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India abandons poverty rate benchmark for social programs

Oct 3, 2011, 6:59 a.m.

By Manoj Kumar

NEW DELHI (Reuters) - India's government said on Monday it would stop a controversial rate of 32 rupees ($0.65) a day being used as a benchmark for access to anti-poverty programs, a move which could raise the cost of its pro-poor agenda as it battles political storms.

The benchmark -- barely enough to buy a return ticket on New Delhi's underground -- has been used for years to help calculate who gets subsidizes in a country where malnutrition rates in some states are worse than the sub-Saharan Africa despite Asia's third largest economy enjoying years of economic boom.

Instead, the government wants to rely on an official survey to identify subsidy beneficiaries under a new food security bill promoted by Sonia Gandhi, the powerful head of the ruling Congress party.

"The (government) planning commission is not taking the view and has never taken the view that benefits should be restricted to only those below this poverty line," Planning Commission deputy chairman Montek Singh Ahluwalia, one of government's top policy advisors, told reporters.

Ministers, whose government is struggling to deal with high inflation and corruption scandals, want to win favor with poor voters as the ruling Congress party heads for state elections next year.

"Only dogs and animals can live on 32 rupees a day," N.C. Saxena, a member of the National Advisory Committee that is chaired by Gandhi and advises the government on social policy, was quoted as saying by newspaper the Mail Today.

As part of Gandhi's bill, last month the government agreed a draft law that would provide subsidized grain to about 67.5 percent of India's 1.2 billion people, expanding a subsidy scheme that covers about 32 percent of the country's poorest.

The bill -- which has yet to be passed by a parliament already facing a long backlog of proposed laws after a year of disruption by the opposition -- could double the nearly $12 billion in the year that India spends to provide cheap grains and lentils through a public distribution system.

That represents about 1 percent of gross domestic product and 5 percent of government spending.

Some finance ministry officials have said the bill is too ambitious, mindful of its impact on the country's plans to cut the fiscal deficit to a targeted 4.6 percent in 2011/12.

(Writing by Alistair Scrutton; Added reporting by Krittivas Mukherjee; Editing by Daniel Magnowski)

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