Nashik & Kolhapur, Maharashtra: Every day, 55-year-old Ranjana Magar, a short and wiry woman, wakes up at 4 am. After a bath, she cooks and packs her lunch and boards a mini-truck carrying passengers to Girnare, 20 km from her home in Malegaon, a village in Nashik district’s Trimbakeshwar taluka, in north Maharashtra.
In Girnare, she stands at the main traffic intersection with thousands of people from nearby villages looking for work as agricultural workers.
By 7 am, farmers from around Nashik who need additional labour on their farms come to the chowk, hiring as many workers as they need or can afford. “I go to Girnare everyday,” said Magar. “There are no jobs in our village.”
Located around a hillock, land in Malegaon village is rocky, unsuitable for agriculture. “We get work in the village for around a week during the monsoon,” said Magar. On all other days of the year, she spends Rs 60 on the trip to and from Girnare, hoping to return with Rs 350.
Two or three days every week, however, Magar has to return home with no work and no wages, the fare to Girnare an additional loss. “Over the last four-five years, the number of people who gather at the chowk has increased three-fold,” said Magar.
In 2016, the year when Prime Minister Narendra Modi declared—and reiterated in 2018—that farm incomes would double by 2022, and before the government abruptly demonetised Rs 500 and Rs 1,000 banknotes, the daily wage at the Girnare chowk for female agricultural workers was around Rs 250. Over the last seven years, this increased to Rs 350, but it was easier to get by then, even with less, said Magar.
“Everything has become more expensive,” she said. A daily purchase of 250 gm of vegetables cost her Rs 10 then, up to Rs 20-Rs 25 now; the round-trip fare to Girnare was Rs 40, up to Rs 60 now.
Larger crowds of workers at the chowk mean limited negotiation power, and greater likelihood of returning home empty-handed. “Farmers keep asking us to work for less,” Magar said. “They offer Rs 200, but I don’t accept less than Rs 250.”
At a daily wage of Rs 200, after deducting the travel cost, there would be barely enough for daily needs. “There is no point working so hard in the sun just to come back home empty-handed.” Others however, more desperate, work for less, driving wages downwards.
The Poverty Data Vacuum
In 2017-18, for the first time in 18 years, the share of food in the total monthly expenses of urban households in Maharashtra crossed 40% in an indication of deeper economic vulnerability, the The Hindu reported on 5 July 2023 , quoting data released by the state government from a National Statistics Office (NSO) report shelved by the central government. In rural Maharashtra, it was 49%.
Between 2011-12 and 2017-18, average monthly expenditure on food for rural households in Maharashtra increased by 51% from Rs 658 to Rs 995. The share of food in the total monthly expenses increased from 46.1% to 48.7%, the first time it rose since 1987-88.
Meanwhile, real wages—wages adjusted to inflation—in rural India have contracted for 16 consecutive months, the Financial Express reported in July 2023, citing Labour Bureau data.
Between 2014-15 and 2021-22, agricultural wages adjusted for inflation rose by only 0.9%, according to an analysis by economist Jean Dreze. Converted from nominal wages to real wages using the Consumer Price Index for Agricultural Labourers, this growth was 0.2% for construction workers and 0.3% for non-agricultural labourers.
While these indicators point to growing economic distress, the government has released no data on whether poverty in India has increased or declined in the last decade. The last available household consumer expenditure survey, conducted by the National Sample Survey Office (NSSO) every five years and critical for estimations of poverty, dates back to 2011-12. The 2017-18 report was withheld.
‘Inequality Has Increased Massively’
This lack of data has prompted researchers to devise new methodologies using proxy surveys and private datasets to come to estimates of poverty.
Some of these estimates (see here and here) hint at a dramatic reduction in poverty, igniting what has been termed the ‘Great Indian Poverty Debate 2.0’. (The original debate pertained to the impact of India’s liberalisation in the early 1990s on poverty levels.)
However, these papers use data from either the National Accounts Statistics (NAS) or from private business information company CMIE (Centre for Monitoring Indian Economy), both disputed replacements for national sample survey data. They are also not backed by improvement of other indicators for living standards like real wages or hunger, economists told Article 14.
Moreover, demonetisation, implementation of Goods and Services Tax (GST), pandemic and climate change have negatively influenced the rural economy, we found as we spoke to farmers, contractors and labourers in villages in Maharashtra’s Nashik and Kolhapur districts.
“The bulk of the population has experienced a series of very negative shocks (some state-induced, like demonetisation, GST and the abrupt and unplanned lockdowns during the Covid-19 pandemic) with very inadequate state protection,” said Jayati Ghosh, development economist and professor of economics at the University of Massachusetts Amherst.
As India gears up for general elections in 2024, the issue of poverty levels and economic distress has seen a renewed interest.
“Unfortunately, so much essential data has been suppressed or changed in methodology or is simply not being collected,” said Ghosh. “This means that both the government and independent analysts are shooting in the dark.”
It was clear from available data, however, that the informal economy has suffered greatly, said Ghosh, that employment has stagnated and “inequality has increased massively”.
Between 2015-16 and 2020-21, the annual income of the poorest 20% households in India dropped by 53% while that of the richest 20% increased by 39%, found a survey by People’s Research on India’s Consumer Economy (PRICE), a Mumbai- based think-tank. The survey included 200,000 households in 2015-16 and 42,000 households in 2020-21 from 800 villages in 100 districts.
Farm Losses Drive Wages Down
In the Thikpurli and Shelewadi villages of Maharashtra’s sugarcane belt in Kolhapur district, daily wage for agricultural labourers has been stagnant at around Rs 100-150.
“Over the last five years, the wage has remained largely unchanged,” said Bharti Patil, a 45-year-old sugarcane farmer and labourer from Thikpurli. Before demonetisation, the daily wage was Rs 100. “Now if we work till 2 pm, we get paid Rs 100 and if we work till 5 pm, we get Rs 150.”
Despite the below subsistence-level pay, Patil cannot ask for more. “If I ask for more, I will have to pay labourers who I have to hire for my farm more. It will end up affecting me.”
Patil, who owns 15 gunthas (0.3 acre) of agricultural land, grows primarily sugarcane, but also a few vegetables, rice and groundnut for household consumption. These are critical to the family’s food budget, but it is still difficult to get by, said Patil. “I can work all day and get Rs 100-150. How can we sustain when sugar costs Rs 40 and oil costs Rs 150?”
The poor profits for small landholders from sugarcane, the only crop that Patil sells, hurts the family’s finances. While a thumb rule is that a guntha of land yields around 1 ton of sugarcane, the Patils’ 15 gunthas yield around 10-12 tons in a good year. At the rate of Rs 3,000 per ton, that amounts to Rs 30,000.
The costs add up quickly: Rs 4,000 to plough the land; weeding three to four times a year, each time at a cost of Rs 2,000-Rs 2,500; Rs 10,000 on fertilisers; Rs 5,000 for water. The Patils’ profit is Rs 5,000 for a year-long crop season.
“The situation is quite bad,” Patil said. “We are just surviving on half a bhakri instead of one, and pushing through to the next day.”
While the rate for sugarcane is fixed under the Fair and Remunerative Price (FRP) system, such is not the case for other crops, especially vegetables that 39-year-old farmer Manohar More grows. Over the last year, More has sold almost all his produce at a loss.
More grows onions, tomatoes, cabbage and wheat with his brother on a 20-acre farm in Dhondegaon village in Nashik district. “I had bought cabbage saplings for 70 paise each. And after working on them for three months, I had to sell the produce for Rs 1 per kilogram.”
More said when he started farming 10 years ago, he sold onions for Rs 5 per kilogram, the same rate he received this year, though expenditure on the farm has more than doubled. “One bag of fertiliser used to cost us Rs 500-600, now it costs me Rs 1700-1800.”
Farming in India has been unprofitable for almost two decades, a 2018 report by the Organisation for Economic Co-operation and Development (OECD) found. The report said that gross farm revenue declined by 14% on average between 2000 and 2016, resulting in losses for farmers. For India’s rural community, half of whom depend on agriculture, these losses impact incomes and livelihood.
As losses mounted, the first casualty in More’s farm operations were labourers. “The way to reduce costs is to hire fewer labourers,” said More. “Everyone in the family pitches in. So we hire labourers only when we really need to.”
Onions are the only major produce that More can hope to get a good rate for, by storing them for longer and selling when rates are high. Untimely rains have, however, limited this possibility too. “In the last four-five years, there has been an increase in unseasonal rainfall,” he said.
Farmers in Maharashtra lost Rs 7,000 crore to climate change-related incidents in the five years between 2018-19 and 2022-23; and, as per a 2022 report by Climate Transparency, a global partnership, farmers in India suffered losses amounting to $3.75 billion (~Rs 31,000 crore) in between 2016 and 2021.
These losses acutely impact landless farmers like 60-year-old Vishnu Potinde who finds regular work as a labourer only during the four months of the monsoon. In addition to working as a labourer on other people’s lands, Potinde leases a plot of land to cultivate rice.
Upon harvest, he gets to keep half the produce while the rest is handed over to the landowner, a lease payment. The family depends on this rice as a year-long staple. However, in 2022, because of irregular rainfall, Potinde ended up with only two sacks of grain, barely enough to last a couple of months.
“There was barely any yield left after giving it to the landowner,” said Potinde. In addition to the changing climate, rising prices combined with stagnating wages has dealt a blow to Potinde’s financial situation.
“What used to cost Rs 200 now costs Rs 500 and what used to cost Rs 500 now costs Rs 1,500. But our daily wage has stayed constant between Rs 200 and Rs 300,” said Potinde. His family gets by with vegetables from the farms he works on, or small loans from neighbours. “The only reason they give it to me is because they know I am hardworking and that I will pay it back.”
Three Shocks: Demonetisation, GST, Pandemic
Before December 2016, Nana Gangurde, 50, used to have four different job sites at a time. A resident of Pimplad village, he undertook contracts for metal fabrication work in nearby Trimbak town. Now, he said, days pass with no work at all.
For the few commissions that exist, there is increased competition. In March, Gangurde got a contract for metal fabrication work for the construction of a marriage hall, for Rs 120,000. He started the work, but halfway through, another fabricator contacted the owner and offered to do it for Rs 80,000. Gangurde had completed half the work, and said he hopes he gets paid for half the labour.
The impact of demonetisation had only begun to recede when the pandemic struck. “I did not leave my house for 18 months during the pandemic,” said Gangurde. “We were just barely surviving.”
Like Gangurde, 45-year-old Devchand Bendkoli from Trimbakeshwar has also been unable to find regular work since demonetisation. Construction labourers, Bendkoli and his son used to be busy for several months in a year. “Now, I find some work for two-three days and then have to look for another gig,” he said.
With not many farm jobs available in his village, and many migrating to the cities to find work, Gangurde said finding work everyday in the cities would be difficult too. “I will do MGNREGS work, too but that also is not available.”
The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) is a 2005 central government policy to guarantee at least 100 days of wage employment in a financial year to every rural household. The scheme, integral to improving the standard of living in rural households by increasing household income, has been systematically undermined since 2014.
Since 2016, India’s economy has faced multiple shocks—the demonetisation of Rs 500 and Rs 1000 currency notes with four hours’ notice to citizens in 2016 that led to job losses, falling farm incomes and a decline in rural wages; the imposition of the goods and services tax in 2017 that led to farmers paying hefty taxes on agricultural inputs; and the sudden nationwide lockdown and pandemic in 2020, which led to more job losses, loss of income and a food security crisis.
“We have to pay GST on everything we buy, from fertilisers to seeds,” said More, “But our produce does not come under GST.” Under GST, farmers incur 5%-18% tax on inputs including fertilisers, pesticides and equipment. But they cannot claim input tax credit like businessmen and manufacturers. This has led to an added annual burden of Rs 15,000 crore for Indian farmers.
In an October 2020 interview to The Print, former RBI governor Raghuram Rajan called these three events ‘jhatkas’ or jolts to the Indian economy and said that loss of jobs and livelihood would lead to many Indians becoming impoverished.
During the same period, fuel and gas prices rose sharply. In December 2017, a subsidised gas cylinder cost just below Rs 500 and an unsubsidised one was around Rs 750. A gas cylinder now costs around Rs 1,100.
In 2020, the government also stopped the direct benefit transfer subsidies to low income households. Between 2018-19 and 2021-22, government expenditure on LPG subsidy decreased by 84%, from Rs 37,209 crore to Rs 242 crore, on account of subsidy withdrawals and voluntary surrendering of the LPG subsidy.
In June 2022, a subsidy of Rs 200 was introduced but it was applicable only for beneficiaries under the Pradhan Mantri Ujjwala Yojana, a union government programme aimed at providing clean cooking fuel to rural and deprived households. Even with the subsidy, a gas cylinder would cost around Rs 1,000, almost twice the price in 2017.
In the same time period, petrol rates increased by 50%. In July 2017, one litre of petrol cost between Rs 63-75 in major metro cities and now, in May 2023, it costs around Rs 100.
The Great Indian Poverty Debate 2.0
The latest official estimate on poverty levels in India are from the Consumption Expenditure Survey (CES) conducted by the erstwhile National Sample Survey Organisation (NSSO) in 2011-12.
The survey, which has been conducted every five-six years since 1973-74, was also conducted in 2017-18. But the report, which showed consumer expenditure falling for the first time in four decades, was scrapped by the government citing “data quality issues”.
This lack of official data for a decade has meant that there is no accurate assessment of how economic shocks such as demonetisation and the pandemic impacted poverty levels. It has also led to multiple efforts using other surveys and data points to come at an estimate.
Of these efforts, the most contentious one has been an April 2022 IMF working paper by Surjit Bhalla, Karan Bhasin and Arvind Virmani. This paper used the 2011-12 CES and annually released National Accounts Statistics (NAS) which provides data on economic indicators at the national level to state that “extreme poverty has been virtually eliminated”.
“The NAS methodology is very questionable,” said Himanshu, associate professor of economics at Jawaharlal Nehru University (JNU). “It is one number for all of India. What Bhalla and others do is they take the distribution from CES and then change the numbers from the CES by integrating it with the national accounts consumption figures. It is a wrong thing to do because normally you don’t change whatever there is in the survey. Also, NAS is not designed to provide an estimate about per capita income or consumption so no one uses NAS to determine poverty.”
Maitreesh Ghatak, professor of economics at the London School of Economics, said using national accounts statistics to infer poverty is akin to “trying to find out what is happening to people living in slums based on data on sales of goods in a local market”. The assumption that everyone’s consumption grew at the same rate as the national accounts numbers was incorrect, he said.
In the same month as the IMF working paper, a World Bank working paper aimed to provide an updated estimate of poverty levels and said that extreme poverty decreased by 12.3 percentage points between 2011 and 2019. The paper used a Consumer Pyramids Household Survey (CPHS) conducted by a private organisation, the Centre for Monitoring Indian Economy (CMIE), to come to this conclusion. The CPHS is a panel survey that surveys the same set of households every quarter since 2014.
But the CPHS sample has become biased towards “better-off (or better-educated) households over time”, Jean Dreze, economist and visiting professor at Ranchi University, and Anmol Somanchi, an independent researcher, wrote in June 2021.
“The CMIE’s Consumer Pyramid Household Survey is not a reliable basis for poverty estimation because it is known to miss many poor households,” Dreze told Article 14 via email, “Attempts have been made to repair the bias, but this is very difficult to do until we understand the roots of the bias.”
Discourse on social media has also used data points such as GST collection, UPI payments, air travel traffic and car sales to contend that the Indian economy is doing well, Vivek Kaul, writer and economic commentator, wrote in the Deccan Herald, “What these data points tell us is that a small section, or the well-to-do part of the society, is doing even better than it was in the past.”
The top 10% of Indian population with an average annual income of around Rs 11 lakh holds 57% of the national income, while the bottom 50% hold just around 13%, earning Rs 53,610 annually on average, found the World Inequality Report 2022. The report termed India as a “poor and very unequal country, with an affluent elite”.
This gap has been widening since the mid 1980s and early 1990s when deregulation and liberalisation policies were first introduced. However, it is difficult to assess recent changes in levels of inequality because “over the past three years, the quality of inequality data released by the government has seriously deteriorated”, said the report.
“The data vacuum gives a free hand to the spin doctors,” said Dreze, “For instance, a pro-Modi economist produces so-called poverty estimates based on upbeat assumptions.”
These ‘estimates’ are attributed to the World Bank or IMF after a paper is published in their working paper series, said Dreze. “Then a journalist turns them into an infographic that gives an impression of dramatic poverty reduction. Social media does the rest.”
By the time the biases are exposed, the world has applauded India for its poverty reduction record, said Dreze. “As the 2024 elections approach, the pressure to produce rosy evidence is building up. And the acrobats tend to be rewarded, so the circus goes on.”
Meanwhile, the NSO has revamped the consumption expenditure survey, including three visits to each household instead of one. The results of the 2022-23 survey that is meant to end in July 2023 may be published after the general elections, reported the Indian Express in April. The government is conducting two surveys to ensure reliability of the results, according to the report, and a second survey would be launched in July 2023.
If the government decides to publish the reports of both the surveys together, then data on how many people like Magar live in poverty in India will be released only after the elections.
(Shreya Raman is an independent journalist based in Mumbai covering gender, health, labour and public policy. Maya Muktai is a video journalist based in Nashik reporting on social issues. Courtesy: Article 14, a joint effort between lawyers, journalists, and academics that provides intensive research and reportage, data and varied perspectives on issues necessary to safeguard democracy and the rule of law.)
Two other articles published in The Wire, both by Wire Staff, also indicate rising poverty in India. We give extracts below:
1. “21% Informal Workers Leave PM Pension Scheme, Inflation, Cost of Living Main Factors”
Nearly 21% informal workers have unsubscribed from the Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM), the Union government’s pension scheme meant for unorganised workers, in less than six months, the Economic Times reported.
The total subscribers under the scheme fell to 4.43 million on July 11, down 1.19 million from 5.62 million on January 31, as per government data. This has raised questions about the viability of the scheme, the Economic Times report said.
According to experts, high inflation and rising cost of living has increased the workers’ difficulties and could be preventing them from contributing to the voluntary pension scheme.
“Stubbornly high prices have raised the actual cost of living, making it difficult for these workers to sustain the burden of monthly contribution under the scheme,” labour economist K.R. Shyam Sundar told the Economic Times. “It would not be surprising if these are permanent exits, with workers actually withdrawing their contribution along with the interest earned on it as high prices continue to pinch on their pockets,” Sundar added.
The scheme, launched with the aim of extending social security benefits to unorganised workers, caters to those in the 18-40 age group and earn less than Rs 15,000 per month.
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2. MGNREGS Numbers Reached Three-Year Peak in June: Report
The number of households signing up for the 100-day job guarantee Mahatma Gandhi National Rural Employment Guarantee Scheme reached the highest figures in three years in June 2023, Indian Express has reported.
This is the third time since April 2014 – since the time monthly figures have been available – that the number of households has crossed three crores.
The 3.04 crore figure is a 10% jump over last June’s numbers.
The Express report said that the only other two times that number of households availing themselves for MGNREGS crossed the three-crore mark was in May 2020 (3.3 crore) and during the COVID-19 lockdown of June 2020 (3.89 crore).
These updates come as the Narendra Modi government continues to reduce allocation for the scheme. In this year’s Budget, MGNREGS got Rs 60,000 crore. As The Wire had reported, this was despite the fact that the revised estimate for FY’23 was at Rs 89,400 crore, up from the budget estimate of Rs 73,000 crore.
