Why in the News?
After the C. Rangarajan Committee (2014) set India’s last official poverty line, economists from the Reserve Bank of India (RBI) have now revisited and updated the estimates using new household consumption data from Household Consumption Expenditure Survey (HCES) 2022–23.
Evolution of Poverty Measurement in India:
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About C. Rangarajan Committee on Poverty Estimation:
- Objective: To evolve a broader and realistic poverty metric incorporating food, health, education, clothing, and shelter costs, beyond calorie-based norms.
- Overview: Formed by the Planning Commission in 2012, chaired by Dr. C. Rangarajan, former RBI Governor, to review India’s poverty measurement methodology.
- Report Submission: Submitted in June 2014; became a major benchmark in the debate on India’s official poverty line and methodological framework.
- Definition of Poverty: Based on Monthly Per Capita Expenditure (MPCE) ₹972 (rural) and ₹1,407 (urban) at 2011–12 prices, equating to ₹32/day (rural) and ₹47/day (urban).
- Data & Methodology: Used Modified Mixed Reference Period (MMRP) consumption data with separate rural–urban baskets, adjusting for state-wise price differentials.
- Poverty Estimate (2011–12): Found 29.5% of India’s population below the poverty line.
- Key Revision over Tendulkar: Expanded consumption basket to include education, healthcare, rent, transport, and other essentials; replaced calorie-based with expenditure-based cost-of-living approach.
RBI 2025 Update (DEPR Study):
- Source & Method: Conducted by RBI’s Department of Economic & Policy Research (DEPR) using HCES 2022–23 data for 20 states; retained Rangarajan framework.
- New Price Index: Created a Poverty Line Basket (PLB) index instead of CPI reflecting actual consumption inflation more accurately.
- PLB Composition: Rural PLB had 57% food share (vs 54% in CPI); Urban PLB had 47% (vs 36% in CPI).
- Key Findings:
- Rural Odisha poverty fell from 47.8% → 8.6%; Urban Bihar from 50.8% → 9.1%.
- Lowest Poverty: Himachal Pradesh (0.4% rural), Tamil Nadu (1.9% urban).
- Highest Poverty: Chhattisgarh (25.1% rural; 13.3% urban).
- Significance: Confirms broad-based poverty decline yet highlights regional disparities; renews calls for a new official poverty line reflecting modern consumption trends.
| [UPSC 2019] In a given year in India, official poverty lines are higher in some States than in others because Options: (a) poverty rates vary from State to State (b) price levels vary from State to State * (c) Gross State Product varies from State to State (d) quality of public distribution varies from State to State |
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