ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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POVERTY-Flash in the Pan

Flash in the Pan?
IN estimating poverty levels in the country, the meticulous work of academicians associated with the National Sample Survey Organisation (NSSO) has finally borne fruit and confirmed the superiority of the results of the NSSO's nation-wide sample surveys over the indirect estimates derived from the National Accounts Statistics (NAS). The Expert Group Report (1993) on estimation of the proportion and number of the poor has rejected the Planning Commission's practice of making pro rata upward adjustments to the NSS size distribution of per capita total consumption expenditure on the assumptions that (a) the higher estimates of consumption expenditure derived from the NAS should be preferred to the lower consumption figures revealed by the NSS; and (b) consistency between the two estimates can be achieved by applying an adjustment factor based on the difference between the two estimates uniformly across all items of consumption, all size-groups of per capita consumption and all states. Finding these assumptions to be not valid, the Expert Group has held that "it is better to rely exclusively on the NSS for estimating the poverty ratio by state and rural and urban areas!' The Expert Group has, however, emphasised that estimation of the incidence of poverty should be for the years for which the large-scale NSS rounds of quinquennial surveys are available, suggesting by implication that the annual surveys of the NSS on consumer expenditure (and employment-unemployment) with relatively small sample sizes may not be enough of a base for the purpose. The point is well taken, for the sample surveys fail to capture the extremes of the rich and the poor, thus tending to underestimate inequality in consumption. The underestimation is likely to be especially serious if the sample size happens to be very small.

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