The Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia, has called the debate on Rs 32 and Rs 26 as something dramatised by the media.

He said that the Tendulkar poverty line will stay but only as a reference point to measure the impact the economic growth and not for determining entitlements.

Excerpts from an exclusive interview:

The Planning Commission's clarification has been termed as too little, too late. Is it?

When you say too late, I was on official tour abroad, so had somebody called me, I would have given all the clarifications. When I got the first opportunity, I clarified.

When you say too little, I don't know what you mean. There are two separate issues. First, many people were concerned that the official poverty line only gave 32 per cent as poor and many people felt that subsidised food should go to a larger number. That is not at dispute, because in any the case the Government is looking at the Food Security Bill and I personally strongly supported the idea that 41 per cent of the population should be entitled to it.

Even otherwise in principle it is not the case when we are saying that you must limit entitlements to the poverty line. Each Ministry has made its own choice. Some of them have preferred universal benefits, some of them have gone for the poverty line. Targeted PDS, which was done long time ago was not linked to the poverty line. The Ministry has not changed that.

There were two reasons for that. One is that when the UPA government came in, we knew there was concern that the overall poverty line was not totally fair, and that it gave too low a level of poverty in the rural areas. So we set up the Tendulkar Committee. This Committee raised the poverty level percentage in the rural areas, and we accepted that. That became the new poverty line. That is reflected in the mid-term appraisal of the 11{+t}{+h} Plan.

Now the question is why the Ministry could not accept the new poverty line. I think the main reason was that the debate on the food security issue was going on. It was discussed for a about a year. It in any case gets rid of the concept of BPL, because it says that highly subsidised food should be given to a priority category. So in that case, once the entitlement issue is separated from the poverty line, this concern is not relevant.

You termed the debate over Rs 32 and Rs 26 as the Pipli Live. You also said it was dramatised.

I think, our poverty line in the affidavit is a family expenditure, Rs 4,800 per family. I am not saying that Rs 4,800 is a comfortable level but if we had said the poverty line is 4800, people would not have been so shocked. I believe it was deliberately dramatised by the critics. There is nothing wrong in that. That is what critics are for and our job is too explain.

Now what will happen to the Tendulkar Line?

So far as we are concerned, it is useful to keep it to see what has been happening over time. Since the Tendulkar line does not determine the benefits, I think it should stay. I think when this line begins to show that the poverty has gone down by such and such percentage, it would be quite reasonable to say let us raise the poverty line as their income has gone up. But we need a lot of data when they become available. It is a reasonable line. We have revised it recently and in due case will do so.

How poor will be identified in urban areas?

The Ministry of Housing and Urban Poverty alleviation is doing a kind of census like the Socio Economic Caste Census. Although it is a little late because of the preparation of the guideline, it will help to identify poor in the urban area.

What is your assessment of the world economy? How much will it affect the financing of the 12th Plan?

The global situation at the moment is very worrisome for everybody, not just for India. Probably right now the biggest concern is what is going to happen in the Euro Zone. Because there are serious doubts whether the Greece rescue package can work, there may have to be some involuntarily restructuring.

Now the world financial leaders, the finance ministers are meeting on October 15. The G20 meeting will be on November 2. I hope that through this process we can give a signal to the market. I think we have taken the view, the Finance Minister has expressed it, that they will be willing to support the international efforts to protect the system from collapse. Obviously if the system collapses it will have negative impact everywhere. You cannot prepare what the negative impact would be, but this will also hurt us, how much we can't say.

Do you think we should scale down the growth estimate?

We already have scaled down to eight per cent. Some people will say it could be around 7.5 per cent, this is not very important. I think, definitely the growth will be slower than the previous year. But this slowing is largely due to a lot of financial uncertainty. So, I am hoping that by the end of this financial year, the global community will be able to give some signal that we are not going to have second financial crisis.

Moodys has downgraded the State Bank of India. What does it mean for us?

The rating agencies downgraded the US, the Italian Banks. What it does is that it sends a signal internationally that they really do not know how safe different banks are. It is a kind of an early warning. But this not just affecting the State Bank of India, it is affecting other banks also. SBI is the most exposed bank internationally, so people focus on that. I have no doubt that the rating will be reversed. I think the Indian banking system is not vulnerable in the same way the other banking systems are as they have lot of external borrowing. Heads of government should bring back confidence.

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