Poverty Estimation in India

History of Estimation of Poverty in India:-

  • Pre- independence one of the earliest estimation of poverty was done by Dadabhai Naoroji in his book ‘Poverty and Un-British rule in India’. He has formulated poverty line as Rs 16 to Rs 35 per capita per year based on 1867-68.
  • In 1938 by National Planning Committee,poverty line estimated as Rs 15 to 20 per capita per month.
  • Post Independence, planning commission has constituted working group for estimation of poverty in 1962, and poverty line was Rs 20 to 25 per capita per month.
  • Alagh committee in 1979 estimated as poverty line .
  • Lakdawala Committee( 1993) has used CPI-IL (Consumer Price Index for Industrial Laborers) and CPI- AL (Consumer Price Index for Agricultural Laborers) for estimation of poverty.

Recent Scenario:-

Expert Group(Tendulkar): – Under the chairmanship of Prof. Suresh D. Tendulkar constituted by the Planning Commission in 2005 , has submitted its report in December 2009. Poverty line was Rs 816 in rural and Rs 1000 in urban per capita per month with national average poor is 21.9%.

Expert Group ( Rangarajan):- 

Summary : Expert Group under chairmanship of Dr C Rangarajan by Planning commission commission in June-2012 and submitted its report in June- 2014. As per report Poverty line is monthly per capita income as Rs 1407 in urban area and Rs 972 in the Rural areas. with national average of poor 29.5%, which is higher than Tendulkar Committee.

Methodology of Expert Group (Rangarajan Committee )- 

  1. Poverty line should be based on normative level of nourishment, Education, Clothing, House, conveyance and non food items.
  2. Average requirement of calories, protein and fats with consideration of age, gender and activity for urban and rural regions. Accordingly energy requirement 2155 kcal per person per day in rural area and 2090 kcal per person per day in urban area. Protein and fat requirement 48 grams and 28 grams in rural and 50 gms and 26 gms in urban  per person per day respectively.  
  3. A food basket meet all the normative requirements define the poverty line. Average monthly per capita consumption expenditure on food is Rs 554 in rural and Rs 656 in Urban areas.
  4. Value of clothing Housing rent, conveyance, education is Rs 141 for rural and Rs 407 in urban per capita per month. All other non food expenses Rs 277 for rural and Rs 344 in urban per capita per month.
  5. Thus new poverty line monthly per capita consumption expenditure of Rs 972 in rural and Rs 1407 in 2011-12.
  6. State-level poverty ratio was estimated as weighted average of the rural and urban poverty ratios and the national poverty ratio was computed again as the population-weighted average of state-wise poverty ratios.
  7. Therefore committee estimates that the 30.9% of the rural population and 26.4% of the urban population was below the poverty line in 2011-12. National average 29.5 %.

Difference in basis of Expert Group (Tendulkar) & Expert Group (Rangarajan):-

  • Expert Group( Tendulkar) has used National Accounts Statistics ( NAS) data while Expert Group ( Rangarajan) has used NSSO ( National sample Survey Organisation) data.
  • Expert Group( Tendulkar) has not used calorie norms for poverty estimation while Expert Group ( Rangarajan) has calorie norms.
  • Expert Group( Tendulkar) has used all India urban poverty line to derive urban and rural poverty while Expert Group (Rangarajan) has used two separate norms for rural and urban basket lines.

Current Scenario:

Since Planning commission has been replaced with NITI aayog on 01.01.2015. Poverty estimation is being done by NITI Aayog (National Institution for Transforming India). A task force has been created by NITI aayog for estimation of poverty line in March 2015 under the Chairmanship of Vice Chairman, NITI Aayog.

This committee will give report on Minimum expenditure required for poverty line, Basket of goods necessary to satisfy human needs and proportion of population below poverty line called poverty ratio or headcount ratio.