Bibek Debroy. File
| Photo Credit: PTI
Making a pitch to revisit the country’s poverty line, Prime Minister’s Economic Advisory Council (PMEAC) chairman Bibek Debroy on Wednesday questioned whether a decline in inequality as suggested by the latest household consumption expenditure survey was a “good thing”, and termed the debate over the gap between the survey’s findings and spends measured in the national income accounts as “sterile”.
“We still do not have an official poverty line that goes beyond Tendulkar,” Mr. Debroy said at a data user conference on the Household Consumption Expenditure Survey (HCES) 2022-23 hosted by the Statistics and Programme Implementation Ministry (MoSPI). He was referring to the recommendations of a panel led by the late statistician Suresh Tendulkar, in 2009, that had pegged India’s poverty line at an expenditure level of ₹33 a day in urban areas and ₹27 a day in rural areas.
“There was a Rangarajan [Committee that revisited the poverty threshold in 2014] but it was never officially accepted… and the MDPI is not quite a poverty line,” Mr. Debroy asserted. The MDPI is the Multidimensional Poverty Index calculated by the Niti Aayog using results of the National Family Health Survey.
“So the question to ask is… should we now have a new poverty line to which these [Consumption Expenditure Survey] data can be applied? And by the way, these data are not only about inequality and poverty, but they also function as inputs in various other cases,” the PMEAC chief said.
Noting that there were some “standard perennial issues” with household expenditure surveys, Mr. Debroy said a few of those were “red herrings”, with the debate over them ‘sterile’.
“One of those is the aggregate of consumption expenditure and the gap between that and the consumption expenditure as defined by national income accounts. That’s an issue that plagues every country in the world,” he underlined.
Another debate pertained to inequality as defined by the distribution of personal incomes, although India did not officially collect such data. “It is, of course, a fact that inequality as measured by the distribution of incomes will be a little bit higher than inequality as measured by the distribution of consumption expenditure,” he said.
Mr. Debroy also “deliberately” posed two questions on the inequality debate. “On the face of it is, is it a good thing that the Gini coefficient [a measure of economic inequality] has declined? We seem to take it for granted that this is necessarily a good thing… it depends, of course, on the level of the Gini coefficient. But we all know that as economies grow and prosper, inequality tends to widen a little bit.”
“The second question is — Given the kind of churn that is happening in India, does the aggregate Gini coefficient tell us anything at all, or should we begin to look at Gini coefficients separately for different States, which of course the Consumption Expenditure Survey enables us to do?” the PMEAC chief noted.
Stating that India’s statistical system, which was applauded globally in the early 1950s, had been criticised by people outside as well as inside the government system in recent times, Mr. Debroy said some of the criticism pertained to quality and time lags while some of it was because users did not understand what the Statistics Ministry was up to. “Historically, MoSPI has not been very good in communicating to the rest of the world, what it has done and why it has done it… For a very long time, it was described as the Ministry of status quo and perpetual impediments,” he quipped, before adding that user conferences marked a departure, and were important to help dispel “misinformed” criticism.
