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Poverty set to drop on statistical quirk

Mamata Singh in New Delhi

After a sharp drop in poverty reported in the 1999-2000 consumption survey of the National Sample Survey Organisation, the thin 56th round sample survey can reveal a further drop in the rural poverty levels.

The results of the thin sample survey, which concluded in June 2001, are expected to be out in some time, and can throw up unexpected results on account of a statistical aberration, statisticians say.

The poverty levels for the rural population are worked out on the basis of consumption estimates.

However, the inflation level, based on the consumer price index for agricultural labourers, was negative in the period between July 2000 and June 2001, when the survey was held.

Over the 12-month period, the level of inflation fell 19.93 per cent, which meant that prices fell by about 20 per cent for agricultural labourers.

As per the substitution effect, the consumption of items whose prices have fallen is expected to rise.

Agricultural labourers account for about 35 per cent of agricultural workers and constitute a major section of the rural poor.

A negative inflation for this section of the population means that if their consumption level has risen even by a small amount, their real consumption levels will shoot up and they will move above the poverty line.

However, in 2001-02, the inflation level based on the consumer price index for agricultural labourers rose almost 27 per cent.

A sharp increase in prices will mean that unless incomes increase in the same proportion, the consumption level will fall and the number of people below the poverty line will increase again.

The fall in inflation based on the index in July 2000-June 2001 was, in fact, contrary to the trend of rising prices and inflation in the previous and subsequent years.

However, experts differ. While the 55th round was a large sample round, the 56th round is a thin sample round, and therefore not a very good indicator of poverty, they say.

Also, if agricultural labourers get wages in kind, any changes in prices will not affect their consumption patterns.

In addition, the figures are national averages, and the price positions vary among states.

Besides, the centres from which data was collected could be different from those from which the thin sample was picked, they said.

All told, the impact of inflation on poverty is not very well defined and will be difficult to estimate, experts say, adding that it would be best to wait for the results of the survey, completed almost a year and a half ago, to come out.

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