Artha Vijnana: Journal of The Gokhale Institute of Politics and Economics

Amaresh Dubey ¹, Palmer-Jones Richard ²

Affiliations
1 North Eastern Hill University, Shillong, IN
2 University of East Anglia, Norwich, GB

Abstract

This is the first part of three papers in which we revisit issues surrounding poverty calculations in India during the 1980s, and 1990s. A number of recent papers have put forward or endorsed Poverty calculations based on poverty lines computed using Unit Values. (expenditure divided by quantity) of food. And fuel and light items in the National Sample Survey Consumer Expenditure Surveys, which they suggest are more plausible than those produced by the Indian Planning Commission. Others have criticised a growing gap between money-metric poverty based on poverty lines and food poverty based on normative calorie consumption levels.

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Amaresh Dubey ¹, Palmer-Jones Richard ²

Affiliations
1 North Eastern Hill University, Shillong, IN
2 University of East Anglia, Norwich, GB

Abstract

In the first of this series of three papers we criticised the consumer price indexes based on unit values calculated from the unit records of the NSS Consumer Expenditure Surveys (NSS CES) which have been used to calculated new poverty lines for Indian states by Deaton and Tarrozi, 1999, Deatan, 2003a. This second paper examines the calculation of poverty lines using these Unit Value Consumer Price Indexes (UV CPIs). We suggest that using UV CPIs to account for temporal change and spatial variation in prices in the production of poverty lines does not appear to be a good strategy. Here we point out what we see as a flaw in the method used to calculate Poverty Lines for different states and sectors from a single base Poverty Lines. Further we argue that neither UV nor official price indexes represent true cost of living indexes because they ignore "environmental" variables that differ between domains and affect the transformation of consumption into well-being. This results in problems of comparability suggesting that the PLs that can be calculated from household expenditure surveys such as, the NSS CES do not correspond to the same level of well-being in different domains and thus do not generate poverty measures time compare differences in ill-being rather than differences in the yardisick by which well-being is assessed. A thorough overhaul of poverty line calculations is required, but welfare comparable poverty lines cannot be based on normative calorie requirements. In the third paper in this series we give our "best" CPIs and those that arise from "robust" methods of poverty comparison using stochastic dominance techniques. Unfortunately, on theoretical grounds neither our poverty calculations nor the the of robust methods in their usual form overcome the problems identified here and there we give evidence in support for this contention in that other indicators of well-being are not well correlated with these poverty counts and comparisons.

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Amaresh Dubey ¹, Palmer-Jones Richard ²

Affiliations
1 North Eastern Hill University, Shillong, IN
2 University of East Anglia, Norwich, GB

Abstract

This is the third in a set of papers discussing Poverty Lines (PL) and poverty aggregates in India published in this journal (Dubey and Palmer-Jones, 2005a; 2005b. In earlier papers we criticised the Unit Value based CPIs and the method of computing PLs from these UV CPIs which have been proposed as an improvement over the official CPIs used to compute PLs and poverty by the Indian Planning Commission (PC) (Deaton and Tarrozi, 1999; Deaton, 2003a). We proposed some improvements but noted remaining lacunae. In this paper we report these PLs and the poverty aggregates we have calculated from them (without adjustment to the 55^th Round).

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