The Hindu Business Line : Living on a dollar a day

The recent revision of poverty measures by two international agencies should perhaps trigger some fresh analysis on Kerala’s renowned human development profile.

KG Kumar

The south Indian State of Kerala has long been held up as a shining example of developmental success in the face of economic odds. Several academics have analysed the “Kerala model” of development. G.K. Lieten, for instance, writing in the Journal of Contemporary Asia on “The Human Development Puzzle in Kerala”, says “In the increasing attention to human development, Kerala has started to serve as a metaphor for a high human development index (HDI) despite a low gross national product (GNP). In terms of literacy, morbidity, child mortality, longevity and fertility, it closely approaches the standards reached in the developed countries. Even in comparison with China and South Korea, admittedly success stories in human development management, Kerala did much better.”

Richard W. Franke and Barbara H. Chasin, state: “Kerala shows that Third World people can make their lives better in the absence of industrialisation or large-scale economic growth. The key ingredients: active grassroots organisations, redistribution of wealth and democratic participation.

“Despite low per capita income, Kerala’s 31 million people have achieved nearly total literacy, long life expectancy, low infant mortality and birth rates and high access to medical care. Kerala’s development indicators compare favourably with the rest of India, low-income countries in general and even rich nations such as the United States.”

“The main elements of the Kerala model are: a land reform initiative that abolished tenancy and landlord exploitation; effective public food distribution that provides subsidised rice to low-income households; protective laws for agricultural workers; pensions for retired agricultural labourers; and a high rate of government employment for members of formerly low-caste communities.”

In this context, two recent reports from international agencies on poverty measurement are pertinent from the “Kerala model” point of view. The World Bank , in its update on ‘International Comparison Programme’, has said that out of an estimated population of about 100 crore in 2005, “the number of poor people living below $1.25 a day has increased from 42.1 crore in 1981 to 45.6 crore in 2005. This is the biggest challenge facing India.”

Having revised its international poverty line norm from $1 a day, the World Bank study reveals that nearly five out of 10 Indians are living on less than $1.25 (approx. Rs 55) a day. And what is worse, their number is on the rise, despite a fall in percentage terms. The study also pointed out that even as the number of people living on the earlier poverty line norm of less than $1 a day had come down, there was still a large number of people living just above this line of deprivation and their numbers were not falling either.

As per the revised estimates on poverty based on new purchasing power parity norms, India’s poverty rate fell by a mere 19 per cent between 1990 and 2005, as compared to a global decline of 38 per cent . In terms of a dollar a day, the number of people living below the poverty line decreased from 29.6 crore in 1981 to 26.7 crore in 2005. In India, even as the poverty rate (at $1.25 a day) as a share of the total population went down from 60 per cent in 1981 to 42 per cent in 2005, the absolute numbers went up from 420 million to 455 million in 2005 during the period.

In comparison, China achieved a much faster rate of poverty reduction. The study revealed that in the developing world outside China, the $ 1.25 poverty rate fell from 40 per cent to 29 per cent over the 1981-2005. However, given the growth of population, this progress was not enough to bring down the total number of poor outside China, which stayed at about 1.2 billion.

Close on the heels of the World Bank study, the Asian Development Bank (ADB) put forward a new way to measure poverty in the Asia and Pacific region. The new poverty line, called the ‘Asian Poverty Line’, is approximately $1.35 a day.

In its report ‘Key Indicators 2008’, the ADB analyses the role of purchasing power parities (PPPs) in comparing rates of poverty in the Asia and Pacific region. According to an ADB statement, a major contribution of the report is its examination of the sensitivity of poverty estimates to different methods for evaluating PPPs.

The report used original data collected specifically for the study to examine where the poor shop, what they buy, in what quantity and what quality. The prices they pay are used to generate a new set of PPPs — poverty PPPs. “Our aim was to shed light on how alternative approaches to compiling purchasing power parities can influence internationally comparable estimates of poverty,” ADB’s Chief Economist Ifzal Ali was quoted as saying. Using consumption PPPs, the report estimated that in the 16 countries that participated in the study, 1.042 billion people would have been living below $1.35 a day in 2005. Under more robust poverty PPPs, this estimate would drop to 843 million people.

Where will Kerala fit in this scheme of things? According to some economists, Kerala, which is only seventh in ranking in per capita State Domestic Product (SDP), tops the list of States in India in per capita consumption. For a principally consumerist State, living on $1.35 or approximately Rs 62 a day is clearly unfeasible. The majority of Keralites enjoy a much higher standard of living. Perhaps, it is time to revisit the issue of poverty in Kerala, especially among the outlier sections of its society, like tribals and fisherfolk.

The writer can be contacted at kgkumar@gmail.com

More Stories on : Economy | Random Walk | Kerala

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page