About Poverty – Measurement of Poverty Lines in India

Definition of Poverty Line

The poverty line is defined as the threshold below which individuals or households are considered to be living in poverty. This implies a lack of sufficient resources to meet basic needs such as food, shelter, and clothing.

Historical Context of Poverty Measurement in India

The Planning Commission served as the primary agency for estimating poverty in India. Various committees and expert groups have been established since independence to study and define the poverty line. The Working Group in 1962 was the first to quantify the poverty line in terms of minimum requirements for healthy living, establishing separate lines for rural and urban areas.

Key Committees and Their Contributions

The Working Group (1962) set poverty lines at ₹20 for rural and ₹25 for urban households per capita per month at 1960-61 prices. The study by V.M. Dandekar and N. Rath (1971) derived poverty lines based on caloric intake, proposing Rs. 15 and Rs. 22.5 for rural and urban areas, respectively. The Task Force led by Dr. Y.K. Alagh (1979) recommended lines at Rs. 49.09 for rural and Rs. 56.64 for urban areas, focusing on caloric requirements. The Lakdawala Expert Group (1993) maintained the previous definitions but introduced state-specific poverty lines to account for regional price variations. The Tendulkar Expert Group (2009) shifted the focus from caloric norms to nutritional outcomes, setting the national poverty line at Rs. 816 for rural and Rs. 1,000 for urban areas. The Rangarajan Committee (2014) was established in response to criticisms of the Tendulkar recommendations. It proposed separate consumption baskets for rural and urban areas, setting the poverty line at Rs. 972 for rural and Rs. 1,407 for urban areas.

Methods of Measurement

The measurement of poverty can be classified into several methods. Income-based measurement evaluates poverty through income levels. Consumption-based measurement assesses poverty via consumption patterns and expenditures. The Multidimensional Poverty Index (MPI) considers various deprivations in health, education, and living standards.

Current Poverty Line Estimates

NITI Aayog currently uses the Tendulkar methodology for poverty estimation. As of the latest estimates, approximately 22% of the Indian population lives below the poverty line. The official poverty line set by the Tendulkar Committee was ₹27 per day for rural areas and ₹33 for urban areas. The Rangarajan Committee suggested a higher threshold of ₹32 in rural areas and ₹47 in urban areas.

Factors Influencing Poverty Measurement

Several factors influence the measurement of poverty in India. Cost of living varies across regions, affecting the poverty line. Inflation impacts purchasing power and real income. Social indicators such as access to education, healthcare, and sanitation also play important role in understanding poverty levels.

Limitations of Poverty Measurement

The measurement of poverty faces several limitations. The static nature of poverty lines does not account for dynamic economic changes. Regional disparities may not be reflected in a uniform poverty line. Additionally, non-monetary factors such as social exclusion and vulnerability are often overlooked.

International Comparisons

Internationally, the World Bank sets the extreme poverty line at $1.90 per day (2011 PPP). The Global Multidimensional Poverty Index assesses deprivations in health, education, and living standards across different countries.

Government Initiatives for Poverty Alleviation

The National Food Security Act (2013) aims to provide subsidised food grains to the poor. The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) guarantees at least 100 days of unskilled wage employment in a financial year to every rural household.

Recent Developments in Poverty Measurement

The COVID-19 pandemic has impacted poverty levels in India. Economic disruptions have necessitated ongoing assessments and revisions of poverty lines based on new data and changing economic conditions.

Future Directions for Poverty Measurement

Future poverty measurement approaches are expected to focus on dynamic methodologies that incorporate real-time data collection. There is an increasing emphasis on multidimensional assessments that consider health, education, and living standards in understanding poverty.

Questions for UPSC:

1. Discuss the evolution of poverty measurement methodologies in India and their implications on social policy formulation.
2. Critically examine the limitations of using a uniform poverty line in India, considering regional disparities and the impact on targeted poverty alleviation programs.
3. Explain the significance of non-monetary factors in the context of poverty measurement and how they can enhance the effectiveness of poverty alleviation strategies.
4. With suitable examples, discuss the impact of recent economic disruptions, such as the COVID-19 pandemic, on poverty measurement and the need for dynamic assessment approaches in India.

Answer Hints:

1. Discuss the evolution of poverty measurement methodologies in India and their implications on social policy formulation.

1. Initial measurements were based on calorie intake and consumption patterns established in the 1960s.
2. The Planning Commission introduced the Tendulkar Committee methodology in 2009, focusing on expenditure rather than just calorie intake.
3. Subsequent methodologies, including the Rangarajan Committee, further refined poverty lines by considering broader indicators like education and health.
4. These evolving methodologies have influenced social policies by shifting focus from mere survival to holistic development, addressing multi-dimensional poverty.
5. Implications include targeted welfare schemes, improved resource allocation, and a greater emphasis on inclusive growth policies.

2. Critically examine the limitations of using a uniform poverty line in India, considering regional disparities and the impact on targeted poverty alleviation programs.

1. A uniform poverty line fails to account for regional cost of living variations, leading to inaccurate poverty assessments.
2. Different states have different economic conditions, which means a single line may misrepresent poverty levels in wealthier versus poorer regions.
3. This can result in misallocation of resources, where states with higher poverty levels may not receive adequate support.
4. Targeted programs may not effectively reach the most vulnerable populations if the uniform line does not reflect local realities.
5. There is a need for region-specific poverty lines to enhance the effectiveness of poverty alleviation initiatives.

3. Explain the significance of non-monetary factors in the context of poverty measurement and how they can enhance the effectiveness of poverty alleviation strategies.

1. Non-monetary factors include access to education, healthcare, sanitation, and housing, which are crucial for a holistic understanding of poverty.
2. These factors help identify the multi-dimensional aspects of poverty beyond mere income levels, providing a clearer picture of deprivation.
3. Incorporating non-monetary indicators can lead to more effective policy interventions tailored to specific needs of the poor.
4. Enhancing social capital, such as community networks, can support poverty alleviation by encouraging collaboration and resource sharing.
5. By addressing non-monetary dimensions, policies can promote sustainable development and improve overall quality of life for the poor.

4. With suitable examples, discuss the impact of recent economic disruptions, such as the COVID-19 pandemic, on poverty measurement and the need for dynamic assessment approaches in India.

1. The COVID-19 pandemic caused economic disruptions, leading to increased unemployment and income loss, which traditional measures may not capture promptly.
2. Many households fell below the poverty line due to sudden income shocks, denoting the inadequacy of static poverty measures.
3. Dynamic assessment approaches, such as real-time data collection and analysis, are essential for understanding current poverty levels and trends.
4. Examples include the use of mobile technology for tracking income changes and access to resources during crises.
5. These approaches can inform timely policy responses and adaptations to safeguard vulnerable populations in future disruptions.