PRB

(February 2012) The past few years have seen much hype regarding the economic progress in India, much of it extolling the country’s “rising incomes” and “exploding” middle class. Entrepreneurs in the country seem to have believed this, resulting in an overbuilding of glitzy malls and the rapid expansion of the number of domestic airlines. Although there has been definite economic progress in India, who exactly benefits?

The number of people living in poverty is often ignored. India’s official poverty measure has long been this: People below the poverty line have a daily diet of less than 2,400 kilocalories in rural areas and less than 2,100 kilocalories in urban areas.

What do measures of wealth such as “middle class” and “poverty” mean in India, compared to countries such as the United States or those in Europe? Estimates of the number of people in poverty in the country vary wildly, as Carl Haub wrote in a 2010 PRB web article with co-author O.P. Sharma, and even the slightest changes in the definition of poverty can change the number of the poor in India by millions. India is on track to become the world’s largest country about 10 years from now, despite declining fertility. How will it manage the population growth in its very large and very poor states?

In a PRB Discuss Online, Carl Haub, senior demographer at PRB, answered questions from participants about what “poverty” and “middle class” in India really mean as standards of living, and what implications these may have for India’s economic and demographic future.

PowerPoint: Age and Sex Structure of India, 2001 (PPTX: 85KB)

PowerPoint: Distribution of Population by Size, of Village, Town, or City, India, 2001 (PPTX: 82KB)

PowerPoint: Fertility Rates in India, 2008 (PPTX: 82KB)

PowerPoint: Household Availability of Electricity and Sanitation Facilities, India, 2001 (PPTX: 83KB)

PowerPoint: Households With Access to Tap Water, India and Selected States, 2001, and China, 1990 and 2008 (PPTX: 90KB)

PowerPoint: Sex Ratio at Birth in the Indian States of Punjab, Haryana, Rajasthan, Gujarat, and Himachal Pradesh, 1999-2009 (PPTX: 93KB)

PowerPoint: Sex Ratio at Birth in the Indian States of Uttar Pradesh, Bihar, Maharashtra, Andhra Pradesh, and Assam, 1999-2009 (PPTX: 92KB)

PowerPoint: Sex Ratio at Birth in the Indian States of Madhya Pradesh, Kerala, Karnataka, West Bengal, Orissa, and Tamil Nadu, 1999-2009 (PPTX: 94KB)

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Feb. 23, 2012 1 PM (EST)

Transcript of Questions and Answers

C S Radhakrishnan: Are we taking into account a pattern of persistence in poverty by those who should have gone out of the bracket long back? Vested interests are encouraging the relatively better off among the poor to conform to the measuring yardsticks of poverty while spending on other aspects of life. For example, recent surveys of BPL families had certain check points to see if a family had come out of the poverty bracket. Families which indulged in what middle class families consider as luxury were being listed as poor, because they technically conformed to the yardsticks of the Planning Commission. Influencing the survey rtems to look the other way on the presence of luxury items in the household was one method employed. Imagine a family earning four hundred rupees per day for at least twenty five days a month, per person and at least three members earning at this level. How can they can they be termed poor. They splurge on expensive alcoholic drinks, indulge in movies at expensive theatres, etc. None of these gets reflected in the BPL survey!
Carl Haub: I wasn’t think so much about the problems with the BPL definition but how poverty overall is measured. But you are, of course, right. I read in the press about a man who saved for years to buy a fan and was taken off the BPL list for having such a luxury! A neighbor, who had a much better living style stayed on the list, possibly due to a payoff.

Dr. Anima Sharma: Dear Carl Haub,As in the other parts of the world, in India too poverty is commonly associated with the economically deprived section of the society. The other associated truth with the economic deprivation is social backwardness. Usually the people living below poverty line also belong to the lower social stratum. They lack education, access to medical care and other facilities. In fact, if you see closely then you will find that that money (fiscal economy) is the prime force to determine the QOL and way of life. Hence, according to me all other attributes contributing to poverty revolve around the economy.
Carl Haub: Certainly very true. The recent growth of the Indian economy has, I believe, benefitted a fortunate few. Recently, the ILO said that India’s economic advance is due to a 34 percent increase in productivity and that employment numbers as such had not risen.

ejaz: Does poor people remain poor for the whole life? if not, what step should governments take for poverty alleviation?
Carl Haub: Whether the government considers them poor or not, they certainly do. A lack of education and training will keep them where they are. There has, of course, been a new government program to provide training down to the district level but such programs often falter. Still, India will need more trained labor force. Perhaps that will add an additional spur to such programs.

Kris Dev: Is there a concrete solution to eliminate corruption and create a level playing field for eradication of poverty?
Carl Haub: I think real enforcement of anti-corruption measures are needed. I’ve been told that the National Rural Health Mission (NRHM) in Uttar Pradesh has seen large sums go missing. But at least they are going after the perpetrators in a more serious way.

J Kishore: When food including water, sanitation, electricity, shelter and cloths need to be purchased then just calculating poverty on the basis of calories requirement is false. It is not difficult to calculate cost of living in different regions of the country if political desire exists.
Carl Haub: Exactly and we have seen a good deal of ridicule in the Indian press about using calories only. So, if can provide for sufficient calories but sleep beneath a railroad bridge, you’re not poor!

Dr. Rukmini Potdar: Why has India not adopted an income based measure of poverty like the way the US has? Is it because of inflation and using the basket of goods (or number of calories) approach being more stable over time? How come the poverty line definition does not include cost of shelter and clothing besides food?
Carl Haub: I believe that it is because money income cannot be measured in most, if not all developing countries. So many in India work in the unorganized sector or in casual labor that money income would be meaningless. And, only a very small proportion pay taxes.

Paola Scommegna: India’s National Family Health Survey-3 shows declines in multigenerational living and increases in older Indians living alone or with just a spouse. Is this a sign of wealth— that families can afford this? Or a shift in the importance put on family caregiving that may impoverish the elderly?
Carl Haub: In some ways, it probably is but the vast majority still live in multigenerational families. One thing to keep in mind is that “household” has an entirely different meaning in India than in the West. In India, a household is defined by having separate cooking facilities even if they live in an adjacent structure of some kind. Also, the extended Indian family does not always live in the same dwelling but remain economically and socially interdependent. The increase in large urban areas may be increasingly due to sons moving to the city for a job but the parents stay behind in the village. Even in those cases, close ties remain.

Robert Prentiss: At some point the U.N. adopted a country’s IMR of 50 or less a determinant that hunger had ended in that country. How does this apply to India and has this emphasis on entrepreneurship made any difference?
Carl Haub: I think that was actually the Hunger Project in California that did that in the 1980s. It doesn’t sound like the UN but perhaps I’m wrong. Do you have a link?

Richard Cincotta: Carl, Your article with O.P. Sharma is so complete that it’s hard to ask a meaningful question within the topic … so, I’ll ask one at the margins. The 20 INR/day and $PPP 2/day poverty lines that around a quarter of all Indians live in relative poverty. If so, the oft-talked-about rise of a middle class of 200,000 Indians seems a gross over-estimate. While, admittedly, beyond your research, what does the BPL calculation say (to you) about the size of the Indian middle (consuming) classes?
Carl Haub: I’m glad someone brought the mysterious middle class! If you are not BPL are you middle class? Hardly, you’re still extremely poor. As far as the middle class goes, a Westerner must erase all previous notions of what that means. “Middle class” in India, to me, should be based on living standards and disposable income. Here is, by my experience since 1994, a middle class family in Delhi, India’s richest city: a flat of 300-800sq ft in a four or five story concrete building (difficult for grandparents to walk up); 2 to 3 to 4 generations; no heat or air conditioning except perhaps an “air cooler” and a space heather in a city where the temperature ranges from 35 to 115F; regular power outages; water supplied twice a day or from a water truck; and a two-wheeler for all-weather personal transportation. I don’t know any Westerners who want to live like that. Disposable income might mean regular trips to the cinema or a family trip to McDonald’s. The latter is actually “flaunting it” since the price of a meal like that could feed a BPL family for months. What we perceive as the middle class, such as those in spacious flat or a single family house with a car or tow are the rich, with a lifestyle most can only dream about. Lastly, the numbers? Perhaps 200,000 is ok by Indian standards but many of those glittery estimates come from marketing consulting firms trying to attract business!

Vega: Could you talk about the Principal Component Analysis method used by the DHS’s (the National Family Health Surveys in India) to measure wealth? Is that the measure ‘in vogue’, or should we look at the various components in a disaggregated way if we want to analyze the effects of wealth/poverty on demographic indicators?
Carl Haub: Do you mean the wealth quintiles?

Dharmendra Sharma: I think that unemployment is the only cause of poverty. If we provide cent percent employment to the people than poverty can be eliminated. What is your perception about it? whether it is the best way to curb poverty ?
Carl Haub: Certainly, as long as it is meaningful, steady employment. For that jobs are needed and training is needed. I may be wrong, but I’ve never heard that jobs go begging, or unfilled. Another problem is, I think, that hundreds of millions of Indian workers value job security over wages (to the benefit of the employer!). There was an article in the Times of India before the Delhi Commonwealth Games that workers building the venues were not paid the legal minimum wage—and they were employed by the Delhi Government! Was “skimming” involved in the contracts? India workers must gain some clout to receive fair pay.

Michael F.: Since food costs less in India than the US when priced in USD (see www.economist.com/blogs/graphicdetail/2012/02/daily-chart-14?fsrc=scn%2Ffb%2Fwl%2Fdc%2Fflippingnerdy) why do we use the USD income as a measure of poverty?
Carl Haub: Well, in India, they do use rupees. Measures such as Purchasing Power Parity calculated by the World Bank in USD are meant to make the level of poverty clearer globally.

Shikha Sinha: Will Unique Identification Authority of India’s Aadhar program be able to successfully target the poor section of the society and uplift them?
Carl Haub: Boy, we’ll see. For those of you who are not aware of this, it’s a program to issue ID cards that cannot be altered to identify the BPL population. But—that still leaves the problem of honestly identifying that group (read: don’t base BPL on calories alone). And then there’s traditional bribery. But perhaps it’s a start.

Vega: Could you recommend a paper which reviews the history and current debate on the consumer expenditure-driven poverty line in India?
Carl Haub: Not right off the bat. But there is an excellent World Bank blog with links. http://blogs.worldbank.org/eastasiapacific

Soumya Mohanty: Does India need to address inequalities in opportunities to achieve a higher rate of poverty reduction?
Carl Haub: Certainly. And it has been tried and is being tried again. As mentioned earlier here, education and training can create jobs as investors may be more willing to invest if the workers are there. Driving around India, I’ve noticed a growing number of Industrial Estates in rural areas, not just urban. These have factories run by Nestle, LG, Tata, etc. I had not mentioned foreign investment but the entrance of multinationals is often a very important factor as controversial as it sometimes is.

Boatemaa Sandra: Does the caste system of traditional Indian society has any influence on the contemporary poverty trends. What are your recommendations for poverty reduction in such a cultural system.
Carl Haub: Someone finally asked about caste! Yes, I believe that it definitely does. Having quotas for Scheduled Castes and Tribes has been around for some time with only some effect. There is a separate “caste census” underway right now, which I think is a step backwards as the government has tried for years to lessen the effect of caste. But, often the ingrained caste system tends to keep people in their place, does it not?

Barbara Reichwein: Following on from Vega’s question, can we discuss the strengths and weaknesses (and practicality to implement) of the most commonly used measures of poverty in India? From an NGO perspective, I have come across:

1. the DHS quintille measures mentioned by Vega,
2. the Indian Below Poverty Line (BPL) card,
3. the Multidimensional Poverty Index, and
4. the New Progress out of Poverty Index of Grameen Foundation

Carl Haub: I’m not familiar with all of those but have noted that the government’s calorie criteria are unsatisfactory. The quintile method certainly helps and is clearly understood. I mentioned the BPL card earlier. Perhaps a new approach would be to determine the level of living the poor should have and then help provide them with that: a dwelling with solid walls and roof (called a pucca house); clean water, even if shared; proper disposal of sewage; and the like. In other words, a serious “on the ground” approach rather than debating statistical methods. Many of the things mentioned are not that expensive.

Julian Crandall Hollick: Given that the figures for poverty are all pretty bad why is there such silence about levels of poverty in the Indian media? Is it because this would ruin the official image of “India Shining” so dear to the Indian media? And why does no political party make a campaign issue out of these statistics?
Carl Haub: Well, Julian, there really hasn’t been silence. Many columns are written about it and headlines do blare ridiculing the government’s current calorie-based method. The “India Shining” business was the ruling party at the time, the BJP’s huge mistake and part of the reasons for its loss in the elections. Many people said “who’s shining, I’m not.”

Ravindra Nath Vyas: To what extent and in what what ways the present model of development i.e. the regime of globalisation has both accelerated and decelerated impoverishment of people in India?
Carl Haub: Well, as I mentioned before, the entrance of multinationals is controversial but I do think it helps change things. I’ve observed this on many trips over the years in Delhi and it’s industrial, hi-tech suburbs, such as Gurgaon, Ghaziabad, and Faridabad. Large corporations, I believe, pay workers rather well, deduct taxes, have clinics, etc. I’m positive, e.g., that that’s an important reason for the explosion of cars——and fairly expensive ones—in Delhi. And it certainly is not just foreign companies. Major Indian firms such as Tata, Modi, etc. have played a big role.

Ryan: With a rise in the middle class in India but static or growing number of poor, do you see the potential for class conflict? And to what extent would this contribute to a destabilization in the country?
Carl Haub: Well, I don’t really see too much of that now. I’m not quite sure how to put it, but many people seem to accept their status. The caste system certainly must contribute. Violence has largely been “community based,” as they put it, i.e. based on religious conflict.

Sravanthi Tapal: How is poverty related to the neonatal mortality in India especially in Uttar Pradesh State?
Carl Haub: That would be the 2005-2006 DHS report for UP. Nationally, it declines from about 40 for the poorest quintile to 21 for the highest. You can see the report at http://measuredhs.com, then “search publications,” then “by country.” The UP state report can be found here: http://nfhsindia.org/up_report.shtml. I’m downloading it but it’s very slow.