Dear Friends:
This story is from the N Y Times (Aprl 10, 2012.). A similar article appeared in the NY Times not long ago, though the headline was different -bhuban April 10, 2012, 1:52 AM Who Deserves Welfare in India? By NIKHILA GILL and VIVEK DEHEJIA Channi Anand/Associated Press A young girl prepares a meal in a slum in Jammu, Jammu and Kashmir, March 26, 2012. Living on 29 rupees (a little more than 50 U.S. cents) a day may not be “such stuff as dreams are made on,” in William Shakespeare’s immortal turn of phrase from “The Tempest.” But according to India’s Planning Commission, which is charged with measuring such things, anyone spending more than that meager amount is considered to be above the poverty line. But what does the poverty line really tell us – is it a level of consumption above which people can live comfortably? As we explored recently in India Ink, the most basic function of the poverty line, in India as in all developing economies, is to track poverty over time and across regions. It does not, in and of itself, make a value judgment on whether 29 rupees is enough for a dignified life; it is simply a tool that allows the government to track the poorest segment of the population, calibrated so that about a third of the total population comes in under this benchmark. If measuring poverty is just a statistical exercise, why all the fuss over where the line is drawn? It’s because the poverty line, for good or ill, is often perceived as a cutoff for the government’s panoply of social welfare programs: that inevitably means that it gets politicized. Those on the right, who want less redistribution, will push for a more stringent poverty line, while those on the left, who want more, will push for a more generous one. Quite apart from the clash of ideologies, there’s the constraint imposed by the government’s budget, which, in a given year, will have a fixed amount of money set aside for each of the redistributive social welfare schemes. The government, whether anyone likes it or not, needs to find a way to target the most needy in a way that makes best use of its scarce resources but doesn’t break the bank. According to Surjit Bhalla, an economist and investment adviser, India’s approach makes sense. Most countries target the poorest 20 percent to 30 percent of their population for support. “The U.S. supports 14 percent of its poorest citizens, so India’s [poverty line] threshold fits in very well with the rest of the world,” Mr. Bhalla told us. Abhijit Banerjee, an economics professor at the Massachusetts Institute of Technology, agrees that the government should use the poverty line to allocate resources. “Whether it is the poverty line or some other metric, some number has to be used to target allocations. If the government wants to allocate money, what else will it use?” he asked rhetorically. Mr. Banerjee does, however, suggest a more nuanced approach than Mr. Bhalla. There’s no reason to have just one poverty line, he argues. The government can have different thresholds for each program, intended to target different beneficiaries. For example, since housing is unaffordable for many more people than, say, food grains, it would be legitimate for housing programs to have more generous cutoffs than the public distribution system (PDS) which gives the poor access to subsidized food. As a more radical alternative, the government could simply do away with targeting and instead universalize the PDS, or devolve the allocation of resources to the community level. Indonesia has tried the latter approach. “It doesn’t work particularly well, but it allows people to make their own mistakes instead of imposing a top down policy on them,” Mr. Banerjee said. “I am not saying that such a policy should be employed in India; given the caste politics, we are unprepared for it at the moment.” Be that as it may, most states use the poverty line as a criterion, requiring would-be recipients to apply for a below the poverty line (BPL) card, which entitles them access to, among other things, the “fair price” shops which sell subsidized food under the PDS. The process of applying for a BPL card is fairly standard across states. Karnataka, for example, requires a form with three photographs and lists documents that can be used as address proof. In the absence of these documents, especially in the case of very poor people, a “food inspector” conducts local inquiries to determine the authenticity of the applicant’s claim. In the absence of paperwork, and thanks to the usual red tape, the scope for corruption increases. Ironically, the very people who are meant to benefit from the subsidized grain sometimes have to pay large premiums to procure a card that, under the law, they’re entitled to free of charge. But that isn’t the story everywhere. Given India’s federal structure, states are free to experiment with how to implement the central government’s welfare schemes. Some states, such as Himachal Pradesh in the north and Tamil Nadu in the south, have opted for a universal PDS, which allows everyone to buy at the subsidized prices without needing to show a BPL card. Critics contend that universal access wastes valuable resources. What purpose would be served by making subsidized food, paid for through the government’s scarce tax revenues, available to people who can afford to buy food at market prices? But advocates hold that a universalized system, by simplifying the bureaucracy of redistribution, actually comes out ahead, by reducing administration costs as well as lessening the incentive to steal or divert from the system, euphemistically known in India as “leakage.” Research by Jean Drèze, an economist and former member of the National Advisory Council, and Reetika Khera, an economist and social activist, provides some evidence in favor of the optimistic view. Nationwide, there’s been a decline in leakage from 54 percent to 41 percent. But in states like Chhattisgarh, where PDS coverage is “quasi-universal,” covering 80 percent of the population, leakage has shown a dramatic drop from 52 percent to 11 percent. For Mr. Drèze, this is good news. He believes that the way forward is not to “fix the poverty numbers,” but rather to find an alternative to what he describes as the “bankrupt approach of BPL targeting.” He argues that universal access works better than a targeted cut-off because “everyone – or almost everyone – has a strong stake in it,” which serves as a check on leakage and red tape. He concedes, though, that this approach is “expensive;” although, he believes, “it tends to work,” he told us in response to an email. What would you recommend to the Planning Commission, which is working on its formula for targeting the government’s social welfare programs? Should it stick to the BPL, or advocate universal access. _______________________________________________ assam mailing list [email protected] http://assamnet.org/mailman/listinfo/assam_assamnet.org
