Debunking tall claims of poverty decline

NT Correspondent

Bengaluru: Noted Belgian-born welfare economist and activist Jean Dreze recently weighed in on the recent claims about the spectacular decline in poverty in India, suggesting that the assertions are inaccurate and that the data cited is also wrong.

He was responding to an article that appeared in a newspaper and was co-authored by fellow economists Surjit Bhalla and Karan Bhasin (referred to henceforth as B&B). Dreze penned his rebuttal in the same publication.

Similar claims were made by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative (OPHI) report back in October. Typo led to miscalculations! Dreze pointed out that B&B mistook data on deprivation-specific Head Count Ratios (HCR) from 2005-06 as figures from 2011-12, all thanks to a typo! The 2005-06 figures were mistakenly copy-pasted in the 2011-12 column.

B&B even admitted to this mistake. The HCR figures are based on National Family Health Surveys (NFHS). However, the ‘2011-12’ figures were taken from the second Indian Human Development Survey (IHDS). The comparison between the two data sets was faulty to begin with. HCR refers to the percentage of deprived persons in the population.

The statistic was used to claim that poverty decline accelerated under the Modi government and that the betterment was felt in all 10 indicators of “multi-dimensional poverty” (MP). The three main indicators used to measure MP in this case are health, education and amenities.

The Belgian-born activist added that the copy-pasted figures were from an earlier outdated data series, which gave rise to the false understanding that there had been an eight-fold decline in poverty after 2011-12.

Therefore what was taken to be a comparison between the figures of 2011-02 and 2019-20 was actually a comparison between 2005-06 data and 2019-20. “The 2011-12 figures are plain wrong, as B&B graciously admitted by email. They are actually from a 2005-06 MP outdated series, copy-pasted by mistake.

So, the alleged comparison between 2005-06 and ‘2011-12’ is actually a comparison between two sets of estimates for 2005-06 (indeed, the respective figures are very close to each other), and the comparison between 2011-12 and 2019-20 is actually a comparison between 2005-06 and 2019-20.

No wonder that B&B found that HCR decline was so slow before ‘2011-12’ and so rapid after that! This goof-up cannot be repaired because IHDS (Indian Human Development Survey) data are not comparable with NFHS (National Family Health Surveys) in any case,” Dreze said. He then pointed out that the HCR data was also not completely reliable.

“We can try to salvage something from this wreck by discarding the 2011-12 figures and focusing on the comparable NFHS figures for 2005-06, 2015-16 and 2019-20. Alas, those figures are wrong too as anyone familiar with NFHS data would immediately notice.

The figures projected by B&B as specific HCRs (‘the per cent poor/deprived according to that indicator’ as they put it) are not in fact head count ratios. They are ‘censored head count ratios’,” he said, partly because “percentage decline is easier to achieve from a lower base.”

Amenities shot up, not much else More importantly, the rate of decline (after 2011-12) is also explained by improvement in amenities such as access to cooking fuel, sanitation, drinking water, electricity, housing and assets, he said.

“Even if there is no improvement in say, nutrition, the censored HCR for nutrition deprivation would decline over time because multidimensional poverty was declining,” Dreze said, pointing out that equal “weight” was attached to all three indicators: health, education and amenities.

He cited his own “correct” data in the process. Moreover, the figures were mostly gathered before the pandemic and don’t take the effects of Covid-induced lockdowns into account. The naturalised Indian activist also pointed out that the indicators don’t take short-term purchasing power into account. This of course was severely affected by demonetisation, a policy that was applauded by Bhalla.