An internal analysis in the Planning Commission shows that India can eliminate the poverty gap by spending just a fraction of its annual anti-poverty budget instead of inaugurating new anti-poverty schemes. The cost of pushing all households above the poverty line would have been Rs. 55,744 crore during 2011-12 if cash transfers were used instead of anti-poverty schemes.

Of this, Rs 42,932 crore would have had to be disbursed to the below poverty line households in rural areas and the remaining Rs 12,812 crore to those in urban areas.

In 2011-12, the year for which the latest NSSO Consumption Expenditure Survey data is available, the UPA government had spent Rs 72,822.07 crore on food subsidy. The expenditure in the same year on the UPA’s seven flagship schemes was Rs 1,09,379 crore.

“The analysis shows our anti-poverty programmes are so leaky and inefficient that even after spending crores year after year, millions of Indians remain below the poverty line,” a highly placed official, associated with the analysis, told The Hindu .

“The government might as well lift everybody above the poverty line by simply giving them cash.”

Poverty gap is the amount of cash given to a household to lift it above the poverty line. It is the difference in the level of consumption of the households below the poverty line and those on the line.

The analysis uses the Tendulkar Poverty Line, according to which a household of five people subsists with a monthly consumption of Rs. 874.50. This poverty line is very close to the World Bank Poverty Line of an income of $1.25 a day (on a Purchasing Power Parity basis).

Households with lower consumption levels are said to be below the poverty line or living on less than the bare minimum required to subsist.

The UPA government has on an average spent close to Rs. 1 lakh crore a year since 2004 on anti-poverty schemes. This is set to rise as the annual cost of implementing the Food Security Law alone is estimated at Rs 1.2 lakh crore.

Spending less on schemes and more of annual budget will lift people above BPL: study

UPA government spent Rs 72,822.07 crore on food subsidy alone in 2011-12

Spending less on schemes and more of annual budget will lift people above BPL: study