The Planning Commission constituted the Lakdawala expert group in 1989 to look at the methodological and computational aspects of estimating the proportion and number of poor people in India. The group's chairman was Prof. Lakdawala. The committee proposed calorie intake based on consumption expenditure as a criterion. In this article, we will study the Lakdawala expert group, which is important for UPSC Examination.

Lakdawala Expert Group - Background

• In the 1980s several methodological concerns have been raised in relation to the Planning Commission's poverty estimates.
• Given the importance of poverty eradication as a social goal, wide-ranging references to the incidence of poverty in discussions about social problems, as well as their use in allocating funds for poverty alleviation programs, it was thought that all issues relating to poverty estimation could be revisited by an expert group.
• In September 1989, the Planning Commission formed an 'Expert Group' to consider methodological and computational aspects of estimating the proportion and number of poor in India.
• The Expert Group's mandate is to "look into the methodology for estimating poverty at the national and state levels, as well as the question of re-defining the poverty line, if necessary."

Recommendations of the Lakdawala Expert Group

• The findings of the Lakdawala committee were based on the idea that the baskets used to construct the Consumer Price Index-Industrial Workers (CPI-IW) and Consumer Price Index-Agricultural Laborers (CPI-AL) reflected the poor's consumption patterns.
• Prof DT Lakdawala chairs an expert group on 'Estimation of Proportion and Number of Poor' (former Deputy Chairman Planning Commission)
• In 1993, the Lakdawala Committee issued a report that included the following recommendations:
  • At 1973-74 prices, the baseline should be Rs 49 per capita monthly expenditure in rural regions and Rs 57 per capita monthly expenditure in urban areas. At 1993 pricing, this amounted to Rs 115 per capita per month in rural areas and Rs 166 per capita per month in urban areas.
  • The poverty line would be calculated using 1973-74 as the base year.
  • The standardized commodity basket corresponding to the national poverty line would be used in state-specific poverty line estimations, but the value of the commodities would be based on the prices in each state in the base year, 1973-74. It highlighted the two tasks that needed to be completed for this purpose:

• The creation of a state-specific consumer price index, or CPI (more on CPI in a future article).
• Separate CPIs should be utilized for agricultural laborers (rural) and industrial workers and non-manual employees (urban).

• It would be suitable to rely on the disaggregated commodity indices for CPI for Agricultural Labourers (CPI-AL) to update the rural poverty line and a simple average of suitably weighted commodity indices of CPI for Industrial Workers (CPI-IW) and CPI for non-manual employees (CPI-NM) to update the urban poverty line.

Criticism of Poverty Line Method by Lakdawala Expert Group

The Poverty Line concept has been criticized and its flaws are highlighted from a variety of perspectives. They are divided into two groups:

• The first is concerned with the concept itself, and
• The second is concerned with the data and methodology used in India to estimate poverty.

• The poverty line is anchored in a norm for calorie consumption
• The notion of absolute poverty is inadequate because relative poverty is also an equally important aspect of poverty and is, in fact, a determinant of absolute poverty at a given level of national income, as absolute poverty need not be immutable over time, also it does not capture important aspects of poverty — ill health, low educational attainments, geographical isolation, ineffective access to law, powerlessness in civil society, caste and/or gender-based disadvantages, etc.
• The poverty line provides the conceptual rationalization for looking at the poor as a category.
• Normative and behavioral elements are compounded in the poverty line in as much as while being based on the calorie norm, it is derived from the actual expenditure pattern.
• The head-count ratio based on the poverty line does not capture the severity of poverty in terms of the poverty deficit, also insensitive to mobility within the below the poverty line group.
• Hence a practical approach should be Improving the set of poverty estimates as may be feasible from time to time, Supplementing indicators and information on various aspects of the conditions of the poor as well as Promoting research.

Conclusion

Lakdawala Expert group was founded by the planning commission in order to get a statistical analysis of poverty in India, which was based on calorie intake based on consumption expenditure, which faced a lot of criticism as it failed to consider facts such as poor health, low educational achievement, geographical isolation, inefficient access to justice, powerlessness in civil society, caste and/or gender-based disadvantages, and so on