumption expenditure for 2009-10 and 2011-12. As per the new report, spending of anything equal to or less than Rs.32 and Rs.47 in rural and urban areas respectively, will put the person under the below poverty line. 29.6% or 363 million (36.3 crores) is the population of the country that is below the poverty line, says Rangarajan panel. That makes any person spending below Rs. 972 in rural India and Rs 1407 in urban India per month can be placed below the poverty line. A family of five will need Rs 4760 or Rs 7035 in rural and urban areas respectively to beat the poverty line.

The previous Suresh Tendulkar committee recommendations, which were criticized by economists all over the country for being too aggressive, declared that Rs 27 and Rs 33 expenditure per day in rural and urban areas are the dividing line between the poor and other classes of the society. Calculated for a month, the numbers would be Rs 816 and Rs 1000 for rural and urban areas, as per Tendulkar Committee.

The percentage of poor in the country is revised from the 21.9% or 269.8 million to 29.6% or 363 million by the new panel. According to Rangarajan, the number of poor declined from 454.6 million in 2009-10 to 363 million in 2011-12 and the poverty ratio from 38.2% to 29.5%. Both Tendulkar committee and Rangarajan committee show that the poverty has reduced quite significantly between 2009-10 and 2011-12.

The Rangarajan committee has also recommended that these poverty estimates be delinked from recommendations for entitlement to public welfare schemes, social security schemes like food security. The panel is recommending that social and caste based census should be the criteria for all governmental welfare schemes.

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