Poverty Estimation in India (Methods and History)
Poverty estimation in India is carried out by NITI Aayog's task force through the calculation of poverty line based on the data captured by the National Sample Survey Office (NSSO) under the Ministry of Statistics and Programme Implementation.
BPL Census is conducted by the Ministry of Rural Development (along with the partnership of state), in order to identify the poor households.
Earlier, Planning Commission was responsible for calculating the poverty line in India.
Poverty line estimation in India is based on the consumption, expenditure and not on the income levels.
MethodUp until 1993-94, the poverty line was based on Uniform Resource Period (URP) data, which involved asking people about their consumption expenditure across a 30-day recall period that is the information based on the recall of consumption expenditure in the previous 30 days.
From 1999-2000 onwards, the NSSO switched to an Mixed Reference Period (MRP) method which measures consumption of five low-frequency items (clothing, footwear, durables, education and institutional health expenditure) over the previous year, and all other items over the previous 30 days.
HistoryDadabhai Naoroji through his book, Poverty and Unbritish Rule in India made the earliest estimation of poverty line (₹16 to ₹35 per capita per year), based on the cost of a subsistence or minimum basic diet.
Post-Independence (1962), the Planning Commission Expert Group constituted by the Planning Commission formulated the separate poverty lines for rural and urban areas (₹20 and ₹25 per capita per year respectively).
In 1971, VM Dandekar and N Rath made the first systematic assessment of poverty in India, based on National Sample Survey (NSS) data.
Alagh Committee (1979)In 1979, the Alagh Committee - constituted by the Planning Commission under the chairmanship of YK Alagh - constructed a poverty line for rural and urban areas on the basis of nutritional requirements and related consumption expenditure.
As per the Committee people consuming less than 2100 calories in the urban areas or less than 2400 calories in the rural areas are poor.
YK Alagh eventually defined the first poverty line in India based on nutritional requirements.
Lakdawala Committee (1993)In 1993, Lakdawala Committee chaired by DT Lakdawala, based on the assumption that the basket of goods and services used to calculate Consumer Price Index-Industrial Workers (CPI-IW) and Consumer Price Index-Agricultural Labourers (CPI-AL) reflect the consumption patterns of the poor, made the following suggestions:
1) Consumption expenditure should be calculated based on calorie consumption (fixed consumption basket) as earlier.
2) State specific poverty lines should be constructed and these should be updated using the CPI-IW in urban areas and CPI-AL in rural areas.
3) Discontinuation of scaling of poverty estimates based on National Accounts Statistics and only NSS data should be relied upon.
The fallout of the Lakdawala formula was that number of people below the poverty line got almost double.
Tendulkar Committee (2009)Tendulkar Committee was constituted by the Planning Commission in 2009 under the chairmanship of Suresh Tendulkar.
The Tendulkar Committee was constituted to review methodology for poverty estimation and to address the shortcomings of the previous methods (Obsolete Consumption Pattern, Inflation Adjustment & Health and Education Expenditure).
It gave following recommendations:
1) A shift away from calorie consumption based poverty estimation.
2) A uniform poverty line basket (PLB) across rural and urban India.
3) A change in the price adjustment procedure to correct spatial and temporal issues with price adjustment.
4) Incorporation of private expenditure on health and education while estimating poverty.
Tendulkar adopted the cost of living as the basis for identifying poverty.
C Rangarajan Committee (2012)The committee was set up in the backdrop of national outrage over the Planning Commission?s suggested poverty line of ₹22 a day for rural areas.
The Rangarajan committee estimation is based on an independent large survey of households by Center for Monitoring Indian Economy (CMIE).
The Committee dismissed the Tendulkar Committees estimation of the poverty level in India and suggested that the number of poor were 19% higher in rural areas and 41% more in urban areas than what was estimated by Tendulkar committee. Related MCQs