1. Is Measurement of Poverty Line
a Futile Exercise?
AOINLA PONGEN
M.A. DEVELOPMENT STUDIES
26/08/15

2. Overview
 1. Where it all began
 2. Chronological order of Expert Committees on Measurement of Poverty
 3. Estimation of poverty line: Retrospect and Prospect
 4. Measuring Poverty- an essential exercise

3. Where it all began
 The history of counting poor in India started during 19th century.
 It was Dadabhai Naoroji who estimated a subsistence-based poverty line at
1867-68 prices.
 After the Independence, in 1962 the Planning Commision constituted a
working group of experts to determine poverty lines for both rural and
urban separately- Rs. 20 and Rs. 25 per capita per year respectively.
 The poverty line was derived from the expenditure so as to provide 2250
calories per day in both rural and urban areas.
 The main drawback of this poverty line was the exclusion of expenditure
on health and education.
 Then after, government of India has been forming committees to estimate
poverty line.

4. Chronological Order of Expert Committees on
Measurement of Poverty
Expert Committees Year Poverty Estimates
Expert Group 1962 Rural: Rs. 20/capita/month
Urban: Rs. 25/capita/month
Task force (Dr. Y.K. Alagh) 1979 Rural: Rs. 49.06/capita/month
Urban: Rs. 56.64/capita/month
Expert Group (Dr. Lakdawala) 1993 Rural: Rs. 115.43/capita/month
Urban: Rs. 165.58/capita/month
Expert group (Dr. Tendulkar) 2011 Rural: Rs. 816/capita/month
Urban: Rs. 1000/capita/month
Rangarajan Report 2014 Rural: Rs. 972/capita/month
Urban: Rs. 1407/capita/month

5. Estimation of poverty line: Retrospect
and Prospect
 Task force (1979):
 Chaired by Dr. Y.K. Alagh, the group constructed a poverty line for both
rural and urban areas separately on the basis of average calorie
requirements. Based on Nutrition Expert Group, the estimated calorie
intake for rural was 2400 kcal and 2100 kcal for urban.
 This group generalized and accepted one poverty line for all the states.
They thus ignored the price differentials.
 The group also did not take into account the different consumption
patterns of the states.

6. …contd
 Lakdawala Committee (1993):
 The group followed the calorie-based methodology for deriving the ‘poverty
line’ without making changes in the existing consumption basket.
 This panel suggested a minor change and that was to disaggregate all India
poverty to state specific poverty line. This was updated by using Consumer
Price Index of Industrial workers for urban area and Consumer Price Index of
Agricultural Labour in rural areas.
 One of the major criticism was the continued use of the original 1973-74
consumption basket without taking into account the structural changes within
the economy.
 The method used could not capture the real situation by just estimating the
poverty line based on consumption expenditure which gets affected by
inflation.
 It is also criticized that earlier poverty lines assumed that health and education
would be provided by the State so did they formulated poverty lines
accordingly.

7. …contd
 Tendulkar Committee (2009):
 The group recommended a method of constructing cost of living indices using
the household level consumption expenditure which included private
expenditure on health and education.
 The methodology used moved away from calorie consumption and replaced it
with urban consumption basket for 2004-05 as the base for both rural and
urban areas.
 This group is criticised for using urban near poverty without considering the
several socio-economic differences in consumption patterns of rural and urban
India.
 This group included expenditures on private health and education which is not
reasonable to achieve minimum standards for health and education for all.
 It also ignored the fact that its state’s responsibility to provide free education
and health care.

8. …contd
 Rangarajan Committee (2014):
 The panel reverted to old method of estimating poverty line for rural and
urban areas separately.
 The expert group gave poverty line in terms of monthly expenditure of a
household.
 One of the criticism was the behavioural dilemma
 It also disregarded multidimensional aspect of poverty
 The committee also ignored inclusion of micronutrient requirements in a
country like India.

9. Measuring poverty- an essential
exercise
 Poverty line figure, therefore, is an evolving process.
 It is an essential exercise as it helps policy makers in
designing policies to uplift a large number of people.
 There is a need to consider multi-dimensional poverty
so that all socio economic and political parameters of
deprivation can be used to select the real
beneficiaries.