POVERTY ESTIMATES (poverty (relative poverty (measured in relation to…
minimum basic standards of living
are defined and people living below these standards are termed in policy as poor or below poverty line ,
determining a poverty line basket
alculating monetary figure
of that basket
relation to rich people
of the country, percentage of economically
is always considered below poverty line.
BPL people - have all basic amenities and reasonable standard of living, their incomes are far below national per capita income
Poverty is a state of deprivation of people or society, in which they are not able to meet their basic needs such as food, clothing and shelter. In all this they have low capacity to deal with Socio-economic and environmental exigencies.
contested - doesn’t include education, healthcare and decent standard of living or dignified life.agreed upon that
are immediate needs and will be preferred by any deprived person.(above eg)
India - initial decades after independence ,short of food grains - prompted government to invest in agriculture - green revolution. At that time investment in social infrastructure - negligible and now India - achieved self-sufficiency,
focus shifted to Health and education.
earliest estimations of poverty was done by Dadabhai Naoroji in his book,
‘Poverty and the Un-British Rule in India’.
poverty lineranging from Rs 16 to Rs 35 per capita per year, based on 1867-68 prices
based on the
cost of a ‘subsistence diet’
consisting of ‘rice or flour, dhal, mutton, vegetables, ghee, vegetable oil and salt’
1938, the National Planning Committee (NPC) estimated apoverty lineranging from Rs 15 to Rs 20 per capita per month.
based on ‘a minimum standard of living perspective in which nutritional requirements are implicit
1944, the authors of the ‘Bombay Plan’ suggested a poverty line of Rs 75 per capita per year.
Poverty Line in India
most of the government support (mainly public distribution system) was
but in latter periods (from 1990’s)
which was meant only for deserving poor.
‘Targeted Public distribution System’ in 1990’s
in which subsidized food was
only meant for Below Poverty Line people
determined by Planning Commission
on the basis of
data provided by
‘National Sample Statistical Organization’ (
) = job is
only to collect data and patterns
NSSO conducts a survey
at 5 year interval
of a mere sample to
capture consumption patterns
, sample size
character of the Nation (or a state) as a whole.
determination of this figure, reliance is obviously placed on data provided by NSSO
(in terms of money) Calorific/Nutritional needs for a basic minimum living
by taking an ideal ‘poverty line basket’
includes food and nonfood items
by expert groups
Ministry of Rural Development
is conducting BPL census for ‘Rural poor’ since 1992 , basis on which rural poor are actually identified , case of urban poor-
no uniform mechanism
, State governments/ UT -
their own methodology for identification
During survey NSSO workers will ask certain questions to households. Period covered by these questions is called
different for different category of items.
Income based vs consumption based poverty line
favored consumption based poverty line
due to following factors
majority of population -
, most in informal sector consists of self-employed people, daily wage laborers etc. Income of this group - variable both temporally and spatially, while
consumption pattern - stable.
regular wage earners- additional side incomes in many cases, which is difficult to take into account.
. For e.g. MGNREGA- employment for about 100 days, for rest of the time too people will earn something.
NSSO’s sample based surveys use a ‘reference period’ (say 30 days). households survey about their consumption in last 30 days, take a representative of general consumption of that household. This
is not possible in case of income.
Working Group of planning commission, 1962
first created by planning commission to
determine desirable minimum level of expenditure required
to make a living
‘national minimum consumption expenditure’ for a household of 5
Rural - 100/month , urban - 125/ month
excluded Health and educational expenditure on assuming that it is provided by state
Used recommendation on ‘Balanced diet’ by Indian council of Medical Research
Task force of 1979, under Algah
Average calorie requirements‘
were estimated separately
for the all -India rural and urban areas on the recommendation of
Nutrition Expert Group
2400 kcal per capita per day in rural areas and 2100 kcal per capita per day in urban areas.
calorie requirements needs some
which can be determined by ascertaining ‘quantity’ of consumption and ‘prices/value’ of that quantity. Data relating to quantity and value was provided by NSSO survey.
consumer expenditure (food and non-food)
of Rs.49.09 per capita per month was associated with a calorie intake of 2400 per capita per day in
and Rs.56.64 per capita per month with a calorie intake of 2100 per day in
Monthly Per Capita Expenditure’
termed as poverty line
- used for upcoming years after
for rise in prices
Expert group 1993 (Lakdawala)
panel didn’t redefine poverty line and retained mechanism defined by Algah expert
Instead it disaggregated ‘All India poverty line’ to ‘State specific Poverty Line’ (using Fisher index) for base year 1973-74
‘Rural and Urban Poverty lines of states’ were
’Consumer Price Index- Agricultural Labor’
for ‘Rural state specific poverty line ‘ and
’CPI- Industrial workers’
for ‘Urban state specific poverty line’
Then All India poverty Ratio (rural and urban) - ‘population based weighted average’ of
poverty ratios of various states.
Hence ‘poverty line’ of India is converted in to ‘state poverty lines’ while ‘poverty ratios’ of states were aggregated to ‘All India poverty ratio
Expert Group 2005 (Tendulkar)
adopted ‘Mixed Reference Period‘
in place of ‘Uniform reference period‘ ,previous methodologies -
‘uniform reference period’ - 30 days
- for all food and nonfood items.
Tendulkar group changed ‘reference period’ to past one year for 5 nonfood items
viz., clothing, footwear, durable goods, education and institutional medical expenses.
other items 30 days reference period was retained
his is called ‘Mixed reference period’
recommended shift away from
basing the Poverty Line basket (PLB) in caloric intake
and towards target
an explicit provision in the Poverty Line Basket to account for
private expenditure in health and education.
separate PLB for Urban and rural areas
.Tendulkar committee ended this
practice by using a uniform basket
(for both rural and urban) based on previous urban poverty line basket.
Poverty line form of ‘
Rs per capita per month’
Expert group, 2012 (Rangarajan)
preferred to use ‘Monthly expenditure of Household of five’ for the poverty line
instead of ‘Mixed reference Period’ it recommended ‘Modified Mixed reference period’
365-days for clothing, footwear, education, institutional medical care, and durable goods,
7-days for edible oil, egg, fish and meat, vegetables, fruits, spices, beverages, refreshments, processed food, pan, tobacco and intoxicants, and
30-days for the remaining food items, fuel and light, miscellaneous goods and services including non-institutional medical; rents and taxes.
poverty line should be based on
levels of ‘adequate nourishment’ plus clothing, house rent, conveyance, education And
determined level of other non-food expenses
means – what is ideal and desirable?
Means – What people use or consume as per general behavior
Poverty line- based on Independent survey conducted by ‘Center for monitoring Indian Economy’ (
reverted to old system of separate poverty line baskets for Rural and urban areas, which was
unified by Tendulkar group
Again National Urban and Rural poverty lines were converted to State specific poverty lines by
using Fisher Index.
World Bank’s Poverty line
The World Bank estimates of poverty - the poverty line of
US $1.25 per person per day
measured at 2005 international price
and adjusted to local currency using PPP (Purchasing Power Parity).
international poverty line = average of national poverty lines in
poorest fifteen countries
(in terms of consumption per capita). For this world bank runs -
‘International Comparison Program’.
performance of a country on this front is major criteria for eligibility or other terms and condition for Loans. not of much relevance for domestic policy making-
fails to provide variation within a country, region, society
etc. Domestic poverty line -
captures all local variations
such as Inter-state or Rural-urban.
Asian Development Bank
- poverty line which is currently at
$ 1.51 per person per day.