Impact of Methodological Changes on Poverty Data in India’s 2022-23 Household Consumption Expenditure Survey

Source: The post impact of Methodological Changes on Poverty Data in India’s 2022-23 Household Consumption Expenditure Survey has been created, based on the article “Not NDA vs UPA: The numbers behind the poverty debate” published in “Indian express” on 1st June 2024.

UPSC Syllabus Topic: GS Paper 1– Society-poverty and developmental issues

Context: This article discusses the recent Household Consumption Expenditure Survey (HCES) in India, focusing on how poverty rates are calculated and the debate over whether poverty reduction was more effective under the NDA or UPA government. It highlights changes in survey methods and questions their impact on poverty data comparability.

For detailed information on All India Household Consumption Expenditure Survey 2022-23 read this article here

What changes were made in the recent Household Consumption Expenditure Survey in India?

1.Use of MMRP: Since the inception of HCES, the NSSO has employed a 30-day recall period, known as the Uniform Reference Period (URP). But now the latest survey shifted to the Modified Mixed Reference Period (MMRP) for better data accuracy, incorporating seven-day, 30-day, and 365-day recall periods.

2.Multiple Questionnaires: Unlike earlier surveys that used a single questionnaire, the 2022-23 survey employed three distinct questionnaires for food items, consumables and services items, and durable goods.

3.Multiple Visits for Data Collection: Previously, data collection involved a single visit, but the latest survey adopted a multiple-visits approach, aimed at improving the quality of responses.

4.Impact on Non-Food Reporting: This led to a sharp increase in reported non-food items consumption in 2022-23 due to improved reporting.

How are poverty rates calculated?

1. Initially, poverty rates were calculated based on calorie intake, but dissatisfaction with this method led to new guidelines by the Tendulkar Committee, which didn’t focus solely on calories.
2. In 2012, the Planning Commission, guided by the Rangarajan Committee, suggested a broader approach, including food, clothing, and other essential needs to define the poverty line.
3. Use of Price Indexes: Consumer Price Index is used to update the base year poverty line across studies, ensuring adjustments for inflation.

For detailed information on Poverty Measurement in India: Approaches and Challenges read this article here

What does the data show about poverty reduction under different governments?

1. UPA Period (2004-2011): Poverty decreased from 37.2% to 21.9%, averaging an annual decline of 2.2 percentage points.
2. NDA Period (2011-2022): Poverty fell from 21.9% to about 6%, with an average annual reduction of 1.6 percentage points.

Why is it hard to determine which government reduced poverty more?

1. Temporal Misalignment: Data collection periods do not coincide exactly with the terms of UPA or NDA, making direct comparisons difficult.
2. Changing Survey Methods: Differences in survey methodologies, such as the shift to MMRP and multiple-questionnaire use, affect data comparability.
3. Impact Delay: Anti-poverty measures take time to show results, so effects may not align with the government’s tenure.
4. Near-Poverty Reduction Challenges: As poverty rates decline, reducing them further becomes more difficult, complicating percentage comparisons.

5.Inflation Adjustments: Different approaches to updating poverty lines with the Consumer Price Index can lead to varied estimates, influencing perceived effectiveness.

Question for practice:

Examine how the changes in survey methods in the 2022-23 Household Consumption Expenditure Survey impacted the reported consumption of non-food items in India.