More than 300 million households considered in survey
Majority live in rural areas, less than 10% have salaried jobs
India’s latest Socioeconomic and Caste Census (SECC) paints a stark picture of widespread rural poverty and deprivation.
Of the 300 million households surveyed, an overwhelming majority (73%) live in villages. Of this rural population, less than 5% earn enough to pay taxes, only 2.5% own a 4-wheeler vehicle and less than 10% have salaried jobs.
Not only does rural India have miserable statistics on income and asset ownership, its literacy rates are low. Only 3.5% of students graduate and around 35.7% of residents can’t read or write.
It comes as no surprise that the bulk of the Indian population is still overwhelmingly poor.
Past surveys and experts have continued to emphasize the chasm between the two disparate pictures of India – one that owns ambitious space and nuclear programs, and boasts of billionaires and information technology prowess, and the one in the villages, of which 92 million households (51%) earn their living by manual labor.
The self-reported data from the SECC survey will be used for targeting new and existing welfare schemes. Toeing the line taken by the previous administration, the government refrained from making caste data public.
What does it mean to be ‘poor’?
India’s definition of “poor” has been hotly debated by development economists and activists, with several finding the official poverty line too low and leaving out a number of people who might still need government assistance. In 2014, a report by the Indian government Planning Commission estimated that 363 million Indians, making up 29.5% of the total population, were living below the poverty line in 2011-12. The report, by the Rangarajan Expert Group, also estimates that the India poverty ratio fell from 38.2% to 29.5% between 2009-10 and 2011-12, lifting 91.6 million individuals out of poverty.
According to a Pew Research Center report released this month, while people were able to move up the social ladder from poor to low income during the last decade, the actual number of people in the middle class (living on $10-20 a day) barely budged from 1% in 2001 to 3% in 2011. Most developing countries set poverty lines far below those of advanced country levels.
Living on double the Indian Planning Commission poverty line of $2.40 per day would still mean not meeting nutritional and other needs at developed economy levels. Many poor people “lifted out of poverty” are still living at levels closer to $2.40 than $10 per day. The Pew report estimates that at the proposed Rangarajan poverty line, food consumption alone would take up 57% of a rural family’s budget and 47% of an urban family’s budget.
Reliability of data questioned
India has traditionally been setting poverty lines (and welfare payments) based on consumption data, while the SECC presents a much more detailed household level data. The Rangarajan expert group recommends that the SECC data and population census be used for determining entitlements, and poverty ratios be merely used for determining allocations between states.
Leading development economist Jean Drèze adds an additional cautionary note: “We should beware of any illusion that SECC data can be used for the purpose of drawing a line between poor and non-poor households. There are fundamental, conceptual and practical difficulties with doing that on the basis of proxy indicators, even with good-quality data.”
Drèze also raises concerns about the quality and reliability of the SECC data, though he thinks the data is more reliable than earlier poverty surveys.
“The reliability of the data is anyone’s guess until the government releases at least some of the SECC data for independent scrutiny. The quality of the data is also likely to vary between different states and districts. Quite likely, the SECC dataset is more reliable than earlier Below Poverty Line (BPL) surveys, and could be well used, for pro-active identification of people who need social security pensions, housing subsidies and so on.”
Changing welfare schemes
The nature and design of India’s welfare state is undergoing a shift under the National Democratic Alliance government. The new government, in its central budget presented earlier this year, cut back funding for welfare schemes. The states have a larger share from the tax pool and are now expected to use their own funds to maintain welfare at current levels, and the central government has no say on allocation.
While this grants more autonomy to the states, there are concerns that maintaining welfare schemes at current levels might prove difficult for state governments that now need to make changes in their budgets. Poorer states that rely more on central funding for welfare payments may also find it challenging to maintain allocations.
At the same time, the center is embarking on new welfare programs. Perhaps the most ambitious and with the most political capital riding on it, is the prime minister’s Jan Dhan Yojana initiative, that aims to bring access to financial services to all households.
In January 2015, 115 million accounts were opened under the scheme, mobilizing INR 91.8 billion ($1.4 billion), the number of new accounts in the short time frame setting a Guinness record.
In May this year, Prime Minister Narendra Modi launched one pension and two insurance schemes, with the goal to create a uniform social security system for all Indians.
The hope is that with financial services, mobile phones and unique identification numbers in place for all Indians, it will be easy to make direct welfare payments to the poor.
SECC data shows that 71% of the rural India population owns a mobile phone. That, at least, is some reason to cheer.