The Planning Commission of India (Now NITI Aayog) periodically estimates poverty lines and poverty ratios for each year for which Large Sample Surveys on Household Consumer Expenditure have been conducted by the National Sample Survey Office (NSSO) of the Ministry of Statistics and Programme Implementation.
Normally these surveys are conducted on quinquennial basis (Every 5 years). However the last quinquennial survey in this series was conducted in 2009-10 (NSS 66th round), since 2009-10 was not a normal year because of a severe drought in India, the NSSO repeated the large scale survey in 2011-12 (NSS 68th round).
How Poverty is defined?
In India, defining a poverty line has been a controversial issue, especially since mid-1970s when the first such poverty line was created by the erstwhile Planning Commission. It was based on minimum daily requirement of 2,400 and 2,100 calories for an adult in rural and urban areas, respectively. Economists such as DT Lakdawala and later YK Alagh, among others, were involved in working out the poverty line from time to time.
Recently, some modifications were made considering other basic requirements of the poor, such as housing, clothing, education, health, sanitation, conveyance, fuel, entertainment, etc, thus making the poverty line more realistic. This was done by Suresh Tendulkar (2009) and C Rangarajan (2014) during the UPA regime.
The Tendulkar committee stipulated a benchmark daily per capita expenditure of R27 and R33 in rural and urban areas, respectively, and arrived at a cut-off of about 22% of the population below poverty line. It sparked of a furious row, as these numbers were considered unrealistic and too low. Later, the Rangarajan committee raised these limits to Rs.32 and Rs.47, respectively, and worked out poverty line at close to 30%.
The old formula for estimating the poverty line is based on the desired calorie requirement. Food items such as cereals, pulses, vegetables, milk, oil, sugar etc. together provide these needed calories. The calorie needs vary depending on age, sex and the type of work that a person does. The accepted average calorie requirement in India is 2400 calories per person per day in rural areas and 2100 calories per person per day in urban areas. Since people living in rural areas engage themselves in more physical work, calorie requirements in rural areas are considered to be higher than urban areas. On the basis of these calculations, for the year 2000, the poverty line for a person was fixed at Rs 328 per month for the rural areas and Rs 454 for the urban areas. In this way in the year 2000, a family of five members living in rural areas and earning less than about Rs 1,640 per month will be below the poverty line.
Poverty Line Estimates and Controversy
According to the latest estimates of the Commission, people with the daily consumption of more than Rs 28.65 in cities and Rs 22.42 in rural areas are not poor. It has been criticised by various “Social Activist” as a retrograde measure. According to it the number of poor in India has declined to 34.47 crore in 2009-10 from 40.72 crore in 2004-05 as per the estimates based on Tendulkar panel methodology which factors in spending on health and education, besides the calorie intake.
Poverty Line Definition in India
The data pegged the poverty ratio at 29.8% of the population in 2009-10, down from 37.2% in 2004-05. However, in recent times, various committees led by economists have come up with different ways to measure the extent of poverty. The official line delivers a poverty rate of around 32% of the population. A committee under Suresh Tendulkar estimated it at 37%, while another led by NC Saxena said 50%, and in 2007 the Arjun Sengupta commission identified 77% of Indians as “poor and vulnerable”. The World Bank’s PPP estimate of Indian poverty was higher than 40% in 2005, while the Asian Development Bank arrived at almost 50%. The UNDP’s Multidimensional Poverty Index finds the proportion of the poor to be higher than 55%.