Recently (in early Mar 2012, as per ibnlive.com) we had a nasty discussion in the media as to the right Poverty Line (PL) for India after the Planning Commission said, "People consuming less than about Rs 29 per day in the urban areas, and about Rs 23 per day in the rural areas are below the PL".
The uproar is quite reasonable. Because one simple midday meal costs about Rs. 40 and the one day Metro Pass costs about Rs. 30 in any mid sized city in India. Then how come BPL is less than Rs. 29 per day? The person has money to buy just one meal a day, and he/she has no money to buy cloth, pay for shelter or travel in the city.
Dr. Montek Singh Ahuwalia, the Deputy Chairman of the Planning Commission came across very defensive. His point was that this BPL had no bearing on the Policy Decisions of Subsidy for the Poor People. He says, irrespective of the BPL, the Food Subsidy is given to about 46% of the population.
I totally disagree with him. My point is Rs. 150 per person per day is the most appropriate level. This means the person can eat three meals a day, but still he is poor because he/she can't have money to pay for cloth, shelter or travel. On this level, about 91% of Indians are poor and I call them India91% and the rest will be in India9%.
In the US, a family of four making less than $23000 a year ($15.75 per person per day) is considered below the PL.
Clearly, using the official exchange rate, even Rs. 150 ($3) per person per day PL is quite low comparing to the US. I refuse to use the Purchasing Power Parity (PPP) in all this discussion because it is seriously flawed. Official rate is readily accepted by any bank any time. PPP is for political discussion, and I believe it is inappropriate for serious economic or financial transaction.
Thinking that 91% of Indians are poor is very shocking to me... What's the root cause of this? I posit that it's the skill level obtained thru very poor education in India. Only about 7% of Indians have a high school pass education level or more!
The Solution naturally lies with Enhancement of Skill thru Quality Education.
More later on this....
