‘Poor households underrepresented in CPHS surveys’

The paper titled “Weighty evidence? Poverty estimation with missing data”, written by Jean Dréze, Visiting Professor, Ranchi University and Honorary Professor, at Delhi School of Economics, and Anmol Somanchi, a graduate student at Paris School of Economics, states that poor households seem to be underrepresented in these CPHS surveys.

This paper studied the World Bank’s method of “re-weighting” the CPHS observations to bring the means of essential socioeconomic variables in line with independent, credible estimates of these statistics, for instance, education levels.

The paper mentioned that poverty estimates by the World Bank study assume that the underrepresentation of poor households in CPHS data is fully corrected by the max-entropy method. But, the simulation exercises by Dréze and Somanchi suggest that the correction is only partial and possibly far from a full correction.

“There is another crucial problem with the estimation of poverty trends from CPHS data: the underrepresentation of poor households seems to have grown over time in recent years,” it said.
“…repairing this gap tends to get harder as the gap gets larger – just like socks are harder to mend when the hole is wider. Thus, growing underrepresentation of poor households could easily create an illusion of poverty decline,” it added.

In April 2022, a study by World Bank’s economists Sutirtha Sinha Roy and Roy van der Weide, named “Poverty in India Has Declined over the Last Decade But Not As Much As Previously Thought” had relied on the same dataset of CPHS surveys, adjusting the survey weights to examine potential biases in it. It found that extreme poverty in India has declined by 12.3 percentage points between 2011 and 2019 but at a rate that is significantly lower than the 2004-2011 period. It had noted that poverty reduction rates in rural areas are higher than in urban areas. Urban poverty rose by 2 percentage points in 2016 during demonetisation and fell sharply thereafter; rural poverty rose by 10 basis points in 2019, likely due to a growth slowdown.

The poverty debate again assumed significance after a new paper authored by former Niti Aayog Vice Chairman Arvind Panagariya and Vishal More, Founder of New Delhi-based research and consulting organisation Intelink Advisors, said that rural poverty as a percentage of the total rural population declined continuously every quarter beginning July-September 2020.

According to the paper, it is only during the strict lockdown period of April-June 2020 that rural poverty saw a “modest rise”. But it fell for the full year 2019-20, even if at a significantly lower rate. It witnessed a sharp decline in 2020-21 as in the pre-Covid year of 2018-19.