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1.
2. Poverty Line Estimation: Concepts and Issues in India
SUBMITTED TO :-
DEPARTMENT OF AGRICULTURAL ECONOMICS
S.K.N. COLLEGE OF AGRICULTURE, JOBNER
SRI KARAN NARENDRA AGRICULTURAL UNIVERSITY, JOBNER
SUBMITTED BY:-
Indu Swami
M.Sc. (Ag.) AGRICULTURAL ECONOMICS
4. INTRODUCTION
India is a prominent global voice that has made significant
progress on human development over the past 60 years, but the
benefits of a growing economy are not shared equally: the
country is still home to one-third of the world’s poor
More than one third of the population lacks the resources and
information to meet basic human needs such as adequate food,
clean drinking water, sanitation, good health provision, shelter
and education.
Science, technology and innovation can play a crucial role in
alleviating poverty. They have led to a wide array of
developments, from boosting agricultural productivity to
providing the means to generate energy cheaply.
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5. poverty
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According to World bank “Poverty is the deprivation of food,
shelter, money and clothing when people can’t satisfy their basic
needs. Poverty can be understood simply as a lack of money or more
broadly in terms of barriers to everyday human life”.
According to Mobile Orshansky who developed the poverty
measurements used by the U.S. government, “ Poor is to be deprived
of those goods, services and pleasures which others around us take
for granted.”
According to David Kurten , “ Poverty also involve social
disintegration and environmental degradation which he describe as
forming the threefold human crisis in the world today”.
6. Types Of Poverty
(1) Absolute Poverty : (Destitution) It refers to the
state of severe deprivation of basic human
needs.
(2) Relative Poverty : It is defined contextually as
Economic inequality in location or society in
which people live.
7. POVERTY LINE
Poverty line is the line which indicates the level of
purchasing power required to satisfy the minimum needs
of a person. It represents the capacity to satisfy the
minimum level of human needs. The line divides the
people into 2 groups :
1. Above poverty line 2.Below poverty line
8. Poverty is easy to spot but difficult to estimate.
Poverty lines are cut-off points separating the poor from the non-
poor.
Everybody measures poverty in their own way.
Its multidimensional nature makes the estimation of poverty
difficult and controversial.
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10. International Poverty Line : World Bank Approach
The international poverty line was first developed by World
Bank, working on the 1990 World Development Report
(WDR), which focused on poverty.
Dollar a day line i.e., $1 per day in terms of PPP exchange
rates.
In 2000, World Bank updated it to $1.08 per day.
Armed with International Comparison Programme (ICP)
2005 data which used almost 700 surveys for 115 countries,
World Bank updated new poverty line $1.25 per day that
serves as the common international standard of extreme
poverty (Ravallion and Chen, 2008).
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11. Where Do the World’s Poor Live?
Around 1.4 billion people in the world were in extreme poverty.
Nearly 80 per cent are actually in middle-income countries.
The number of Indian poor constituted 37 per cent of the global
poor.
Around 426 million people or about 34 per cent of the population
living below the new international poverty line of $1.25 per day in
India.
(Summer, 2012)
12. Extreme Income Poverty, 2010($1.25 poverty line of World
Bank)
12
Region Millions of Poor % of World’s
Poor
Headcount
Poverty Rate
Sub-Saharan
Africa
404 30.5 47.5
South Asia 641.5 44.3 36
East Asia 295.4 21.5 14.3
Latin America
and the Caribbean
45.3 2.9 6.9
Middle East and
North Africa
9.5 0.7 2.7
World 1,395.7 100 22.8
Selected MICs:
China 173.0 13.1 14
India 426 37.4 34.5
Indonesia 51.5 4.2 22.6
Nigeria 100.5 8.1 66.5
13. Poverty Line Estimation in Developed Countries
In most of Europe, a family with a net income of
less than 60% of the “ net disposable income” is
counted as poor.
In USA, poverty line represents the basic cost of
food for a family multiplied by three. The
threshold level is adjusted for inflation every
year. A family is counted as poor if its pre-tax
income is below this threshold.
(Nanda and Suresh, 2012)
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15. The Working Group Poverty Line (1962)
The Planning Commission, in 1962, constituted a Working
Group under the chairmanship of Dr. Gadgil to estimate the
poverty line.
The national minimum for each household of 5 person should
not be less than Rs.100 per month in terms of 1960-61 prices.
For urban, should not be less than Rs. 125 per month.
This national minimum excludes expenditure on health and
education.
Widely used as the poverty line in the 1960s and 1970s
despite the fact that the details of the calculation based on
which the minimum norm of Rs. 20 per person per month
was set was not clear.
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16. Task Force Poverty Line (1979)
The Planning Commission on 30th July, 1977,
constituted a Task Force on Projections of Minimum
Needs and Effective Consumption Demand under the
Chairmanship of Dr Y. K. Alagh.
The Task Force defined the poverty line as per capita
consumption expenditure level, which meets the average
per capita daily calorie requirement of 2400 kcals. in
rural areas and 2100 kcals. in urban areas.
This transforms into monthly per capita consumption
expenditure of Rs. 49.09 in rural areas and Rs. 56.64 in
urban areas, at 1973-74 prices.
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17. Expert Group Methodology (1993)
The Planning Commission constituted an expert
group in September, 1989 for estimating the
proportion and number of poor under the
chairmanship of professor D. T. Lakdawala to "look
into the methodology for estimation of poverty and
to re-define the poverty line, if necessary".
The group, decided to retain the poverty line
defined by the Task force.
The group disaggregated the national level rural and
urban poverty lines as defined by the Task Force
into state-specific poverty lines.
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18. Tendulkar Committee (2009)
An export Group headed by Professor Suresh D.
Tendulkar was constituted in 2005 to review the
methodology for official estimation of poverty and
recommend changes in the existing procedures.
Main departures –
i) moving away from calorie norm
ii) use uniform ‘poverty line basket’ (PLB) to both the
rural and urban population.
iii) incorporating an explicit provision in price indices
for private expenditure on health and education
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19. New Poverty Line, 2011-12
Using 66th round NSSO survey and following the Tendulkar
Committee methodology, Planning Commission made
estimates of poverty for 2009-10 which were released
through a Press Note on 19th March 2012.
Constituted Rangarajan Committee in June 2012 to review
the methodology for the measurement of poverty.
Since the data from the NSSO 68th round (2011-12) of
Household Consumer Expenditure Survey became available,
the Planning Commission has updated the poverty estimates
for the year 2011-12 as Rs. 4,080 per month per family in
rural areas and Rs. 5,000 per month per family in urban areas.
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20. Number and Percentage of Population below poverty line
by states - 2011-12
(Tendulkar Methodology)S.No. State Rural Urban Total
%age of
Persons
No. of
Persons
(lakhs)
%age of
Persons
No. of
Person
s
(lakhs)
%age
of
Person
s
No. of
Persons
(lakhs)
1. Chhattisgarh 44.61 88.90 24.75 15.22 39.93 104.11
2. Rajasthan 16.05 84.19 10.69 18.73 14.71 102.92
3. Manipur 38.80 7.45 32.59 2.78 36.89 10.22
4. Uttar Pradesh 30.40 479.35 26.06 118.84 29.43 598.19
5. Bihar 34.06 320.40 31.23 37.75 33.74 358.15
6. Andaman &
Nicobar Islands
1.57 0.04 0.00 0.00 1.00 0.04
7. India 25.70 2166.58 13.70 531.25 21.92 2697.83
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Press Note on Poverty Estimates, 2011-12 Government of India
Planning Commission.
21. Poverty Line for India (Rs. Per capita per month)
Year Rural Urban
1993-94 205.84 281.35
2004-05 356.30 538.60
2009-10 672.8 859.6
2011-12 816 1000
21
Source: Planning Commission, Government of India, retrieved
from
http://planningcommission.nic.in
22. Percentage and Number of Poor Estimated by Tendulkar
method in India
Poverty Ratio (%) Number of Poor (million)
Rural Urban Total Rural Urban Total
1993-94 50.1 31.8 45.3 328.6 74.5 403.7
2004-05 41.8 25.7 37.2 326.3 80.8 407.1
2009-10 33.8 20.9 29.8 278.2 76.4 354.6
2011-12 25.7 13.7 21.9 216.5 52.8 269.3
Annual
Average
Decline:
1993-94 to
2004-05
0.75 0.55 0.74
Annual
Average
Decline:
2004-05 to
2011-12
2.32 1.69 2.18
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23. Decline in Poverty at Various Points Above and Below
Tendulkar Poverty Line in Rural Areas (Annualized rate of
decline on Y-axis and variations from Tendulkar poverty
line on X-axis)
23
Source : Press Note on Poverty Estimates, 2011–12, Planning
Commission (2013), Government of India
24. Decline in Poverty at Various Points Above and Below
Tendulkar Poverty Line in Urban Areas
24
Source : Press Note on Poverty Estimates, 2011–12, Planning
Commission (2013), Government of India
25. Trend decline claimed based on the Tendulkar
poverty line is not going to alter with increase in
the poverty line.
While the absolute levels of poverty would be
higher, the rate of decline would be similar.
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26. Facts say……
Tendulkar line is roughly equal to the World Bank’s
well-established poverty line of $1.25 per day in
Purchasing Power Parity terms.
The Tendulkar poverty line is 92% of the median
expenditure in rural areas and 69% of the median
expenditure in urban areas in 2004-2005.
(Himanshu, 2010)
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28. Critics……
The Planning Commission's Rs 33 line that divides the
poor and the not poor is a cruel joke.
( Vikram, 2013)
The poverty estimates don’t present an accurate picture
of the number of those who live in very poor
conditions.
(Nanda and Suresh, 2013)
if Food Security Bill views two-thirds of the people as
needy, how could you have a poverty line saying only
one third are poor?
(Aiyar,2013)
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29. Most of the critics focussed on the figures of a
27.20 per capita per day for rural areas and Rs.
33.40 per capita per day for urban areas.
It is unfair to convert the poverty line to per day
figure as all the data is expressed in monthly
fashion and the concept of poverty is inevitably
linked to a time factor.
Expressing consumption on a per day level does
not reflect the consuming patterns of those
surveyed because households budget on a
monthly, not a daily basis.
(Pratima, 2013)
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30. We can Conclude…….
Critic’s arguments may be valid on moral ground but not
on economics ground.
Planning Commission should maintain the distinction
between use of poverty estimates as a tool of measuring
progress over time and targeting of beneficiaries for
social assistance programmes.
Poverty line is not a comfortable line, it is a comfortable
stress.
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31. From the viewpoint of keeping track of the fortunes
of the destitute, poverty line is not crazy as the
critics made out.
With limited revenue resources, we should target the
destitute first.
Targeting above poverty line may be a good politics
but very Bad Economics
Set higher poverty line, but be ready for another
1991-style Disaster.
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32. 32
Around 2.5 million people die every year due
to hunger in India. So,
Please Do Not Waste Food
