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	Prices that bounce by Naomi Hossain Institute for Development Studies   I’m just back from South Kalimantan, part of Indonesian Borneo, where the idea that future food prices are likely to be jump even higher because of extreme weather events feels very real. Climate, energy, food and global economic crisis all feature in an alarming combination of volatilities. In the Banjarese community where IDS partners SMERU have been researching the social impacts of crisis since 2009, most people are rubber tappers. The past year has been particularly up-and-down, mainly down, even by the elastic standards of rubber producers.   We went to see one family, where the newly-single mother and household head – call her Siti – panicked when she saw us. ‘I’ve already paid’, she said. ‘I’ve paid for this month’. She thought we were debt collectors and was already behind on her first (I suspect also last) installment for her new motorbike, easily the most popular means of getting about Indonesia. Siti needed it because she had recently shed her violent unfaithful husband, and was looking after four children on the wages of a rubber tapper(her working hours are 2am till 10am, when the rubber is fresh and the weather is cool).   The wages of rubber tappers are well down on last year, mostly because rubber prices have been affected by the double dip in the global economy, but partly due to the unusually dry season. Sofian told us he and his wife Fatiyah were earning 2.25 million (about US$ 240) rupiah per month this time last year; now they were getting 600,000 to 700,000 (US$ 63-73), depending on quality and quantity of their rubber. That is for two adults putting in a shared 7 hour shift between 4 and 9am, 6 days a week.   But as the price of rubber has sunk, the price of most food has steadily risen. People still eat rice in the same quantities or mix it with noodles – work is physical and they need the energy – but have cut down on fish. And, presumably because of the soybean crisis in the US, the high protein staple of the poor, tempe (soybean cake), has doubled in price. As the motorcycle grocer explained as he sped off, the price is the same, so he halves quantities.   Focus groups told another story. Their main problem, they tell us, is water. Some people think it is deforestation that has caused the water problems in Kalimantan, but in this part of Banjar, people point to the growing presence of the coal-mines. A popular community development programme (PNPM) devised a water pump project in an area with a water source, only to find that by the time it was installed, the water had disappeared, sunk without a trace, as the coal-mines dug deeper into the earth. The mining company has bought up lots of local land, at cheap but still attractive prices, so many local people no longer farm their own land. But they are also too poor to get the education they need to work for the mining companies as drivers or mechanics. It’s all lose-lose here, at least until the rubber price picks up or food prices go down again.   * Naomi Hossain is a Research Fellow in the Participation, Power and Social Change research team at IDS. Visit the related web page
	India"s official poverty line doesn"t measure up by Jayati Ghosh Jawaharlal Nehru university India   Dec 2011 (AlertNet)   Inequality in earnings has doubled in India over the last two decades, making it one of the worst performers in terms of salary disparities from all the emerging economies, the Times of India has reported.   Aid workers say that despite doubling the size of its economy between 1990 and 2005, Asia''s third largest economy has not yet been able to wipe out poverty and has largely failed to translate its economic success to benefit the grassroots poor.   According to a new report by the Organisation for Economic Cooperation and Development (OECD), the top ten percent of wage earners in India now make 12 times more than the bottom 10 percent.   “There is evidence of growing concentration of wealth among the elite,” said the report.   “The consumption of the top 20 percent of households grew at almost 3 percent per year in the 2000s as compared to 2 percent in the 1990s, while the growth in consumption of the bottom 20 percent of households remained unchanged at 1 percent a year.”   Wage inequality has fuelled more general inequality in the country, said the report, adding that India''s Gini coefficient, the official measure of income inequality, has risen from 0.32 to 0.38, with 0 being the ideal score.   In the early 1990s, India’s income inequality was close to that of developed countries, but its performance has plummeted since then, bringing it closer to China on income inequalities than the developed world.   India spends less than 5 percent of its Gross Domestic Product (GDP) on social protection schemes compared to Brazil''s more than 15 percent and its tax revenue as a proportion of GDP is under 20 percent -- the lowest of all emerging economies -- and just half that of developed countries, said the report.   South Africa is the only emerging economy with worse earnings inequality, but it has halved this number over the last decade, the report added.   Oct 2011   India"s official poverty line doesn"t measure up, by Jayati Ghosh.   It is time to separate people"s real needs from the arbitrary assessments of poverty that have guided Indian governments.   India"s poverty line has always been a matter of huge debate, but it was a discussion mostly confined to economists and policymakers. But the matter has now gone public, following a row about an affidavit from the planning commission to the supreme court of India, in which the official poverty line was set at 26 rupees (around $0.53) per person per day in rural areas and 32 rupees in urban areas. This can only be a good thing, because the official attempts to measure poverty are not just arcane, but riddled with contradictions.   How exactly are these numbers arrived at? The measure was developed in the early 1970s, when a group of experts decided the appropriate line would be set according to the average monthly consumption expenditure of households whose members consumed (per capita) 2,400 calories of food per day in rural India and 2,100 calories per day in urban India.   Subsequently, the poverty line has simply been updated using consumer price indices. These numbers now have little to do with actual calorie consumption because food consumption patterns have changed. However, the use of that line has been defended by official sources who have argued that, at that level of expenditure, families could afford to buy minimum food and have simply chosen not to.   Of course, this begs the question of whether it is really choice or the urgent need to consume other items (energy, healthcare and so on) that determine patterns of spending. Nevertheless, it is precisely this line (annually updated by consumer price indices) that has been used to describe the extent of poverty in India for decades. This was roughly similar to the World Bank"s estimate of $1 a day (now $1.25 a day) per person, not at nominal exchange rates, but at purchasing power parity (PPP) exchange rates.   In recent times, various committees led by economists have come up with different ways to measure the extent of poverty. The official line delivers a poverty rate of around 32% of the population. A committee under Suresh Tendulkar estimated it at 37%, while another led by NC Saxena said 50%, and in 2007 the Arjun Sengupta commission identified 77% of Indians as "poor and vulnerable".   The World Bank"s PPP estimate of Indian poverty was higher than 40% in 2005, while the Asian Development Bank arrived at almost 50%. The UNDP"s Multidimensional Poverty Index finds the proportion of the poor to be higher than 55%.   All this even sounds ridiculous. And if it were simply a question of measuring the extreme poor and tracking the extent of extreme poverty over time, this discussion could indeed be left to the social scientists. But what has made it matter – for all the wrong reasons – is that these arbitrarily drawn poverty lines have been used to determine the extent to which citizens receive subsidised access to essential goods and services.   Since the mid-1990s, various government schemes have differentiated between the categories of "Below Poverty Line" (BPL) and "Above Poverty Line"(APL), and it was announced that a whole range of subsidised goods and services - from cheaper food grain in the public distribution system to subsidised healthcare to access to funds for basic housing – would only be available to BPL households.   Since India has a federal system, state governments are in charge of delivery of all these goods and services, and they have to decide which households are most in need through surveys.   In fact, many state governments have taken a more realistic view of the people in need and issued "BPL" cards to many more households than those recognised according to the official poverty line. In some southern states, for example, significantly more than two-thirds of rural households have BPL cards.   But the central government allocates resources (both money and food grain) to the states on the basis of the national poverty estimates taken from the national sample survey, which is based on the official poverty line. State governments that provide these goods and services to additional households have to finance the extra ones themselves. As they have faced hard budget constraints, this has become increasingly difficult. That is why the poverty numbers are such a bone of contention.   In this context, the only sensible thing for the government to do would be to separate the basic entitlements of the people, especially food, from such controversial numbers. This is the basic proposal of a statement signed by more than 30 leading economists, including two former state finance ministers and many senior economists who have worked with the government in different capacities. The statement is worth quoting:   "We do not consider the official national poverty lines set by the planning commission, at 32 and 26 rupees per capita per day for urban and rural areas respectively, to be acceptable benchmarks to measure the extent of poverty in India.   In any case, irrespective of the methodology we adopt to measure poverty, the number of poor and hungry people in the country remains unacceptably large.   While academic debates can continue on the appropriate measure of poverty in India, its extent and whether it is decreasing over time, we strongly believe that it is unacceptable and counterproductive to link the official poverty estimates to basic entitlements of the people, especially access to food.   Official surveys of nutritional intakes and outcomes indicate that undernutrition is much more widespread than income poverty, however defined.   It is also widely recognised that the targeted public distribution system (PDS) introduced since 1997 has done more harm than good by creating divisions even among the poor and has led to massive errors of exclusion.   Restoring the universal PDS appears to us as the best way forward in combating hunger and poverty. This must be a policy priority in the backdrop of high and persistent food price inflation".   Following the controversy, the government has now declared that it will take into account multiple dimensions of deprivation for arriving at specific entitlements that rural households will receive, and that the current poverty estimates based on these declared numbers will not be used to impose any ceilings on the number of households to be included in different government programmes and schemes. We still have to see how this will play out, but here is a step in the right direction.   * Jayati Ghosh is professor of Economics at Jawaharlal Nehru university, New Delhi. Below is a link to a Hunger Video Project - made by people from some affected communities. Visit the related web page
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