Number of urban poor who get govt benefits may come down by more than half

Urban households eligible for “automatic inclusion” in government-funded welfare schemes will come down from 18.1 million to 7.2 million if the government accepts a refined methodology recommended by an expert panel.

In terms of percentage, the number could decrease from 27.8% to 11.1%. There are 65.1 million urban households in India.

The committee, headed by NITI Aayog member and economist Bibek Debroy, was set up in January by the Union housing and urban affairs ministry. The panel’s goal is to fine-tune the method recommended in 2011 by another panel, led by SR Hashim, to identify poor families in towns and cities.

The panel pegged the overall number of urban households entitled to at least one government benefit, even if they don’t qualify under the “automatic inclusion” category, at 30.9%.

The previous figure calculated through the Hashim committee’s method was 35%. In rural areas, nearly half of the 180 million homes fall in this category.

“We are going through the Debroy panel’s report. No decision has been taken as yet,” said a senior ministry official.

Debroy was recently appointed chairman of the economic advisory council of the Prime Minister.

The prime minister’s office discussed the report in September and directed the housing and urban affairs ministry to make the findings public. The ministry hasn’t done it yet.

The Hashim panel’s methodology, which was used for conducting the socio-economic caste census (SECC) in urban areas, found 18.1 million households to be eligible for “automatic inclusion”. But in the villages, which have three times the number of homes than urban areas, the figure stood at a negligible 0.89%.

“In rural areas, the number of automatically included is less than 1%, in urban areas it is 27%,” a government official said.

The Hashim committee’s methodology warranted a relook because of the huge difference in the “automatic inclusion” figures in urban and rural areas, according to government officials.

The divergence is on account of the panel’s “automatic inclusion” criteria, which are expansive as they include all casual workers and other factors.

The Debroy panel, which modified the previous methodology, pegged the number of urban households that will automatically become eligible for benefits at 7.2 million or 11.1%.

It said all earning adult members of an urban family, even daily or irregular earners, should be dropped from the “automatic inclusion” list as their income doesn’t reflect their economic vulnerability.

It suggested incorporation of additional information and parameters to identify eligible beneficiaries such as credit card with defined credit limit, any member of household earning more than a given level of income each month, and paying income tax. “These parameters were factored in during the rural survey,” an official said.

So far, the housing and urban affairs ministry has not used the SECC data to identify beneficiaries for its pro-poor schemes such as Pradhan Mantri Awas Yojana (PMAY) and National Urban Livelihood Mission.

But the rural development ministry is using the SECC data for identification of beneficiaries for, say, PMAY, National Old Age Pension Scheme, and National Widow Pension Scheme.

The Hashim committee recommended a three-stage process to identify the urban poor. These were automatic exclusion, automatic inclusion and a scoring index. Any family is automatically identified as poor if it doesn’t have a home, any income or is headed by a woman or physically challenged person, according to the Hashim panel’s method.

A family is excluded automatically from the list if it owns a four-room home and any of these assets such as a car, air-conditioner or computer, or any of these three together — a fridge, a landline phone, a washing machine or a two wheeler.

The Debroy committee suggested families owning computers with internet connectivity or landline phone should not be “automatically excluded” from the urban poor list. It contended that possessing such assets does not indicate one’s economic power.

The panel felt that these assets facilitates “economic transactions efficiently” and promote “social interactions among people” and it will be “anachronistic” if they are used as a criterion for exclusion of a deserving person from social benefits.

The Hashim committee had recommended excluding such families.