How poor is India?

In spite of having scores of billionaires, India remains an impoverished country where millions suffer from inadequate food, malnutrition, health problems and illiteracy. How many Indians are poor and whom do we call poor? Where do they live and what are the causes of poverty? Unless we answer these questions, we will not be able to solve the problem.
So how many Indians are poor? If you google the words “836 million” you will get plenty of sites that answer the question. The number of poor Indians is 836 million. Where does this magic figure come and does it change with time? I investigated this last year. What I found was astounding. The National Sample Survey Organization (NSSO) is a unit of Government of India that undertakes various surveys every year to collect data about the people of India. It does not survey household or per capita income. What it attempts to find out is per capita expenditure. For example, on an average a person in rural India might be spending Rs 25 per day to buy all the requirements such as housing, food, clothes, entertainment etc. Rs 25 per day are equivalent to Rs 750 per month. This quantity is called Monthly Per Capita Expenditure (MPCE).
In 2007, another Government of India body, National Commission for Enterprises in Unorganized Sector or NCEUS published a document http://nceus.gov.in/Condition_of_workers_sep_2007.pdf
where it came up with the magic figure of 836 million poor people in India. After reading this document, I found out that they have used the NSSO 61st round sample survey data that was collected in 2004-05. Based on Indian population at that time, NCEUS claimed that 836 million Indians or 77% of the population live in poverty. Their cut-off point for identifying a person as poor was a Daily Per capita Expenditure of Rs 20 or less. This is equivalent to MPCE of Rs 600 or less. In simple terms, if a person spent less than Rs 600 per month in 2004-05, he/she was identified as poor.
I wanted to cross check the veracity of this measurement. I did my own calculations based on the same NSSO 61st round survey of 2004-05 and found out that the number of poor people was actually 675 million and not 836 million. Only 62% of Indians spent less than Rs 20 per day as opposed to NCEUS’s claim of 77%. Also these figures are from 2004-05. In 2009, the number of poor people must have come down significantly.
My efforts to publicize this error failed. I had emailed the facts to the Prime Minister and Finance Minister of India but those emails failed to reach their destination. I wonder why Government of India publishes emails of important persons when attempt to send email fails.
If you are interested in my computations, here is the document:
http://spreadsheets.google.com/ccc?key=rowhR0mhtjbyoHbsR64kALw&hl=en
Unfortunately, even in 2009 politicians of all hues claim that 77% of Indians are poor. Now we know that the figure is false and the actual percentage is 62%. A very important point to note is that out of these 675 million poor people ( out of a total population of 1090 million in 2004-05), an overwhelming majority of 586 million live in villages while another 88 million live in urban areas. We can therefore safely infer that most of the poor are rural people. In the next blog we will see why there is huge poverty in rural India.