ForumIAS announcing GS Foundation Program for UPSC CSE 2025-26 from 27th May. Click Here for more information.
News: Recently, policy advisors and researchers at the IMF and World Bank have also attempted to estimate headcount ratios under various assumptions.
About the recent poverty measurements by IMF and World Bank
The IMF method: It carried out the exercise using adjustments for private final consumption expenditure from the National Accounts Statistics and also using the expenditure incurred by the government under the public distribution system.
The World Bank method: It has tried to estimate headcount ratios using CMIE data from the consumer pyramids household survey from 2015 to 2019, relating it with the NSS consumer expenditure data from 2011 and data from other sources like the National Family Health Survey, PLFS, etc.
But the huge differences in the headcount ratios between the two studies add to the confusion in the already complicated measurement issues of poverty in India.
How does India calculate poverty estimations?
India uses the NSS consumption expenditure survey for the measurement of poverty. The results from it, carried out in 2017, are not available due to quality issues in the data collected.
India already has a measurement of multi-dimensional poverty that gives a better understanding of deprivation. The aspirational district programme extended to the block level and provides the direction and location where specific interventions are required.
Why does the NSS and CMIE surveys are not comparable?
Sample designs are different: For instance, NSS adopts multistage stratified sampling whereas CMIE uses rotational sampling.
CMIE’s Consumer Pyramids Household Surveys (CPHS) have unequal sampling probabilities. For instance, households on the main streets have a higher likelihood of selection.
Difference in definitions: The basic definition of the household is different in the two surveys.
Sample size and recall period: NSS collects information on more than 345 unique items to arrive at consumption expenditure estimates whereas CMIE does so through 114 items.
NSS expenditure is based on a recall period of 30 days for food items and others over 365 days, the CPHS consumption expenditure is based on a recall period of the last four months.
Time difference: The NSS survey data used is for the year 2011, and the CMIE survey from 2015 to 2019.
Change of weights: Unlike the NSS, the CPHS does not conduct a listing exercise and instead uses projections of households and population growth to construct sampling weights.
What should be done to measure poverty?
Measurement of poverty at the national level does not serve any policy purpose. One has to go down to the state, district, block and village level to identify pockets of poverty to develop and deliver special programmes needed in each case.
Source: The post is based on an article “NSS, CMIE are surveys not comparable. Studies should not relate them” published in the “Indian Express” on 13th June 2022.
