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Consumption-based poverty estimates have relevance

  • Published
    16th Aug, 2023

Context:

As per the data released by NITI Aayog for Multidimensional poverty index (MPI), shows that the poverty has declined to 15% in the year 2019-20. However, it is argued that relevance of National Sample Survey (NSS) consumption-based poverty estimates are still very important to consider than the Multi-dimensional poverty.

Facts supporting Consumption based Poverty estimation:

  • Based on Tendulkar estimates: The estimates of poverty based on consumer expenditure, using the Tendulkar committee methodology show (over a seven-year period between 2004-05 and 2011-12) that the number of poor came down, but less than the MPI estimates.
  • Different mechanism of interpretation: Poverty based on income or consumption is different from deprivations based on education or health.
  • Deaton and Drèze (2014): It also indicates that “it is important to supplement expenditure-based poverty estimates with other indicators of living standards, relating for instance to nutrition, health, education and the quality of the environment”.

Changes in surveys for consumption estimates:

  • For aggregation of correct data: Independent indicators and analytically appropriate rules of aggregation require that all of them relate to the same household. More generally, this requirement poses several data constraints.
  • Lack of survey data: The survey data on consumption expenditures done in 2017-18 have not been released officially. In the absence of such data, indirect methods like Centre for Monitoring Indian Economy (CMIE) and Periodic Labour Force Survey (PLFS) data sources can be used for differing conclusions.
  • Mismatches in aggregate consumption estimates: The differences in aggregate consumption estimates between National Accounts Statistics (NAS) and NSS data. These two estimates of consumption (NSS and NAS) do not match in any country;

Suggestive Measures:

  • MPI data evaluation must be changed: Data collection and interpretation is different. For e.g. there is a problem with the child mortality indicator as it is for population groups and not for households.
  • To supplement the results of consumption surveys: The data obtained from consumption survey must be supplemented to study the impact of public expenditure on health and education of different expenditure classes.
  • Role of NSO: The National Statistical Office must study the problem and come out with possible suggestions to improve the collection of data through both routes.
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