India winning battle against poverty, says Planning panel

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Poverty rate down to 22%; rural-urban divide stays sharp

Every eighth person living in urban areas is below the poverty line, while one in five rural residents is poor, the Planning Commission has estimated.

According to the new estimates, there has been a sharp reduction in both absolute numbers of poor, as well as the poverty ratio. The poverty ratio has declined to 21.9 per cent in 2011-12 from 37.2 per cent in 2004-05.

The percentage of population below poverty line in 2011-12 has been estimated at 25.7 per cent in rural areas and 13.7 per cent in urban areas. The percentage of population below the poverty line in 2004-05 was 41.8 per cent in rural areas, 25.7 per cent in urban areas, and 37.2 per cent in the country as a whole.

The new estimates, based on 2011-12 Household Consumption Expenditure estimates by the National Sample Survey Organisation, have been arrived at using the methodology suggested by the Suresh Tendulkar committee in 2009.

The Tendulkar panel had redrawn the poverty line at a daily consumption expenditure of Rs 22.42 per person in rural areas and Rs 28.65 in urban areas.

That methodology, as well as the poverty estimates arrived at using it, were widely criticised for under reporting poverty by fixing the consumption levels too low. The Planning Commission subsequently appointed another committee, headed by Chairman of the Prime Minister’s Economic Advisory Council, C. Rangarajan, which is yet to submit its report.

The new estimates, revised based on the consumption expenditure survey, have revised the Tendulkar numbers upwards, but only slightly. The new poverty line pegs daily per capita consumption expenditure at less than Rs 33.33 in cities and Rs 27.20 in villages.

This figure is marginally higher than the cap of Rs 32 for urban area and Rs 26 in rural area for 2010-11 announced last March.

Now, the Commission says, “For 2011-12, for rural areas the national poverty line using the Tendulkar methodology is estimated at Rs. 816 per capita per month and Rs. 1,000 per capita per month in urban areas.”

Thus, for a family of five, the all India poverty line in terms of consumption expenditure would amount to about Rs 4,080 a month in rural areas and Rs 5,000 a month in urban areas. These poverty lines would vary from State to State because of inter-State price differentials, it said.

In actual terms, there were 26.93 crore people below poverty line in 2011-12 as compared with 40.71 crore in 2004-05. The methodology used here factors in money spent on health and education besides calorie intake to fix the poverty line.

The Commission said the decline in poverty is mainly on account of rising real per capita consumption figures.

The Commission has also highlighted the fact that during the 11-year period 1993-94 to 2004-05, the average decline in the poverty ratio was 0.74 percentage points per year. It accelerated to 2.18 percentage points a year during the seven-year period 2004-05 to 2011-12 (during which the UPA has been in power).

Therefore, it can be concluded that the rate of decline in the poverty ratio during the most recent 7-year period 2004-05 to 2011-12 was about three times that experienced in the 11-year period 1993-94 to 2004-05.

The Commission feels that Tendulkar poverty line may be revised by the Rangarajan Committee and that the poverty line may even go up. However, an increase in the poverty line will not alter the fact of a decline, it claimed, while adding that while the absolute levels of poverty could be higher, the rate of decline would be similar.

(This article was published on July 23, 2013)
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Union Budget 2014-15 Highlights

  • Following are the highlights of the Union Budget 2014-15 presented by Finance Minister Arun Jaitley in Parliament on July 10, 2014
  • Income-tax exemption limit raised by Rs 50,000 to Rs 2.5 lakh and for senior citizens to Rs 3 lakh
  • Exemption limit for investment in financial instruments under 80C raised to Rs 1.5 lakh from Rs 1 lakh.
  • Investment limit in PPF raised to Rs 1.5 lakh from Rs 1 lakh
  • Deduction limit on interest on loan for self-occupied house raised to Rs 2 lakh from Rs 1.5 lakh.
  • Committee to look into all fresh tax demands for indirect transfer of assets in wake of retrospective tax amendments of 2012
  • Fiscal deficit target retained at 4.1% of GDP for current fiscal and 3.6% in FY 16
  • Rs 150 crore allocated for increasing safety of women in large cities
  • LCD, LED TV become cheaper
  • Cigarettes, pan masala, tobacco, aerated drinks become costlier
  • 5 IIMs to be opened in HP, Punjab, Bihar, Odisha and Rajasthan
  • 5 more IITs in Jammu, Chhattisgarh, Goa, Andhra Pradesh and Kerala.
  • 4 more AIIMS like institutions to come up in AP, West Bengal, Vidarbha in Maharashtra and Poorvanchal in UP
  • Govt proposes to launch Digital India’ programme to ensure broad band connectivity at village level
  • National Rural Internet and Technology Mission for services in villages and schools, training in IT skills proposed
  • Rs 100 cr scheme to support about 600 new and existing Community Radio Stations
  • Rs 100 cr for metro projects in Lucknow and Ahmedabad
  • Govt expects Rs 9.77 lakh crore revenue crore from taxes
  • Govt’s plan expenditure pegged at Rs 5.75 lakh crore and non-Plan at Rs 12.19 lakh crore.
  • Rs 2,037 crore set aside for Integrated Ganga Conservation Mission called ‘Namami Gange’
  • Kisan Vikas Patra to be reintroduced, National Savings Certificate with insurance cover to be launched
  • FDI limit to be hiked to 49% pc in defence, insurance
  • Disinvestment target fixed at Rs 58,425 crore
  • Gross borrowings pegged at Rs 6 lakh crore
  • Contours of GST to be finalised this fiscal; Govt to look into DTC proposal.
  • ‘Pandit Madan Mohan Malviya New Teachers Training Programme’ launched with initial sum of Rs 500 crore
  • Govt provides Rs 500 crore for rehabilitation of displaced Kashmiri migrants
  • Set aside Rs 11,200 crore for PSU banks capitalisation
  • Govt in favour of consolidation of PSU banks
  • Govt considering giving greater autonomy to PSU banks while making them accountable
  • Rs 7,060 crore for setting up 100 Smart Cities
  • A project on the river Ganga called ‘Jal Marg Vikas’ for inland waterways between Allahabad and Haldia; Rs 4,200 crore set aside for the purpose.
  • Govt proposes Ultra Modern Super Critical Coal Based Thermal Power Technology
  • Expenditure management commission to be setup; will look into food and fertilizer subsides
  • Impasse in coal sector will be resolved; coal will be provided to power plants already commissioned or to be commissioned by March 2015
  • Long term capial gains tax for mutual funds doubled to 20%; lock-in period increased to 3 years
  • Rs 4,000 cr set aside to increase flow of cheaper credit for affordable housing to the urban poor/EWS/LIG segment.
  • EPFO to launch the ‘Uniform Account Number’ service to facilitate portability of Provident Fund accounts
  • Mandatory wage ceiling of subscription to EPS (Employee Pension Scheme) raised from Rs 6,500 to Rs 15,000
  • Minimum pension increased to Rs 1,000 per month
  • Union Budget 2014: List of products getting cheaper/ costlier

  • Finance Minister Arun Jaitley today spared the common man from price hikes by keeping duties on commonly used day-to-day items unchanged but made it costlier for smokers and tobacco consumers with a steep increase in excise rate in tax proposals in Budget 2014—15.
  • Following is a list of what will be cheaper and costlier:
  • CRT television
  • LED/LCD TVs especially below 19 inch
  • Footwear priced between Rs 500 to Rs 1,000 per pair
  • Soaps
  • E—book readers
  • Desktop, laptops and tablets
  • RO based water purifiers
  • LED Lights, fixtures and lamps
  • Pre forms of precious and semi—precious stones
  • Sports Gloves
  • Branded petrol
  • Matchbox
  • Life micro insurance policies
  • HIV/AIDS drugs and diagnostic kits
  • DDT insecticides
  • Cigarettes
  • Aerated drinks with sugar
  • Pan masala
  • Gutka and chewing tobacco
  • Jarda scented tobacco
  • Radio Taxi
  • Imported electronic products
  • Portable X—ray machines
  • Half cut/broken diamonds.


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