Drawing the poverty line

Much of the debate on poverty remains focused on the distinction between the poor and the non-poor. There is considerable dispute about where exactly to draw the poverty line, and the quantum of benefit that should be given to those we consider poor. In the process we tend to ignore the differentiation among the poor.

But, as our collective conscience pushes us towards accepting a more liberal definition of where the poverty line should be, as well as a more significant quantum of benefit that should be given, there is a very real possibility that this differentiation could distort the functioning of anti-poverty measures.

The problem with ignoring differentiation among the poor is not just one of magnitude. The distance between the poorest and those just below the poverty line will depend on where we draw the line. The more serious concern is the extent to which the poorest benefit from anti-poverty measures.

Ideally, the poorest should be the ones who benefit the most from these schemes. At the very least, the proportion of beneficiaries among the poorest must not be less than the proportion among other sections of the poor.

Proportion of poorest

But even this minimal condition is not always met. A recently completed study of the working of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in Karnataka took as the chronic poor those rural landless households that could not afford even a bicycle. And in most parts of the State the proportion of labour beneficiaries of MGNREGS in this group was less than the same proportion in the asset class just above theirs. To make matters worse, even when they did get access to the scheme, they typically got less than due to them.

The same study found the poorest consistently reporting a lower earning from the MGNREGS than the others. This could be related to the fact that the scheme stipulates the amount of work that has to be done in a day and pays according to the work done.

The poorest, with lower access to food and health facilities, may well be less able to carry out the same amount of unskilled labour that a fitter, a marginally better-off worker, can. We cannot also completely ignore the fact that getting work could have its transaction costs. And the poorest are least equipped to resist demands made by those offering work locally.

The existence of such leakages can easily lead us to bemoan the widespread corruption in public schemes. But blaming it on corruption can often make things worse. The fear of corrupt practices invariably results in putting more stringent bureaucratic measures in place. And the poorest are, again, the least equipped to meet these requirements.

Hence, the steps ostensibly taken to keep the better-off away from anti-poverty measures can end up keeping out the poorest as well.

In fact, the data from the same MGNREGS study indicated that a significant proportion of the chronic poor did not have Below Poverty Line ration cards. Indeed, the proportion of the chronic poor who had BPL cards was only a little above the proportion of others who had BPL cards.

Increased resources

Ironically enough, there is also the possibility that knee-jerk reactions based on our collective conscience can make things worse for the poorest. As we raise the poverty line the numbers competing for the resources allocated to the poor increase.

This should matter less for those schemes that have a self-selection criterion built into them. The focus of the MGNREGS on unskilled labour alone serves this purpose for the poor as a whole.

But in the more backward regions, where the MGNREGS wage rate is still attractive, the competition for the resources available under the scheme is quite intense. The Act, of course, guarantees that a worker demanding work will either get work or an unemployment allowance. But the chronic poor rarely have the legal and other resources needed to make that guarantee stick.

The fact that the chronic poor do not always have the capacity to be recognised as poor can become an even more critical issue if the Finance Minster sticks to his promise in this year's Budget to move towards a system of cash transfers instead of product subsidies.

When subsidies on, say, kerosene are built into the price of the commodity, the chronic poor get the benefit whenever they buy the commodity. But if the kerosene subsidy is replaced by a cash transfer, the price of kerosene without subsidy will necessarily be significantly higher.

And those among the chronic poor who do not have the documents to prove they are poor will not even be able to get the benefit of cash transfers to offset the higher price of kerosene.

Health, nutrition

Thus, even as our conscience pushes us to demand a higher and more meaningful poverty line, it must be accompanied by measures that are more sharply targeted at the chronic poor.

At the very least, the serious challenges they face in nutrition and health must be met. Ideally this would be done through schemes that have mechanisms of self-selection that attract only the chronic poor.

A public kitchen cooking nutritious coarse cereals for the poor in areas of extreme poverty would be one example. But to even begin thinking on these lines we would have to recognise that the debate on poverty must go beyond the poverty line to the differentiation below it.

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