Politicizing Poverty in India

This is dedicated to all of you who thought I would never figure out how to post something on this blog :
In line with the theme of Ben’s column regarding how to ‘measure’ a middle class, I wanted to extend our thoughts towards the issues involved with how we might conceptualize and measure the poor, specifically those living in poverty. The widespread perception of both China and India’s recent economic experiences under market reforms have been of burgeoning middle classes and shrinking populations under the poverty line. Ben’s piece problematizes easy generalization of the growth of the middle classes, and the tribulations involved with specifying such a class. As with the Chinese case, estimates of the Indian middle classes also range widely, with most common estimates put the number at a very bullish 200-250 million (http://www.time.com/time/asia/covers/501041206/two_indias_vpt_das.html)

However, many Indian analysts are quick to point out however, that estimating the middle class in India is exceedingly difficult, especially since only about 10-15% of the country actually pay income tax, making earnings hard to measure. Moreover, what is understood as ‘middle class’ by Western companies seeking investment opportunities and market share, assumes a purchasing power for commodities and services that the bulk of what Indian national estimates of a ‘middle class’ according to rankings of income would consider elite(http://www.iht.com/articles/1996/07/30/india.t_1.php). Considerations of such purchasing power would revise estimates of the middle class substantially downwards to under 100 million.

A concomitant issue stemming from the measurement of the middle class, is an understanding of how to measure poverty. Much of the debate on economic ‘globalization’, and the public perception of liberal market policies is based on the idea that such policies are necessary for India has often been held up as a model (along with China) for how market reforms might reduce poverty. Yet the debate within India has been extremely heated, and unsurprisingly, highly politically charged. Poverty in India is measured a number of different ways, but primarily rely on consumer expenditure to measure whether a baseline of caloric needs are being met. The two principal mechanisms are through national accounts which try to measure expenditure, and surveys, which rely on households to report their consumption in order to measure their status.This latter technique is cited more often, since consumption expenditure data is highly unreliable, especially given the non-monetized nature of the Indian rural economy, which most of the country’s poor are part of. According to the survey figures, poverty in India has been thought to drop from over 35% to around 25% during the 1990s.

However, there are several issues with drawing conclusions from these survey techniques. Firstly, household surveys relating to consumption typically interview the head of a household (usually a male) even though women are more likely to have information on household consumption patterns. Secondly aggregating consumption for a household does not allow us to measure intra-household distributional inequalities, which might be quite extreme in households with both male and female children. Lastly, the methodology used in the surveys can change and themselves falsely contribute to a sense of poverty reduction. For example, during the 1990s, India moved from using a one-month recall of consumption to a one-week recall (i.e. a household was asked how much it consumed in the past week, rather than the past month). Since people’s memories are sharper over a week’s duration than a month, these estimates tended to include proportionately more than the 30-day recall did, leading to a false impression of greater consumption than in previous survey rounds. The political interests behind neoliberal reforms wanted to compare across these methodologies in order to create the perception of massive poverty reduction, but this is simply not good social science-- or indeed the grounds for good public policy, and an awareness of these measurement issues is essential for any reasoned debate of the impact of current pattersn of development, even in cases like India and China that are regarded by many policymakers as clear ‘successes’. (For a good overview of such issues, see Deaton and Kozel’s work on Indian poverty: http://wbro.oxfordjournals.org/cgi/reprint/20/2/177.pdf )