Poverty Lines in India: Estimations and Committees

Poverty Lines 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.
  • Poverty is measured based on consumer expenditure surveys of the National Sample Survey Organisation. A poor household is defined as one with an expenditure level below a specific poverty line.
  • The erstwhile Planning Commission was the nodal agency in the Government of India for estimation of poverty. It estimates the incidence of poverty at the national and state level separately in rural and urban areas.
  • The incidence of poverty is measured by the poverty ratio, which is the ratio of number of poor to the total population expressed as a percentage. It is also known as head-count ratio.

Time Line of Poverty Estimation in India

The first Poverty line was created in India by the Erstwhile Planning Commission in the mid 1970s. It was based on a minimum daily requirement of 2400 and 2100 calories for an adult in Rural and Urban area respectively.

YK Alagh Committee (1979):

  • In 1979, a task force constituted by the Planning Commission for the purpose of poverty estimation, chaired by YK Alagh, constructed a poverty line for rural and urban areas on the basis of nutritional requirements.
  • Table 3 shows the nutritional requirements and related consumption expenditure based on 1973-74 price levels recommended by the task force.  Poverty estimates for subsequent years were to be calculated by adjusting the price level for inflation.

Poverty Estimation Committees in India

Lakdawala Committee Tendulkar Committee Rangarajan Committee
The committee was constituted in the year 1993. The Committee was constituted in the year 2004-05 The Committee was constituted in the year 2012.
The criteria suggested by the committee was Calorie intake based on consumption expenditure. The committee estimated poverty by using basic requirement of the poor such as housing, clothing, shelter, education, sanitation, travel expense and health etc., to make poverty estimation realistic.

The committee suggested to do away with the calorie-based criteria.

The committee also suggested to have a uniform poverty line across rural and urban India.

The Rangarajan Committee goes back to the idea of Lakdawala committee method of calculating Rural and Urban Poverty Separately.

The Rangarajan group took the view that the consumption basket should contain a food component that satisfied certain minimum nutrition requirements, as well as consumption expenditure on essential non-food item groups (education, clothing, conveyance and house rent) besides a residual set of behaviourally determined non-food expenditure.

The committee recommended for state-specific poverty lines. The Tendulkar committee stipulated a benchmark daily per capita expenditure of RS 27 and RS 33 in rural and urban areas, respectively, and arrived at a cut-off of about 22% of the population below poverty line. C Rangarajan expert group report, recommended a monthly per capita consumption expenditure of RS 972 in rural areas and RS 1,407 in urban areas as the poverty line at the all-India level.

Assuming five members for a family, this will imply a monthly per household expenditure of RS 4,860 in rural areas and RS 7,035 in urban areas.

The Rangarajan committee estimated a daily per capita expenditure of RS 32 and RS 47, in rural and urban areas respectively as the poverty line, and worked out poverty line at close to 29.5%.

As per Ladkawala committee the percentage of population living below poverty line in the year 2004-05 was:

Rural: 28.3%

Urban: 25.7%

All India: 27.5%

As per Tendulkar report, the percentage of people living below poverty line in the year 2004-05 were as follows:

Rural:41.8

Urban: 25.7

Total 37.2

In the year 2011-12,

Rural:25.7

Urban: 13.7

Total: 21.9

The Rangarajan expert group estimates that 30.9 percent of the rural population and 26.4 percent of the urban population were below the poverty line in 2011-12.

The all-India ratio was 29.5 percent.

 

By
Himanshu Arora
Doctoral Scholar in Economics & Senior Research Fellow, CDS, Jawaharlal Nehru University
CategoriesUncategorized
  • Subscribe

    Do not miss important study material

1
Leave a Reply

Please Login to comment
1 Comment threads
0 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
1 Comment authors
Maximillian Pamei Recent comment authors
  Subscribe  
newest oldest most voted
Notify of

Maximillian Pamei
18 Mar, 2019

Thanks sir! this is so useful. Didnt get anywhere else in crisps manner