Policies should work not only towards reducing the number of people below the poverty line but also ensuring that people do not suffer from multiple deprivations. Critically examine the above statement in the light of methodology adopted to measure poverty in independent India. (250 W)

Mentor’s Comment:

Similar question has been asked in 2016-mains, (“An essential condition to eradicate poverty is to liberate the poor from deprivation.” Substantiate this statement with suitable examples.)

Introduction should explain poverty as a social phenomenon. We can also mention about the UN Human Rights Council definition of poverty.

Next, we need to mention about the methodology of assessing poverty in India. Poverty line, Dadabhai Naoroji’s formula, planning commission, Alagh Committee, Lakdawala Committee, Suresh Tendulkar Committee, C Rangrajan Committee etc. have given different aspects of measuring poverty in India. Currently, NITI Aayog has the mandate to define poverty and are likely to appoint an expert committee on the same.

Next, mention what are the challenges are there before policy framers regarding poverty in India.

Next, mention the way forward, what needs to be done and conclude with balanced note.


Model Answer:

Poverty is a social phenomenon wherein a section of society is unable to fulfill even its basic necessities of life. The UN Human Rights Council has defined poverty as “a human condition characterized by the sustained or chronic deprivation of the resources, capabilities, choices, security and power necessary for the enjoyment of an adequate standard of living and other civil, cultural, economic, political and social rights”.

Methodology of Assessing Poverty In India:

  • The poverty line defines a threshold income. Households earning below this threshold are considered poor.
  • Different countries have different methods of defining the threshold income depending on local socio-economic needs.
  • One of the earliest estimates of poverty was done by Dadabhai Naoroji in his book, ‘Poverty and the Un-British Rule in India’.
  • He formulated a poverty line ranging from Rs 16 to Rs 35 per capita per year, based on 1867-68 prices. The poverty line proposed by him was based on the cost of a subsistence diet consisting of rice or flour, dhal, mutton, vegetables, ghee, vegetable oil and salt.
  • Officially, the erstwhile Planning Commission was the nodal agency in the Government of India for estimation of poverty.
  • These estimates are based on the recommendations of the committees appointed by it.
  • India used to define the poverty line based on a method defined by a task force (Alagh Committee) in 1979. It was based on expenditure for buying food worth 2,400 calories in rural areas, and 2,100 calories in urban areas.
  • Later Lakdawala Formula included the calorific limits of Alagh committee and it also included health and education components. It considered the total amount of money needed per person in a house to meet his calorie intake.
  • In 2011, the Suresh Tendulkar Committee defined the poverty line on the basis of monthly spending on food, education, health, electricity and transport.
  • According to this estimate, a person who spends Rs. 27.2 in rural areas and Rs. 33.3 in urban areas a day are defined as living below the poverty line. For a family of five that spends less than Rs. 4,080 and Rs. 5,000 in rural and urban areas respectively is considered below the poverty line.
  • This has been criticised for fixing the poverty line too low.
  • According to a committee headed by former Reserve Bank governor C Rangarajan, there were 363 million people, or 29.5% of India’s 1.2 billion people, who lived in poverty in 2011-12.
  • The Rangarajan panel considered people living on less than Rs. 32 a day in rural areas and Rs. 47 a day in urban areas as poor.
  • The government may soon come out with a new definition of poverty, with the Niti Aayog likely to set up a panel of experts to formulate a new poverty line.
  • The new line, which will be different from the existing Tendulkar line and Rangarajan line, will also be based on the latest consumption expenditure survey.

Challenges for policy framers with respect to poverty in India:

  • Poverty can have two broad categories like absolute poverty and relative poverty.
  • Absolute Poverty is a condition in which people do not even get a minimum income needed to maintain their lives.
  • India has higher prevailing rates of malnutrition, hunger, homelessness, unemployment and hence its absolute poverty also remains high.
  • Relative poverty refers to a comparative perspective where a section of population is relatively deprived compared to another better off section of population.
  • This definition is more broader and includes amenities like a well sanitised pucca house, access to education, healthcare, social security benefits, leisure, comfort etc.
  • The poverty line provides the conceptual rationalization for looking at the poor as a “category” to be taken care of through targeted ameliorative programmes, ignoring structural inequalities and other factors which generate, sustain, and reproduce poverty.
  • Poverty line derived from personal consumption patterns and levels do not take into account items of social consumption such as basic education and health, drinking water supply, sanitation, environmental standards, etc. in terms of normative requirements or effective access.
  • In a country of India’s continental size and diversity, poverty line based on aggregation at all-India level ignores State-specific variations in consumption patterns and/or prices.
  • While poverty is considered as a single dimensional measure, the term Social Exclusion is even more broader and multidimensional. It indicates that a section of population is not able to participate effectively in social life.
  • Inequality refers to the social and economic divide between the rich and poor. In India the inequality between well off sections of the society and the rest of the population is increasing. According to Credit Suisse the richest 1% of population in India owns 53% of its total wealth.
  • In India, there is a regional dimension of poverty as some states like Delhi, Punjab, Haryana, Kerala, Tamil Nadu etc., have significantly reduced their poverty whereas states like Uttar Pradesh, Bihar, Madhya Pradesh, West Bengal etc., have a higher proportion of poor people.
  • At another level there is Rural-Urban disparity as generally the Urban areas have less poverty indices than compared to rural areas because of the availability of jobs in manufacturing, service sector etc.
  • Even informal employment that pays a meagre wage is mostly concentrated in urban areas, also the agricultural sector is not much profitable in rural areas due to crop failures, fragmentation of land holdings etc.

What Should Be Done:

  • It is necessary that the use of poverty line be minimised.
  • Certainly, it gives a broad picture about India’s development process but its use must be for analytical purposes.
  • All major schemes should be designed using specific parameters for better targeting, easier implementation and effective evaluation.
  • The social and caste census can serve as another tool.
  • Government’s focus on investment has to also include social sector apart from physical infrastructure.
  • Well-meaning legislations like NFSA, RTE, MNREGA are being stifled due to lack of timely payment of wages or non-implementation in other cases.
  • Private sector has also a role to play in poverty remediation by going beyond minimum CSR spending.

Government has rightly widened the type of projects (included toilets for schools, slum rehabilitation recently) that can be taken up under CSR. Trickle-down effects having been long discarded in India as early as 1970s, it would be better to learn from the past and focus more on directed poverty alleviation programmes aided by efficient and timely delivery of services.