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Counting the urban poor

By R B Bhagat

In all the noise over whether the urban poor can survive on a daily per capita expenditure of Rs 33 rupees or Rs 47, we miss the point that we need to move away altogether from the income/consumption approach to measuring poverty to measurement on the basis of urban habitat -- including access to safe water, sanitation and a clean household environment -- and livelihood/disaster vulnerabilities

Consumption/Income poverty

Poverty may be defined as deprivation of a minimum standard of living as per societal norms. Looked at this way, the notion of poverty differs from society to society. It is essentially a multidimensional concept -- an outcome not only of deprivation of income, but also of education, housing, safe water, sanitation, and access to healthcare, etc. On the other hand, poverty is generally measured either on the basis of income or consumption levels of households. A poverty line is determined on the basis of household-level income or the least consumption expenditure required for an individual to avoid unacceptable living conditions.

In the first estimation of poverty levels in India by V M Dandekar and Nilakantha Rath, in the early-1970s, poverty was defined as the inability of a person to get two square meals a day. Two square meals were pegged at 2,250 calories per capita per day. According to them, the poverty line was the total income, rather total expenditure, of a person that did not in fact permit the provision of food containing 2,250 calories per day in urban and rural India (Rath 2011). Due to lack of data on income, information on total expenditure available from the National Sample Survey Organisation (NSSO) is mainly used. Along with consumer expenditure, NSSO also provided quantities of both food and non-food items consumed. It may be noted that total expenditure is not just expenditure on food but includes expenditure on non-food items. No norm, however, was fixed for non-food items; it was assumed to be appropriate at the respective level of total expenditure (Rath 2011).

Originally, the poverty lines for rural and urban areas were fixed for the year 1973-74 at Rs 49 and Rs 56 monthly per capita, respectively. In subsequent years, this was updated using an appropriate price index, namely Consumer Price Index for Agricultural Labour for rural areas and Consumer Price Index for Industrial Workers for urban areas. One of the strong assumptions in this estimation was that the basket of food items remained the same over the years.

The Planning Commission has appointed several committees in the past. A committee under the chairmanship of D T Lakdawala was appointed in 1991 to re-examine issues related to the poverty line that were submitted in 1993. This committee changed the calorie norms, recommending 2,400 calories per head per day for rural areas and 2,100 calories per head per day for urban areas. It also suggested a spatial price index for different states, as prices of various food and non-food items vary across the states of India making it necessary to adjust the all-India poverty line to state-level prices. A monthly per capita consumption expenditure of Rs 356 and Rs 539 for rural and urban areas respectively was adopted for the year 2004-05.

Not satisfied with poverty estimations and aiming to counter some of the strong criticism surrounding poverty estimates, the Planning Commission appointed another committee under the chairmanship of Suresh Tendulkar, in 2009. The Tendulkar Committee addressed three main issues in the earlier estimation of poverty:

  • The rural and urban consumption basket of food and non-food items had remained tied down to parameters over three decades old (1973-74) and were therefore outdated.
  • Crude price adjustment using consumer price indices of agricultural labour for rural and industrial workers in urban areas was inappropriate.
  • In the earlier poverty lines, private expenditure on education and health was covered in the base year 1973-74, but no account was taken of either an increase in their proportion in total expenditure over time or their proper representation in the available price indices (Planning Commission 2009).

In order to counter the above criticisms, the Tendulkar Committee tried to move away from the calorie norm, but fixed the urban head count ratio provided by the Lakdawala Committee (25.7%) for the year 2004-05 as the new poverty line in order to maintain continuity of estimates. The committee also used implicit prices derived from quantity and value data collected in household consumer expenditure surveys to compute and update the poverty lines, and took into consideration the rising cost of education and healthcare expenditure. It is important to note that the Tendulkar Committee did not separate the urban and rural consumption basket of goods and services in estimating the new poverty lines (Planning Commission 2009).

Figure 1: Number of poor in rural and urban areas, India, 1993 to 2012 (in million)

Source: Planning Commission 2013

Figure 2: Poverty ratio in rural and urban areas, India, 1993-2012 (in %)

Source: Planning Commission 2013

Seen through Figures 1 and 2, it may be noted that the urban poverty ratio declined from 31.8% in 1993-94 to 13.7% in 2011-12, according to the Tendulkar Committee methodology, but the urban poor still exist in huge numbers, at 52.8 million. Although India has a low level of official urbanisation (31%), it harbours one of the world’s largest numbers of urban poor. The largest concentration of urban poor was in Uttar Pradesh (11.8 million), followed by West Bengal (4.8 million) Maharashtra (4.7 million), and Madhya Pradesh (4.3 million) (Planning Commission 2013).

Since several representations were made suggesting that the Tendulkar poverty line was too low, the Planning Commission, in June 2012, constituted another expert group under the chairmanship of C Rangarajan to review the methodology of poverty measurement. The Rangarajan Committee is deliberating the issue and is expected to submit its report by the middle of 2014 (Planning Commission 2013) (see box alongside -- Ed).

According to the Tendulkar Committee methodology, the urban poverty line was fixed at Rs 1,000 and Rs 816 per month per capita for urban and rural areas respectively. On a daily basis, this would be Rs 33 and Rs 27 per capita for urban and rural areas respectively, for the year 2011-12. The figures caused an uproar in the media and political circles recently, with questions to the Planning Commission as to whether it was possible for anyone to survive on this paltry amount. According to Utsa Patnaik, it is in fact not a poverty line but a destitution line (Patnaik 2013). Further, if poverty is directly measured through consumption expenditure in each round of the NSS Survey, rather than fixing it to a year and adjusting for price rise, the estimates of poverty are glaring and India could be termed a ‘republic of hunger’ (Patnaik 2007).

Urban poverty is pegged at 26.4%

The Rangarajan Committee, which has retained consumption expenditure as the basis for determining poverty, has pegged the total number of poor in the country at 363 million or 29.6% of the population against 269.8 million (21.9%) by the Suresh Tendulkar Committee. The Rangarajan Committee raised the daily per capita expenditure to Rs 32 from Rs 27 for the rural poor and to Rs 47 from Rs 33 for the urban poor, thus raising the poverty line based on the average monthly per capita expenditure to Rs 972 in rural India and Rs 1,407 in urban India.

Thus, for a family of five, the all-India poverty line in terms of consumption expenditure, as per the Rangarajan Committee, would amount to Rs 4,760 per month in rural areas and Rs 7,035 per month in urban areas. The Tendulkar Committee had pegged this at Rs 4,080 and Rs 5,000.

The Rangarajan Committee therefore put the percentage of people below the poverty line in 2011-12 at 30.95% in rural areas and 26.4% in urban areas as compared to 25.7% and 13.7% according to the Tendulkar methodology.

Habitat and housing poverty

The official poverty estimates as accepted by the Planning Commission are based on consumption norms. Other aspects of poverty related to habitat and housing, such as access to safe water, sanitation and a clean household environment are not taken into account. It also does not take into consideration the differential vulnerabilities of urban populations associated with urban habitat, disasters and precarious sources of urban livelihood. Out-of-pocket expenditure is one of the most important factors causing the urban poor to remain in a vicious circle of poverty.

Households in urban areas suffer various housing and habitat deprivations apart from low income. The Census of India published important data related to housing and living conditions in rural and urban areas as part of its decennial census. Table 1 provides some of the latest data on urban conditions. It appears that there has been some progress in housing and living conditions as shown by indicators such as ‘house with concrete roof’, ‘households with tap water’, ‘households connected with drainage and latrine facilities’ and ‘households using clean fuel like LPG/PNG’ in 2011, as compared to the 2001 Census. However, nearly one-third of households do not have access to tap water and clean fuel, and one-fifth have no access to latrine and drainage facilities.

As a large number of households do not have access to treated drinking water, this could be a major factor causing waterborne diseases like diarrhoea and dysentery. Access to clean water and sanitation has been considered one of the most important social determinants of health. Water-related illness constitutes one-third of morbidities among adults, and two-thirds among children (HLEG 2011).

Further, due to lack of access to clean fuel like LPG/PNG, a significant number of households use coal, wood, cowdung and crop residue as cooking fuel, putting them at risk of indoor air pollution. Studies show that this form of pollution is a major public health problem. In India, prolonged exposure to indoor pollution could lead to lung cancer, adverse pregnancy outcomes, cataract, and blindness. Several hundred thousand women and children die
prematurely because of indoor air pollution (Mishra, Retherford and Smith 2002).

Table 1: Housing and living conditions in rural and urban India, 2001-2011

Amenities Rural 2001 Rural 2011 Urban 2001 Urban
2011
Total
2001
Total
2011
% of households with concrete roof house 11.9 18.5 44.4 52.9 21.2 29.6
% of households with tap water 24.3 30.8 68.7 70.6 36.7 43.5
% of households with electricity as a source of lighting 43.5 55.3 87.5 92.7 55.8 67.2
% of households with latrine facility within the premises 21.9 30.7 73.7 81.4 36.4 46.9
% of households connected to drainage 34.1 36.8 77.8 81.8 46.4 51.1
% of households with bathroom 22.8 25.4 70.4 77.5 36.1 42.0
% of households using LPG/PNG 5.7 11.4 48.0 65.0 17.5 28.5

Source: Census of India, 2001 and 2011

The urban poor living in slums and small- and medium-sized cities and towns are hardest hit, as deprivations of drinking water, sanitation and toilet facilities are most glaring here (Bhagat 2011). The 2011 Census also shows that 65 million urban residents live in slums. In other words, the number of those living in housing poverty was higher than the number of official urban poor, at 52.8 million for the year 2011-12. Thus, there is a need to understand urban poverty dynamics separately for slum and non-slum areas. This would be better understood if we moved from the income/consumption approach to poverty to the measurement of poverty on the basis of conditions of urban habitat and vulnerabilities.

Thus, there is a need to re-orient some of the conventional concerns of poverty measurement. From this perspective, a person may be defined as poor in an urban area if he or she fails to meet the basic needs of living, and also if he/she is vulnerable to loss of habitat and livelihood or is at risk from various disasters.

Concerns in urban policy

The eradication of habitat and housing poverty requires comprehensive urban planning addressing the needs of the urban poor. It is worth mentioning that India is passing through an urban transition and cities are looked upon as engines of economic growth. A just and spatially distributed urbanisation process would also help eradicate poverty in rural areas, as rural and urban poverty are interlinked in some ways through migration. This requires an urban development strategy for each Indian state which is not merely city-centric but designed to promote better rural-urban linkages in terms of flow of goods and services, financial resources, information and ideas. Cities and towns must not only take care of their poor but also serve in the uplift of the rural poor. Rural and urban poverty should not be seen as separate entities but an integrated one to be tackled through urban development strategy. This does not mean that we should not have a rural development strategy, but their possible integration in vision, planning and practice is essential.

As India’s urbanisation is dominated by medium and small towns, it raises the important issue of providing civic amenities and improving governance in them. National programmes like the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) are essentially biased towards big cities; the urban poor living in medium and small cities and towns have a lesser voice, and their issues are scarcely addressed.

In order to deal with the large number of urban poor, as a result of faster urbanisation, India has to push through urban reforms and policy changes initiated in the early-1990s. Though urban development is a state subject it does not hold the central government back from initiating centrally-sponsored urban development programmes, guidelines for urban development and promises of increased funds.

One significant reform initiated by the central government is the promotion of decentralised governance by urban local bodies through the 74th Amendment to the Constitution effected in 1992. The amendment envisages planning and development of urban centres by urban local bodies. This is possible only if urban local bodies are empowered politically, administratively and fiscally by their respective state governments to make a significant dent in urban poverty. Small towns and big cities have been facing two entirely different problems. Whereas many small towns are still governed by rural local bodies (panchayats) (Bhagat 2005), multiple agencies are responsible for planning, development and governance in big cities that have shown little concern for the urban poor (Bhagat 2012).

In fact, there is lack of local democracy and empowerment of urban local bodies both politically and fiscally. This has apparently hurt the urban poor most.

(R B Bhagat is Professor and Head of the Department of Migration and Urban Studies, International Institute for Population Sciences, Mumbai)

References

Agarwal, Siddharth (2011). ‘The State of Urban Health in India: Comparing the Poorest Quartile to the Rest of the Urban Population in Selected States and Cities’, Environment and Urbanisation,Vol 23, No 1, pp 13-28

Bhagat, R B (2005). ‘Rural-Urban Classification and Municipal Governance in India’, Singapore Journal of Tropical Geography, Vol 26, No1, pp 61-74

Bhagat, R B (2011). ‘Urbanisation and Access to Basic Amenities in India’, Urban India, Vol 31, No 1, pp 1-13

Bhagat, R B (2012).A Turnaround in India’s Urbanisation’,Asia Pacific Population Journal,Vol 27, No 2, pp 23-39

HPEC (High-Powered Expert Committee) (2011). Report on India Urban Infrastructure and Services, Ministry of Urban Development, Government of India, New Delhi

Mishra, Vinod, R, Retherford, and Smith, K R (2002). ‘Indoor Air Pollution: The Quiet Killer’, Asia-Pacific Issues, Analysis from East-West Centre No 63, Honolulu, 2002

Planning Commission (2013). Press Note on Poverty Estimate, 2011-12, Government of India, Press Information Bureau, New Delhi

Planning Commission (2009).Report of the Expert Group to Review the Methodology for Estimation of Poverty, Government of India, New Delhi

Rath, Nilkanth (2011). ‘Measurement of Poverty: In Retrospect and Prospect’, Economic and Political Weekly,Vol 46, No 42, pp 40-43

Patnaik, Utsa (2007). The Republic of Hunger and Other Essays, Merlin Press, London

Patnaik, Utsa (2013). ‘Poverty Trends in India 2004-05 to 2009-10: Updating Poverty Estimates and Comparing Official Figures’, Economic and Political Weekly, Vol 48, No 40, pp 43-58

www.infochangeindia.org, October 2014