Prime Minister’s Economic Advisory Council (PMEAC) chairman Bibek Debroy on Wednesday asked whether a decline in inequality as suggested by the latest household consumption expenditure survey was a “good thing”.
“On the face of it is, is it a good thing that the Gini coefficient [a measure of economic inequality] has declined? We seem to take it for granted that this is necessarily a good thing… it depends, of course, on the level of the Gini coefficient. But we all know that as economies grow and prosper, inequality tends to widen a little bit.”
“The second question is… should we begin to look at Gini coefficients separately for different States,” he wondered.
He termed the debate over the gap between household consumption survey findings and spends measured in the national income accounts as “sterile”. “It is… a fact that inequality as measured by the distribution of incomes will be a little bit higher than inequality as measured by the distribution of consumption expenditure,” he said.
On the question of poverty, he said, “We still do not have an official poverty line that goes beyond Tendulkar,” referring to the recommendations of a panel led by the late statistician Suresh Tendulkar. The committee had in 2009 pegged India’s poverty line at a per-capita consumption expenditure of ₹33 a day in urban areas and ₹27 a day in rural areas.
“There was a Rangarajan [Committee that revisited the poverty threshold in 2014] but it was never officially accepted… and the MDPI [of the Niti Aayog] is not quite a poverty line,” Mr. Debroy asserted. The Multidimensional Poverty Index (MDPI) is calculated using results of the National Family Health Survey.
“So, the question to ask is… should we now have a new poverty line to which these [HCES] data can be applied,” he asked.