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The grime beneath the glitter

By C P Chandrasekhar

The official figure for income poverty in urban India is 21%. Multidimensional urban poverty would be more than double that, and the absolute number of urban poor continues to be over 76 million. Why are the numbers so high? Is it because the wealthy enclaves of urban India are being built on the surpluses extracted from this urban labour force, underpaid and housed in extreme deprivation?

Among the many features attributed to modern development, which includes the diversification of production and employment away from agriculture to manufacturing and then to services, is the creation of urban spaces and a rise in the share in total of urban population, employment and income. The premise often is that since manufacturing based on the factory system involves the centralised and concentrated production of goods for dispersed markets, agglomeration in urban centres is inevitable. By definition too, the urban is identified not just by population concentration in agglomerations that are towns and cities, but by a high share of manufacturing activity in production and employment.

There are, however, three problems with this perspective. The first is it presumes that the Kuznets-type trajectory of diversification of economic activity of the kind mentioned above is inevitable. India, with its stunted industrialisation and excessive growth of services, both urban and rural, shows that it is not. The second is that it assumes that industrialisation inevitably furthers urbanisation. A comparison of West Bengal, which was among the early industrialising regions under colonial rule, with Maharashtra and Tamil Nadu today shows how the trajectory of urbanisation (in terms of the number, size and dispersion of cities and towns in the area constituting the state) can vary substantially depending on the trajectory of industrialisation. Urbanisation is limited in terms of the number and dispersion of urban centres in Bengal, whereas it is much more spacially widespread and includes more centres of varying sizes in the other two states. Third, as Amitabh Kundu (Economic and Political Weekly, May 14, 2011) has argued, demographic growth in the principal urban centres is slowing down, with conditions in urban centres discouraging migration and making the urbanisation process exclusionary.

The last of these is surprising given the fact that rural India is burdened with un- and underemployed labour, with little to garner from land and willing, we presume, to move to improve their livelihood. If they do not, it must be because the promise of a livelihood is not realised for so many that the probability of finding a livelihood is perceived to be declining. To this must be added that even for those who find a livelihood, earnings are such and access to basic facilities so limited, that they and those still dependent on them have to live in conditions that make the standard of living gap between rural and urban so narrow, non-existent or even adverse that it discourages in-migration or encourages out-migration.

This is surprising, since in the celebrated Lewisian idea of development the backward (rural) sector serves as a near-inexhaustible source of supply of labour for (urban) industry because of the higher wages and better conditions that the modern (urban) sector can offer. Clearly, the attraction of some urban areas is declining. But none can say that urban India is starved of workers because of the conditions there that discourage migration. Rather, a large urban reserve army seems constantly at hand even if it is paid a pittance and is housed in conditions and environments that reek of deprivation. In fact, even India's outsourcing success in IT and IT-enabled services and its services-led growth has been based on access to that reserve army. Firms being outsourced to from abroad can successfully compete because they are themselves outsourcing a range of services -- transportation, security and catering, for example -- to agencies tapping the cheap reserve army in the urban areas. But overall, urban aggregate and per capita income growth outstrip the rate of growth of urban employment.

The consequence is a high level of urban poverty. It is certainly true that the officially estimated urban poverty ratio (at 21% on average for all of India according to the Planning Commission's poverty estimates for 2009-10) is considerably lower than the rural ratio of 34%. It is also true that -- given the still low rate of urbanisation in India -- most of India's officially defined poor (nearly four-fifths) live in villages. However, there are grounds for recognising that the nature and extent of urban poverty is severe.

On the face of it, as Chart 1 suggests, urban poverty has been declining in terms of rates as well as (in the most recent estimates) in terms of absolute numbers. It should be noted that the official urban poverty estimates presented in Chart 1 reflect the numbers derived from the Tendulkar Committee recommendations, and therefore are not strictly comparable with the earlier figures. Even with comparable figures, however, the data suggest that the rate of urban poverty has been coming down (although certainly not as rapidly as could be hoped given the aggregate income increase in the country). However, the absolute numbers of urban poor remain extremely large, at more than 76 million.

Source: Planning Commission Press Note on Poverty Estimates 2009-10, March 2012

One important concern is that these urban poverty figures are quite misleading because they have such a minimalist notion of survival. What is called 'poverty' in India is really extreme destitution, such that a much larger proportion of the population would tend to be classified as poor according to most international standards, even in other developing countries at similar levels of per capita income.

The issue of the official poverty line has generated much debate in recent times, as it became evident to the wider public that both the methodology and the actual lines drawn for estimating the poor were deeply flawed. Until the official estimates for 2009-10, poverty numbers were generated by using the consumer price indices to update a poverty line determined by average monthly consumption expenditure of households whose members consumed (per capita) 2,400 kcal of food per day in rural India and 2,100 kcal per day in urban India in the 1970s. Thereafter, the Tendulkar Committee set up by the government provided another even more arbitrary determination of the poverty line, which did however generate somewhat larger numbers in terms of the incidence of poverty.

Even so, the income poverty lines that are now being officially used are still extremely low, for both urban and rural poverty. Table 1 provides some estimates of these lines across states for 2009-10, as well as the associated urban poverty ratios.

Table 1: Urban poverty lines and estimates by state, 2009-10
  Monthly per capita
spending (Rs)
Daily per capita
spending (Rs)
Poor as per cent
of urban population
Urbanisation
(per cent)
Andhra Pradesh 926.4 30.88 17.7 33.5
Arunachal Pradesh 925.2 30.84 24.9 22.7
Assam 871 29.03 26.1 14.1
Bihar 775.3 25.84 39.4 11.3
Chhattisgarh 806.7 26.89 23.8 23.2
Delhi 1040.3 34.68 14.4 97.5
Goa 1025.4 34.18 6.9 62.2
Gujarat 951.4 31.71 17.9 42.6
Haryana 975.4 32.51 23 34.8
Himachal Pradesh 888.3 29.61 12.6 10.0
Jammu and Kashmir 845.4 28.18 12.8 27.2
Jharkhand 831.2 27.71 31.1 24.1
Karnataka 908 30.27 19.6 38.6
Kerala 830.7 27.69 12.1 47.7
Madhya Pradesh 771.7 25.72 22.9 27.6
Maharashtra 961.1 32.04 18.3 45.2
Manipur 955 31.83 46.4 30.2
Meghalaya 989.3 32.98 24.1 20.1
Mizoram 939.3 31.31 11.5 51.5
Nagaland 1147.6 38.25 25 29.0
Odisha 736 24.53 25.9 16.7
Puducherry 777.7 25.92 1.6 68.3
Punjab 960.8 32.03 18.1 37.5
Rajasthan 846 28.20 19.9 24.9
Sikkim 1035.2 34.51 5 25.0
Tamil Nadu 800.8 26.69 12.8 48.4
Tripura 782.7 26.09 10 26.2
Uttar Pradesh 799.9 26.66 31.7 22.3
Uttarakhand 898.6 29.95 25.2 30.6
West Bengal 830.6 27.69 22 31.9
All India 859.6 28.65 20.9 31.2
Source: Planning Commission Press Note on Poverty Estimates 2009-10, March 2012 and Census of India 2011

It is evident from Table 1 that the lines for determining urban income poverty remain extraordinarily low, and would not be considered sufficient to describe a household as 'non-poor' in any meaningful sense. In Delhi, for example, the stated daily consumption spending per capita of less than Rs 35 would not have been enough, even in 2009-10, to enable a person to use the public transport system from one end of the city to the other, quite apart from all the necessary items of consumption.

Clearly, determination of the income poverty line leaves much to be desired not least because it ignores the actual elements and rising costs of the standard spending basket of poor households whose members are forced to seek wage employment for survival. Since there is no clearly specified norm for the determination of the line, apart from some 'guesstimates' by 'experts' of the likely necessary consumption of households, there are good reasons for finding this line not only arbitrary but also unrealistic and even unfair. It is quite likely that the lower incidence of urban poverty stems from this insensitivity to the actual requirements and material conditions of a majority of the urban population.

Of course, one basic problem with assessing the incidence of poverty, whether urban or rural, is the continued reliance on the crude single indicator of income. It is quite evident that poverty is multidimensional, encompassing a range of different although typically overlapping deprivations. It comes as no surprise that the UNDP's Multidimensional Poverty Index found the incidence of multidimensional poverty in India to be almost double that of the income poverty rate, and even slightly higher than that for urban India.

The central government has declared that it will use a multidimensional measure, based on data from the ongoing socio-economic census, to determine which households should be classified as poor. But there are still relevant concerns about whether this will actually capture the nature and extent of urban poverty in its various manifestations.

One frequently used indicator to gauge the extent of poverty is the size of the slum population. But it is clearly the case (and also increasingly recognised) that not all the slum-dwelling population is poor; nor do all the poor live in slums. The 2011 census found that around 12% of the urban population in Class I cities lived in slums, with higher rates in the larger cities.

The amenities available to the urban population may provide some further indications of their material status. For example, according to the 2011 census, nearly one-fifth (17%) of the urban population do not live in pucca houses. Nearly one-third (32%) of urban households -- accounting for around 120 million people -- live in a single room, while more than 3% of households have no exclusive room to themselves at all. Around 19% of urban households have no latrine facilities within their premises, while another 10% do not have modern water closets or improved sanitation. Around a quarter of families do not have bathing areas within their homes.

Since these can be interpreted as characteristics of extreme destitution and absolute privation rather than simple poverty, it is noteworthy that the numbers involved here are slightly more than those described by our official system as urban poor in income terms. Once again, this points to the likelihood that the available income poverty indicators are significantly wanting in their ability to capture the true extent of poverty even in urban India.

Thus, even without any version of a hukou-type household registration system, which in China deprives rural migrants to urban areas access to most services that urban 'citizens' are entitled to, India has managed to provide for itself a cheap and underprovided labour force, while putting some restraint on the pace of rural-urban migration. One reason for this is that while a crisis-ridden and increasingly unviable agriculture is in a position to release labour on demand, the rate of expansion of opportunities for employment in urban India as a whole is limited. And to the extent that urban employment is growing it is quite concentrated, since the boom experienced under the post-1991 regime in India has delivered its benefits to a few regions, at a few centres and to a relatively small proportion of the population. One result of this is the Kundu exclusion effect in the form of a relatively slower pace of urbanisation. A related result is evidence of a concentration of urban poverty in India, which is somewhat different from the concentration of rural poverty. Chart 2 shows how just 10 states account for nearly four-fifths of the number of officially defined urban poor in India.

Source: Planning Commission Press Note on Poverty Estimates 2009-10, March 2012

This is not only reflective of larger absolute populations or greater degrees of urbanisation. In fact, in some states urban poverty ratios are as high or even higher than rural poverty ratios, such as in Kerala, Manipur, Punjab and Uttarakhand. In other states like Uttar Pradesh and West Bengal, the gap between urban and rural poverty ratios is quite small. Some states like Bihar and Manipur have very high urban poverty rates of 40% or more, even according to this very stringent measure that actually captures extreme destitution.

Thus urban poverty and extreme deprivation, of an extent far greater than captured by income poverty estimates, is the result of the pattern of growth under the neo-liberal regime, wherein a few sectors not only experience high growth but use parasitic dependence on an underpaid labour force to extract the surpluses that finance the glitter and the glamour of the wealthy enclaves of urban India.

(C P Chandrasekhar is Professor at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. He is also a regular columnist for Frontline (titled Economic Perspectives), Business Line (titled Macroscan) and the web edition of The Hindu (titled Economy Watch))

Infochange News & Features, August 2013