Size-class and returns to cultivation in India

'Size-class and returns to cultivation in India: a cold case reopened' is the title of a recent working paper from IGIDR that Sarthak Gaurav and I have co-authored. This revives the age-old debate on farm size and productivity that started in the early sixties  by Amartya Sen. Some excerpts from the abstract, introduction and conclusions of the working paper are given below. An abstract of its revised version published in Oxford Development Studies is also given below.

Abstract

This paper investigates the relationship between returns to cultivation per hectare and size-class of land cultivated in India, using unit level data from the 59th round National Sample Survey, 2003. The analysis is done separately for ‘kharif’ and ‘rabi’ − for total value of cultivation from all crops at the all India level. The empirical evidence rejects the null hypothesis of no relationship and points to the existence of an inverse association. We argue that the efficiency of the small-holders has to be taken with a pinch of salt because their low absolute returns brings into focus the question of their livelihood sustainability which is further aggravated on account of higher unit costs. Being the first exercise in a series of proposed explorations into disaggregated analyses across states, and for specific crops, it opens up the classic debate on farm size and productivity in the 21st century.

Introduction

In recent years, Indian agriculture has been reeling under a crisis and one of the concomitant outcomes is poor returns to cultivation which has rendered farming as an unsustainable livelihood option – particularly for the marginal and small holders.2 This also raises the long debated question of inverse relationship between size-class and productivity, that is, whether marginal and small farmers are relatively efficient vis-à-vis larger size-class farmers? The current paper explores this aspect of Indian agriculture using unit level data from the Situation Assessment Survey of Farmers, administered in the 59th round of the National Sample Survey (NSS).This survey was conducted during 2003 and collected information for the agricultural year 2002-03.This is the latest (and the largest) nationally representative data set for analyzing the state of farming in India. By conducting the analysis at the unit level, to the best of our knowledge, we provide the first baseline for the 21st century. An attempt has been made to assesses the relationship between size-class and returns to cultivation; and in doing so, it expects to contribute and open-up the long drawn out, and till recently dormant debate.

...

Conclusions

An analysis of size-class and returns to cultivation using nationally representative data from the Situation Assessment Survey of Farmers (SAS) of the 59th Round of the National Sample Survey, for the period 2002-03 opens up the classic debate on the efficiency of the small holder. Our empirical results, computed separately for kharif and rabi, at an aggregate all India level as also for each size-class reject the null of absence of any relationship between size-class and productivity and indicate the existence of an inverse relationship. While the small holder seems efficient the low absolute returns raises questions on livelihood sustainability. This is also important from the perspective of the risk bearing capacity of the small-holders given the fact of their per hectare costs being higher.

To the best of our knowledge, these are the first estimates for the 21st century and at the pan-Indian level; and could be used as a baseline for comparative analyses in the future. Our empirical evidence can be considered as an important contribution to the literature on size-class and productivity relationship. While opening up this cold case we are aware that one needs to go down to further details and control for other factors that may affect returns to cultivation. It would be equally important to analyse the variation across states, social groups as also the crop-specific patterns. We plan to do some of these in a series of future exercises.

In spite of the limitations of our study, it is a first attempt at a fundamental problem in Indian agricultural using a nationally representative sample. Given the relevance of our findings in corroborating the story of a crisis in Indian agriculture on one hand, and with the promise to reopen the classic debate on farm size and productivity on the other, we argue for the need for further inquiries, and if feasible, a future round of the SAS as it is almost a decade since the first (and only) survey.

Those interested in the full paper can click, 'Size-class and returns to cultivation in India: a cold case reopened'.

A revised version of the paper is now available as 'Farm size and returns to cultivation in India: revisiting an old debate' Oxford Development Studies, Published online 21 Nov 2014.

The abstract of the revised version is as follows. This paper revisits the long-debated question of the relationship between farm size and productivity by studying the relationship between area cultivated and net returns to cultivation in India using a nationally representative data-set. The analysis is carried out separately for the two major agricultural seasons, kharif and rabi, and for both the seasons pooled together. Our findings suggest the existence of an inverse relationship, even when we control for a number of household and farm characteristics and even when we treat factors such as household type (occupation), social group (caste), agro-climatic zone (region) and agricultural season as fixed effects. The result is also robust to correction for selection bias. However, the efficiency of the smallholder as a result of this greater productivity has to be treated with some caution as it ignores the low absolute levels of their returns, which raise questions about the sustainability of their livelihoods. This is further aggravated by the fact that they pay relatively higher unit costs and because of their greater dependence on purchased inputs.

Food, Hunger and Ethics

Food, Hunger and Ethics is the title of my new working paper, which has been accepted for publication in the Indian Journal of Medical Ethics. The abstract and key words are given below.

Abstract: Management of hunger has to look into issues of availability, accessibility and adequacy. Posing it from an ethical perspective the paper argues out in favour of right to food. But, for this to happen, the state has to come up with an appropriate and effective bill on food and nutrition security, address the issue of inadequate provisioning of storage space by state agencies leading to rotting of foodgrains - a criminal waste when people are dying of hunger, and rely on a bottom-up approach involving the community that complements the top-down administrative structure to identify poor and reduce both exclusion and inclusion errors in targeting.

To read the paper, see  Food, Hunger and Ethics.


Key words: Bottom-up, cash transfers, exclusion and inclusion errors, foodgrains, Mahatma Gandhi, nutrition adequacy, poverty, Rawls, right to food, targeting, top-down, unique identification.

Links to some important papers referred to in the paper are as also given below.

What do we want form a theory of justice? by Amartya Sen

2010 Global Hunger Index

India State Hunger Index 

Right to food campaign home page

Report of Expert Group to review the methodology for estimation of poverty, Chairperson: Suresh Tendulkar, 2009.

Wealth of Nations, by Adam Smith

Link to the paper Food, Hunger and Ethics

Report on Strengthening the Role of Agriculture for Nutrition Secure India

The Indira Gandhi Institute ofDevelopment Research (IGIDR), Mumbai and International Food Policy Research Institute (IFPRI), New Delhi organized a workshop ‘Strengthening the Role of Agriculture for Nutrition Secure India’ on 13 September 2011 at New Delhi.

In his welcome and opening remarks, PK Joshi pointed out that the concerns of hunger, micronutrient deficiencies and undernourishment should take our thinking beyond growth. He also mentioned that one per cent growth in agriculture has a greater impact on poverty reduction than a similar growth in non-agricultural sector.  He urged the need to look at agriculture and nutrition linkages through three lenses - economic, social and governance.

S Mahendra Dev indicated that one of the purposes of the workshop is to bring in agriculture-nutrition linkages into the policy making exercise. In particular, the twelfth five year plan. Five concerns that he raised are (a) to increase productivity of rainfed resource poor regions with an emphasis on small and marginal farmers, (b) to diversify the diet beyond cereals and include locally available nutritious food, (c) to curb food inflation, particularly for proteins like pulses, (d) a greater need for empowerment of women, and (e) convergence of agriculture with other programmes. Also see his recent co-authored policy note, Pro-nutrition agriculture in India.

In his inaugural address, Vijay Vyas used some recent nutrition indicators on children and women from the National Family Health Survey (NFHS) where India, when compared with similar indicators for other countries, is nearly at the bottom. In addition to low levels, he also pointed out their persistence and in some cases the deterioration of malnourishment. To a large extent, India has addressed the issue of chronic hunger. But seasonal hunger, particularly during the period after sowing and before harvesting, for some sub-groups of population in agricultural communities is a matter of concern. However, when it comes to calorie-protein adequacy and micronutrient requirements we are still below the norm. We are not even able to provide 1800 calories to many and then again a substantial amount of what is provided is only through cereals. Thus, it is not just agriculture, but also the dietary intake, economic accessibility and environmental factors that matter. He reiterated the pivotal role of agriculture both as a supplier but also as a sector that can generate maximum demand. He called for more production, more variety in terms of nutri-cereals, fruits and vegetables and to make this possible the need for changes or a move beyond rice and wheat through policies of pricing, credit facilitation, distribution and institutional reforms among others.

The keynote address was given by RB Singh who began by quoting Hippocrates “Let food be thy medicine, thy medicine be they food” and then goes on to reiterate Dr Vyas’s point by presenting actual data on India’s poor nutrition indicators in a global comparative perspective, particularly with Brazil and China, for undernourishment, underweight children, low birth weight, low body mass index of mothers, greater fertility, higher child anaemia, lower expenditure on child care, lower vaccination, lower mother’s literacy and lower public expenditure. Both Brazil and China also intervened on clean drinking water, sanitation hygiene, education and awareness and backed this up with political will. He reminded the gathering about the Copenhagen Consensus 2008 reiterating the need for Lifelong Livelihood Security and how neglecting issues of child malnutrition can have adverse impacts on the economy. There is immense scope for research towards leveraging agriculture for nutrition. He put up a case in favour of new technology for seeds, but on genetic engineering he said that cisgenic (genes taken from the same species or a closely related one) will have certain advantages and less regulatory requirement when compared against the transgenic (genes from other species like the Bacillus thuringiensis or Bt). He also highlighted the importance of home/kitchen garden in meeting most of the micro nutrient deficiencies. He praised the rich gene biodiversity of India and said that we should maintain it and propagate agro-ecologically differentiated practices. Keeping the importance of children in this concern of nutrition, he concludes by showing the picture of a child with the caption “Hold my today; I will hold your tomorrow.”

In her presentation, Suneetha Kadiyala began by highlighting the overall scenario in India, higher growth, but not doing well in human development dimension and with much higher share of poor and malnourishment (both undernourished and overweight). The agriculture sector is not doing well and one has observed a high food price index. In the global hunger index, India is not doing well and the state-specific hunger index also does not augur well for almost all the states analyzed. To address nutrition problems, direct interventions like infant feeding and bio-fortification could address only one-third of the problem whereas indirect interventions through agriculture, social protection, education, health system, and women’s empowerment turn out to be important. Some of the emerging findings from their recent study are as follows. (a) A cross-country analysis indicates that agricultural growth helps in the reduction of stunting, but the result weakens when Indian states are included in the analysis suggesting a poor linkage or disconnect between agriculture and nutrition in India. (b) There is a data disconnect as the existing information make it difficult to analyze the said linkage. (c) Over the years, dietary diversity has increased and the food base has moved to non-cereal sources but mother’s education and household income seem to have a positive impact on diversity. Some of the key entry points from her presentation are that household income matters, agriculture influences dietary pattern, women’s asset ownership is critical for decision making and nutritional outcomes, and that direct health and nutrition interventions matter.

Praduman Kumar’s talk was from a small holder perspective. It began with the contrast that at an aggregate level, India is self-sufficient in food, but it also has the largest number of hungry and poor and most of them happen to be agricultural labourer and marginal farmers with less than one hectare of land. The presentation pointed out that demand, particularly of non-foodgrain crops will increase, but supply will not. This will increase prices and reduce per capita consumption and also have an adverse affect on dietary diversification. Thus, for a food/nutrition secure India we need to focus on livestock, education, irrigation, aquaculture, horticulture, and dryland agriculture. There is a need to bridge research and policy gaps and integrate them with local wisdom. The presentation ended by showing a critical triangle with the three dimensions being food security and agricultural growth, poverty reduction and rural development, and environmental sustainability.

The next presentation was on Food Security Atlas of Rural India by Preet Rustagi, which was based on a district level exercise for rural areas of eight states. At the district level they came up with two indicators – one on food security based on 12 indicators (of which four were on availability, six on access and two on absorption) and an outcome indicator based on underweight children and under-five mortality. From the 281 districts, 101 are food insecure (all the 18 in Jharkhand, most (13 out of 16) in Chhattisgarh, 29 out of 45 in Madhya Pradesh and 19 out of 30 in Odisha and the relatively food secure districts are mostly in Uttar Pradesh (16) and one each in Maharashtra and Rajasthan. There is a clear connection between food insecurity and low irrigation, poor connectivity, income insecurity, hilly terrain, higher proportion of scheduled tribes and scheduled castes, higher proportion of agricultural labourers, low agricultural wages and low female literacy. However, there did not seem to be much connection with the outcome indicators. Severe or extreme insecurity in outcome were observed in 82 districts (31 in Uttar Pradesh, 26 in Madhya Pradesh (there could be some connection here) and 15 in Rajasthan).  The way forward is to focus on the food insecure and poor outcome districts on various associated risk factors, but the interventions should be locally relevant.

Speaking from a gender perspective, Bina Agarwal brought into the discourse some welfare and efficiency concerns. She vouched the concept of land bank, which can act as a depositor of landowners and creditors to tenants. The landowners could be given some minimum returns and higher returns if the land is put to use by tenants. The latter can work in groups, but they need not worry about going to individuals for leasing in. She also mentioned about integrating other support services for the final tiller.

Coming back again, S Mahendra Dev raised some additional issues. The question of availability/access is important, but so is the productivity of water. This reminds RB Singh’s keynote that one kilogram of potato requires 900 litres of water but one kilogram of beef requires 15,500 litres of water. The other concern is that of climate change, as it could adversely affect the yield. Other matters of concern are to bring nutri-cereals into the public distribution system, who should grow pulses (small or large farmers), the slowing growth of fruits and vegetables (or as someone said, the slowing down of horticulture revolution), bridging the gap in prices between what farmers receive and what consumers pay, and the need for convergence of different district level plan through the panchayati raj institutions. An important point that came up during the discussion is the increasing input costs and adverse impacts of pesticide usage.

Veena Rao, a bureaucrat, lamented that nothing much happened out of the National Nutrition Policy 1993 and the National Plan of Action on Nutrition 1995 where the linkage between agriculture and nutrition was spelt out. However, some of these have been taken up in the Karnataka Nutrition Mission. The important ones being that nutrition is to be addressed from a life cycle approach – infants, children, adolescents, lactating and pregnant mother; bridging calorie, protein and micronutrient deficiency through appropriate intervention to different target groups; accelerating, integrating and tightly monitoring multi-sectoral ongoing programmes; achieving convergence between different programmes and covering pragmatic gaps; involving civil society and community; launching awareness and making available nutritious and energy rich food at lower cost through public-private partnership. This reminds me of the ‘health and nutrition’ intervention through the Society for Elimination of Rural Poverty (SERP) in Andhra Pradesh. In some villages where nutritious food was given to lactating and pregnant mothers, the cost of food in some villages could be met by the participants doing some packaging work for the local grocery shop, and as a result none of the child births in this village was less than 3.5 kilograms – the proof of the pudding lies in its eating.   

Kaustav Banerjee, representing the revitalizing rainfed agriculture, pointed out that from the perspective of availability at the aggregate level one should not be worried for foodgrains as a whole. While there availability at a local level does matter, but a matter of greater concern is the unavailability of millets in adequate quantities even at an aggregate level. Further rainfed agriculture comprises two-thirds of the farmed area but has attracted comparatively less policy design and interventions. Thus, there is the need for a new architecture to address this, which should be holistic and integrate agriculture with livestock and area development.

Comparing the Empowered Group of Ministers draft versions of the National Food Security Act to that prepared by the National Advisory Council, Biraj Patnaik pointed out that the former has several shortcomings. It does not have the definitions of some important concepts such as child, malnutrition, starvation, job chart and health centre upfront and the definitions of foodgrains, homeless person and public distribution system are relatively restricted. The entitlements for a person per day have been reduced from four to three kilograms of foodgrains. There are no special provision for single women, lactating and pregnant mothers, malnourished children and emergency and disaster affected persons. More importantly the rights of the people living with starvation have been watered down. As a result, the links with nutrition is  absent. He also raised the attention of the house to two other things. The global land grab in Africa where many countries (including India) and private companies (including Indian) are leasing in land to produce food to address shortfalls in their own countries, besides building food reserves to make gains through speculation and trading, is contributing to less land being available for the production of food for the local economies in Africa. The other concern was on the role of the commodities futures markets and its implication on food prices (see the Report of the Expert Committee To Study the Impact of Futures Trading on Agricultural Commodity Prices, particularly the note by the Chairperson of the committee, Abhijit Sen).

In his remarks, Sukhadeo Thorat pointed out that some vulnerable social groups suffered more in terms of malnutrition. If one factors in the gender dimension, women from these social groups are found to be suffering more. To address this, there is need to have a group specific policy. He also pointed out that the larger scheme of things makes the farmer take a decision on crop production based on profitability and not on nutrition. See his co-authored policy note on addressing the unequal burden of malnutrition. 

Ramesh Chand began by pointing out the weakening link between agriculture and nutrition and the paradox of higher production as also high prices and hunger existing concurrently. He raised the concerns of India being a global diabetic capital, of whether lower consumption of 1400/1600 kilocalorie by some people is because of absence of purchasing power or low requirement based on different homeostatic conditions, and of the fact that people continue to avoid purchasing nutri-cereals even in those regions/areas where their prices are lower than rice and wheat. The homeostatic argument reminded of PV Sukhatme's dissent note to the Report of the Expert Group on Estimation of Proportion and Number of Poor, pp.46-49.

Pravesh Sharma, a bureaucrat with the Small Farmers’ Agri-Business Consortium, made the last presentation where he outlined three things. First, he pointed out that the institutions of the 1970s that were meant to achieve a macro level food sufficiency are not appropriate to address livelihood and nutrition security. There is need to encourage producers organizations that embed technology credit and market and are also linked to pathways that foster food and nutrition security. Second, there should be diversification at the household or village level, which on the one hand will spread the risk of the small farmer, and on the other will also give the farmer household a healthy and varied nutrition basket. Third, there is a need to encourage the non-farm sector with good backward and forward linkages, as this would be of help for the small and marginal farmers, the local region as also the overall economy.

The day’s session ended with the remarks from Liz Drake, Department for International Development (DFID) and the hosts S Mahaendra Dev, Director, IGIDR and PK Joshi, In-charge, IFPRI, New Delhi. The takeaway from the exercise is that a small group will work towards formulating key policy suggestions that would be submitted to the Government of India. From IGIDR’s perspective, this has been a nice collaborative exercise with IFPRI and in New Delhi and one is looking forward to more such endeavours in the future.

(The author thanks Bhaskar Goswami for his suggestions on an earlier write-up.)

Also see my post, Food, Hunger and Ethics.

If a lie is told three times ...

I am writing this in response to a response on Aadhaar (UIDAI clarifies on Aadhaar), which itself was necessitated because of a note indicating Aadhaar: on a platform of myths.

If a lie is told three times, then it becomes the truth. However, if a lie is told umpteen times then ...

Faced with this dilemma, I cannot but agree with your observations Sharmaji. I agree that the Aadhaar or Unique Identification Authority of India (UIDAI) cannot be compared with what happened in the UK and the USA. I also agree that India is capable of high-end technology. However, I have some questions from a layman’s perspective.

As the context of India is different from that of other countries, the context of Jharkhand is different from that of Delhi. Have we conducted some pilots or rather a series of pilots to understand the context and implications on service deliveries before agreeing on a mammoth project. If yes, then why is that not being discussed and deliberated?

Has the expenditure of so much money for UIDAI been discussed in the parliament? This is important because we were told about the supremacy of the parliament in the recent deliberations on 'anti-graft'.

It is said that Aadhaar will reduce graft. If that is so, then it might make sense to have a pilot for the beneficiaries of graft and come up with a system of tracing the unaccounted sources of wealth and penalizing them. Instead, I am told that it is targeting people who lost out because of apathy of functionaries through a public private partnership (PPP).

If the enrollment in Aadhaar is voluntary then how will a citizen not enrolled under Aadhaar get her entitlement for different services. If there is no recourse for that citizen, is the proposed system not unfair?

In a liberal democratic set-up, what is the value of privacy? Why is it different in India than it is in the UK or the USA?

If Aadhaar fails to reduce the ills then who will be accountable? Will it be the Prime Minister, the Parliament, the Planning Commission or the People of India?

For an earlier note of mine, see Aadhaar, Radiagate and Cablegate.

Anna, Bapu, Corruption, and Democracy - An Appeal

Anna Hazare's fast unto death from 16 August 2011 at Ramlila maidan, New Delhi,  is a crusade against corruption that has taken the nation by storm. The unprecedented peoples participation was neither expected by  the organizers of India Against Corruption (IAC) nor the Government of India. Much has been said in favour and against  (for a repository of some of the write-ups see  Jan Lokpal Bill and Anna Hazare). I am not reviewing any of these positions here. I just have a few independent observations to make.

First, Anna's fast and the non-violent nature of the movement has its roots with Bapu, the father of the nation Mahatma Gandhi.  This brings into our domain the parallels with other recent people power based non-violent struggle such as the Tunisian and  Egyptian revolutions or the Burmese struggle (see the two Reith lectures by Aung San Suu Kyi on Liberty and Dissent).

Second, different sections of the polity impute different meanings and have identified it in some way. It brings with it a hope for a just and fair society. Even those who disagree with team Anna's version and their method or approach agree that corruption needs to be done away with it. Put in other words, it is a call for doing away with vested interest. This is easier said than done as those powerful entities who have been benefiting will oppose. A protracted battle and dilly dallying is only expected.

At the core of contention is the Lokpal Bill against corruption, which was first introduced in the Parliament of India 42 years ago in 1968, but even after a number of modifications has not seen the light of the day. In recent years, the civil society spearheaded by IAC has come with an alternative Jan Lokpal Bill (Peoples Ombudsman Bill) and wants this version to be discussed in the parliament so that it forms a base for strong anti-corruption laws. The National Campaign for Peoples' Right to Information (NCPRI) have come up with another version. Some of the major differences in these three versions are with regard to the inclusion of the Prime Minister, inclusion of lower level Government functionaries, inclusion of civil society's that receive public funding, and separation of judiciary among others. One feels that good points from all versions can be taken to come up with a strong Lokpal Bill.

While discussing corruption, I want to take a small digression as this reminds me of a lecture given by one of my teachers (Professor Sourindra Barik, a Sahitya Akademi award winner in 1988)  when I was in college about 25 years ago. He said that  tacit toleration or in a sense acceptance of corruption is a matter of degree. For instance, if you want to meet an official and if the peon is preventing you from meeting the person then you grease the person by offering two paans or a five rupee note and you may not be happy about it but brush it aside and think that ye chalta hai (it is fine). But, after meeting the officer if you are told that your work will be done only if you pay (say, Rs.10,000 or some amount that you consider is substantial)  then it will not be at a toleration/acceptance level, but you still cannot do anything about it - either you pay  and get your work done or wait endlessly. In the current movement, the support of people is to show their solidarity to something they did not know what to do. Having got an opportunity, they are saying it loud  and clear that our toleration/acceptance levels have breached and please do something about it. 

This takes us to our last, but not the least, point - the relevance of democracy. On the one hand, we have a non-violent people-based movement. On the other hand, we have the movement raising some questions on parliamentary propriety.  The question before us in a democratic polity is whether people are supreme or is the parliament supreme - a catch 22.

 

A democracy is by the people for the people and of the people. But, then it cannot be based on peoples whims and  fancies - however  reasonable the propositions may be.  To weed out vested interests, there are some norms and institutions.  There is a basic structure required for a democracy to function. They are, as laid down in our  Constitution,  the separation of powers between the Legislature, the Executive and the Judiciary and then we have the fourth estate - the media.   The question here is if the persons  (or, a dominant section of them) manning the important institutions themselves espouse some powerful vested interest then how do we go about. 

Business as usual is not an option. In the current scenario, there is a need for peoples power indicated through the crusade against corruption to converge with Constitutional propriety. How? In this seeming disagreement, deliberative processes should be initiated to to bring about agreement and order. Some possible suggestions are the following.

First, all parties agree for a strong anti-graft law. Second, the Government agrees to initiate the deliberations in the Parliament in a sincere, honest and transparent manner and discuss all versions and takes the best points from all of these.  Third, transparency requires that the deliberations are open to public so that they know who takes what positions (if possible to include the positions that the Bureaucrats take while providing suggestions).  Fourth, this important discussion requires an open voting by each individual  based on her or his own judgment and constituencies requirement. In short, no party can issue a whip on this.  Fifth, as this is an open-ended discussion that all political parties have committed to, the outcome of the voting will not be construed as a vote for or against the Government. Sixth, all peoples representative should discuss with people from their constituencies as also the civil society and others to form a reasoned opinion.  Seventh, provision may be made by the Government to interact with different representatives of the civil society as and when the situation warrants.

Before I end, I should commend the civil society and their representatives for getting this process on. As I see, this is going to be a long drawn-out struggle. Quoting Robert Frost I can only reiterate: "And miles to go before I sleep,  And miles to go before I sleep." Hence, my humble request to Shri Anna Hazare. Sir,  please  give up your fast. If you so desire, continue it in a limited way, as per your Doctor's advise.   But, please do give up your fast.

Long live Democracy! Long live Mother India. 

(Those interested may see my earlier blog In Defense of Anna Hazare written on 13 April 2011 during his first round of fasting that led to the formation of a joint committee for drafting an anti-graft bill, but differences between them led to the Government and the civil society coming with two versions, and hence, the current logjam).

Poverty Estimates in India

Poverty Estimates in India: Old and New Methods, 2004-05 is the title of a new working paper published from the Indira Gandhi Institute of Development Research (IGIDR), Mumbai. It has been co-authored by Durgesh C. Pathak, a post-doctoral fellow whom I have been mentoring for the last two years, and myself. This paper is dedicated to the memory of Late Professor Suresh D. Tendulkar who passed away recently on 21 June 2011. Below I give excerpts that draw from the two quotations  that the paper begins with, the abstract, introduction and concluding remarks.

The poor are a part of necessary furniture of the earth, a sort of perpetual gymnasium where the rich can practice virtue when they are so inclined. - Francesco Guicciardini (Discorsi Politici)

But I, being poor, have only my dreams;
I have spread my dreams beneath your feet;
Tread softly because you tread on my dreams...
- W. B. Yeats

Abstract

This paper provides estimates of poverty and inequality across states as also for different sub-groups of population for 2004-05 by using the old and new methods of the Planning Commission. The new method is critically evaluated with the help of some existing literature and its limitations discussed with regard to doing away with calorie norm, use of median expenditure as a norm for health and education when the distribution is positively skewed, difficulty in reproducing results for earlier rounds acting as a constraint on comparisons, and using urban poverty ration of the old method as a starting point to decide a consumption basket. More importantly, it discusses the implications on financial transfers across states if the share of poor is only taken into account without accounting for an increase in the total number of poor. Despite these limitations, on grounds of parsimony and prudence the state-specific poverty lines suggested in the new method, as also in the old method, are used to calculate incidence, depth (intensity) and severity (inequality among poor) estimates of poverty for different sub-groups of population, viz., NSS regions, social groups and occupation groups.

Introduction

In India, the quinquennial rounds of national sample survey (NSS) of consumption expenditure have been instrumental in providing us with an estimation of head count ratio. The Report of the Task Force on Projections of Minimum Needs and Effective Consumption Demands (Government of India, 1979) looked into the age, sex and activity specific nutritional requirements and arrived at a per capita norm of 2400 calorie for rural and 2100 calorie for urban and based on this a monthly per capita expenditure (MPCE) of Rs.49.09 in rural and Rs.56.64 in urban was identified as the poverty line for 1973-74. This was updated to accommodate price changes over time. The Report of the Expert Group on Estimation of Proportion and Number of Poor (Government of India, 1993) proposed the use of independent poverty lines for each state and updating them by looking into the state specific changes in prices. This formed the basis for official estimates of poverty provided by the Planning Commission till recently (hereafter, old method).

Some of the criticism of this approach is that the updated prices may not represent the calories norm that they were initially pegged to,  that the calorie norms should change because of demographic shifts in age and sex and change in occupational patterns, that basic requirements like health, education, sanitation and housing are not included in the calculation of poverty line, that a reference period of 30 days may not be appropriate for low frequency items of consumption expenditure among others. These have been partly addressed in the Report of the Expert Group to Review the Methodology for Estimation of Poverty (Government of India, 2009) leading to a new set of poverty estimates for the year 2004-05 that have now been accepted by the Planning Commission (hereafter, new method).

The current exercise focuses on three points. First, it discusses critically the new methodology in the light of a brief review of some recent literature by various scholars. Second, it analyses the change in shares of poverty across states and union territories (hereafter, states) that will occur due to this shift. It also tries to briefly hint the possible repercussions of these changes on poverty reduction efforts in states.  Third, it provides estimates of proportion of poor (head count ratio or incidence of poverty), depth (poverty gap or intensity) and the severity (poverty gap squared or inequality among the poor) at various levels of disaggregation like states, NSS regions, social groups and occupational categories.
...

Concluding Remarks

The Planning Commission accepted the suggestions by an Expert Group that it had constituted leading to a new method for estimating poverty in India using NSS's consumption expenditure data for 2004-05. The new method replaces the uniform recall of 30 days for all consumption items to a mixed recall where consumption of five low frequency items were collected for the last year (365 days) and appropriately adjusted to get a monthly per capita expenditure. It also takes into consideration health and education needs that the old method had not incorporated in its calorie norm. While doing these, it also opened up a number of other issues.

First, it did away with the benchmarking of a poverty line with a calorie norm that the old method was based on. They did not let the calorie norm go away totally. A reference is made to an FAO (Food and Agriculture Organization) calorie norm being achievable around its poverty line, but then this norm is for light and sedentary activities that may not adequately capture the energy needs of the poor who put in hard labour.  Second, while factoring in health and education expenditure is a positive step, using median expenditure as a norm for a positively skewed expenditure distribution may not represent the actual requirement of a poor person.  Third, having done away with a calorie norm, it begins with the poverty ratio for urban India from the old method as given. Using this ratio on the mixed recall it generates a consumption basket at the aggregate level for urban India and then uses this to generate a poverty line for states around this basket. This means that instead of using state estimates to compute a weighted all India average, it begins with the latter. A bottom-up method is replaced with a top-down approach. Fourth, the computation of consumption basket requires use of data from other rounds of NSS as also from other sources. The whole procedure is quite cumbersome and replicating it for earlier rounds or even for thin rounds is difficult and in many cases not possible. This will also have implications on the usage of time series poverty trends in macro modelling.

From a policy perspective, the new method will lead to change in share of poor. If financial transfers across states do not account for an increase in the number of poor or have a budget constraint then this means that the poorer states would end up getting less.

Despite these limitations, on account of pragmatic considerations as also for parsimony and prudence, the state-specific poverty lines have been used for computation of poverty at various sub-groups. This has been attempted in this paper for NSS regions, social groups and occupation groups for both the old and new methods. The relatively higher incidence of poverty among scheduled tribes in rural areas and scheduled castes in urban areas for social groups and that of agricultural labourers and other labourers in rural areas and casual labourers in urban areas for occupation groups have been discussed.

Though they do not play any active role in poverty estimation, yet the poor have maximum stake in poverty analysis as they are at the receiving end. Thus, a move towards a bottom-up approach where the poor get involved in the understanding of vulnerability, particularly in the implementation of policies (including on identification of poor and poverty alleviation) so as to bring in greater accountability and transparency is called for . In its absence, every attempt to define and measure poverty is like treading on the dreams of poor. If poverty measure chosen is going to help them, at least some of these dreams would become a reality. Otherwise they dry like leaves fallen from trees.

For details see the paper, Poverty Estimates in India: Old and New Methods, 2004-05.

Jharkhand Trip, 9-11 June 2011

Currently I have taken up a work to evaluate PRADAN (Professional Assistance for Development Action), a civil society that has been engaged for more than 25 years in livelihood enhancement in 43 of the poorest districts spread across eight states in India. In this context, I had been to Jharkhand during 9-11 June 2011.

Ranchi, the capital of Jharkhand is the new emerging city showing signs of haphazard growth. It is still not late and care should be taken to expand with wide roads and landscaping that is natural to the region. After a quick breakfast, Narendranath (from the Delhi office of PRADAN who had earlier spent a decade of his field days in Goda and Hazaribagh areas when Jharkhand was part of undivided Bihar) and I moved over to Khunti, a newly carved out district from Ranchi on 12 September 2007.  It is a very historical place, as Kunti and her five sons (the Pandavas) were supposed to have stayed here during their agyantavas (years of anonymity) and also the birth place of Bhagwan Birsa Munda, and we happened to be there 111 years after he died under mysterious circumstances in the Ranchi jail when he was just 25 years. I just wonder what would have been the course of Indian history if Bhagwan Birsa was alive for another 50 years. Would there be 'green hunt' today?

I had a quick interaction with a few of their staff and then moved over to a Mundari village - on the way I  saw the path to the village where Bhagwan Birsa was born, the hillock where he organized meetings as also the presence of operation green hunt. PRADAN's intervention in a village begins by organizing women self help groups (SHGs). We were welcomed by flower garlands prepared by the different groups. The local PRADAN staff facilitated the women folk in drawing out a village resource mapping and planning of what could be done. With help from a special Swarnjayanti Gram Swarozgar Yojana (SGSY), which has now become the National Rural Livelihood Mission (NRLM). Mango plantation has been done in lands that were otherwise barren. Some poultry and goat rearing activities have also been initiated. Most importantly, it is this village that featured in Ek Ropa Dhan, on System of Rice Intensification (SRI) cultivation, that bagged the best promotional film at the 58th National Film Awards in 2010. The intervention in this village for SHGs for women built on the existing strength of the traditional gram sabha (which even today is largely a male affair) that has been functioning regularly. Today, however, there are occasions when the views of women are sought at times. 

We went to another village where I was shown of an intervention facilitated by PRADAN that has transformed a rocky barren land to a mango orchard. Seeing the success, other similar land are also being extended to orchards. I had a late evening interaction with PRADAN staff who had returned from their field locations and then returned back to Ranchi.

Early in the morning we left for Hazaribagh, rather Barhi block. Unlike, Khunti, this is not a tribal belt. Small women owned poultry farms and tasar weaving are some of the interventions in this region. Some SHGs have been operating for nearly two decades. I was told that some of these are functioning independently and some are now part of other groups - splintered from PRADAN. It would be worthwhile to know the level of interactions and the benefits. Also relevant would be to know about the SHGs that  might have closed down.  

We also went to a village with a number of women-run poultry farms. Some of the questions raised during discussions were risks associated with poultry farming on account of diseases and price shocks. The system followed by PRADAN spreads the risks and  absorbs the shocks while providing income.The last interaction was at Padma block. Here the women were very articulate. There were strong discussions on dowry, and in particular the issue of desertion of women, particularly among Muslims.

By the time we reached Hazaribagh we were joined by Abhijit and Souvik from Koderma and Goda respectively. One of the problems they indicated is the male migration and the unwillingness of the youth to engage in manual labour work (particularly the youth from the middle peasant communities). Thus agriculture has become a domain of the women whereas men migrate out in search of jobs (handling mechanized earth movers and with increasing susceptibility to diseases like AIDS, acquired immune deficiency syndrome). What are the livelihood interventions that would keep the men back and also save the family are important questions? The next day we returned to Ranchi and had a long discussion with Satya on the tasar story - Silken Spread.