'Only 45 per cent of the population earns less than Rs 20 a day' Read more: 'Only 45

[Yusuf]

Information on income and expenditure of India's 200 million households has always been mired in controversy. A new dimension has been added by Rajesh Shukla , director of the Centre for Macro-Consumer Research under the aegis of the National Council for Applied Economic Research (NCAER). His recent book, How India Earns, Spends and Saves, reveals new data at variance with conventional thinking. Subodh Varma discussed some of the aspects with him:

Why does your recent book on earning and spending patterns carry the subtitle 'Unmasking the Real Indian'?

The National Sample Survey (NSS) collects data on spending by households. Our survey, carried out in 2004-05, collected data on how households earn, spend and save. Income data reveals several as yet hidden dimensions like how families affect savings, why some people earn more than others and geographical distribution of various strata. It sheds light on the role of factors like education, occupation and place of residence in determining income levels. Besides income, our data also reveals saving patterns.

Is this data reliable?

Our data is comparable to NSS and Census data. The NCAER has been carrying out such surveys for the past several decades. Top experts and institutions supervised this survey. It used an internationally accepted methodology. From an initial listing of over 4.5 lakh households, some 63,000 households were selected and samples from various strata based on, say, land ownership or educational level, were drawn. So, the data is reliable.

Does your data also show that 80 per cent of the population lives below Rs 20 per day?

No, our survey showed that about 45 per cent of the population is below that benchmark. That's a significant difference from the NSSO-based 80 per cent figure that was popularised by the Arjun Sengupta commission. Actually, there is a lot of confusion. This is mainly because of divergent definitions being used by different agencies. The reason why our data differs from NSSO data is because they are measuring expenditure and then using it as a proxy for income. This doesn't work. As our data shows, people are earning much more than revealed just by expenditure patterns. Moreover, on many counts their expenditure data also is unclear. Due to all these reasons, i suggest that there is a strong case for revisiting the data generated by other agencies.

How can your data be used?

Our survey can provide complete demographic profiles of any segment of the population. This can have multiple uses. The regional poverty data can be used to target the MGREGA (Mahatma Gandhi Rural Employment Guarantee Act) or PDS better, rather than going by the flawed measures of poverty. Affirmative action in favour of the poor can thus be better delivered. Similarly, you have an integrated profile of say the top 20 per cent income earners across the country. This includes their spending patterns, saving patterns and measures of disposable income in their hands. This can be of great use for those addressing this segment as a market. Our analysis also shows neglected dimensions like the bottom 60 per cent of the income pyramid account for 40 per cent of total private expenditure. That's a colossal amount in absolute numbers.

Read more: 'Only 45 per cent of the population earns less than Rs 20 a day' - Edit Page - Opinion - Home - The Times of India http://timesofindia.indiatimes.com/...0-a-day/articleshow/6288970.cms#ixzz0wGmLzxqg

 

[Armand2REP]

How can so many people earn less than 32 cents? If that is the case the poverty of India would be 80%. The international poverty level is around 1€ a day. How many Indians make that?

 

[Rage]

The data is pretty much a load of bullshit. It's an improvement on the Sengupta Comission- which measured expenditure for poor people- for which they extrapolated data, 'cause they couldn't get enough- as a proxy for income. But the econometric method is still not fine- it measures "monthly per capita consumer expense (MPCE)" for every five years. It also is obsolete- the survey was conducted in 2004-05 and does not factor in the best years of economic growth. The coverage of the NSSO also varies with various rounds- this round, the 60th, focused on morbidity, health care and elderly conditions. But, the biggest problem, by far, is that there are no fixed rotation preiods for the special-interest modules attached to the core consumption-employment modules of the NSS- which means notionally representative data such as income distribution patterns and consumption streams are difficult to ascertain, especially when compared.

I'd go with what is to me a more accurate figure- 41% of the population earning less than $1.25 a day as of 2008. Btw, $1.25 a day in India is quite a bit. Enough to earn you two full square meals and leave something left over.

 

[Yusuf]

Armand, i can tell you that a daily wage laborer in my city bangalore makes more than 500 rupees a day, and there are also hawkers who make that much and more. 500 a day is about $11 a day. It would qualify them as middle class in India. But they chose to live as below poverty line people. They wear torn clothes and walk without shoes/slippers etc.

India is very complex.

 

[nitesh]

I remember when Below Poverty Line ration cards were starting and Bangalore was also included the total number of cards issued were found out to be more then population of Bangalore. So all the cards were scrapped. This should give one hint about poverty

 

[nitesh]

These schemes for giving cheap food is not good, actually these are bringing more harm then good. The labor class is not willing to work more because they get 35 kg of ration @ 70-105 Rs, that's almost 2 USD. And this ration is sufficient for 1 month for a normal family. No why should they work more?

 

[nrj]

Labor reforms coming big way in India in coming few years...

 

[Phenom]

^^ I really really hope your wish comes true

Employment generation would get a huge boost with labour reform

 

[amoy]

I really don't think how many $$ one earns is the priority. A sound social security net is more important.

A laborer probably can make $20 a day but what about those days off, or being at his old age, or medicare?

If out of job one may apply for unemployment benefit @ roughly RMB 500 per month for 24 months (not sure), but something from hand to mouth only. That's why Chinese tend to save and save leaving 'domestic demand' unpulled.

In an 'ideal' society all these shall be well taken care of in addition to $$.

 

[nrj]

^^ I really really hope your wish comes true

Employment generation would get a huge boost with labour reform

Labor Reforms are Cong's next big card IMO. It'll help the situation to a very large extent....

 

[SATISH]

http://planningcommission.nic.in/reports/sereport/ser/std_pdstn.pdf

one needs to see how effective the PDS system can work when it comes to rural places. I always say that the state government must make full use of the funds to make sure the living of the people is not affected. In TN both the parties are good at management of PDS.

http://www.tncsc.tn.gov.in/html/pds.htm