1) Compare and analyse poverty estimation made by World Bank for Indian population with that of estimations made by various committees in India.

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TopicPoverty and Developmental Issues

1) Compare and analyse poverty estimation made by World Bank for Indian population with that of estimations made by various committees in India. (200 Words)

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  • Harsh Dhingra

    Plz review

  • Vivek Kumar Singh

    WB has revised its poverty estimate and has declared that India has over-estimated its poverty.
    Comparisons
    (1) A/c WB only around 12% population was poor in India in 2011-12.While the committee estd. by the govt. though varied but pegged the percentage between 21 to 29 %.
    (2) PPP model and Dollar was taken as the base by WB in calculating the poverty world wide($1.90 cutoff) poverty indicator.While Indian committees used the consumption basket basis.
    (3)Rural and Urban Area had been demarcated separately by the Indian committees but WB used the single scale($1.90).
    (4)Products consumed by the Indians(Rural ,Urban) were specially taken into consideration as “High End” and packaged products are not used by Rural people generally were kept out of the basket but World bank took all this into account.
    (5)Multi -dimensional poverty was not taken into account vis-a-vis Non-monetary Indicators of Poverty eg Health,Education,Sanitation etc. by either of them.

    As MDGs is running into the concluding year , India has performed satisfactorily on the set standards.We have SDGs goals before us which is aimed at to eradicate poverty by 2030. Such confusing stats neutralises concentrated efforts. As the World Bank’s reports are used by International agencies to route the Aid and support, the report could have given the Indian point of view a consideration, better consensus with GoI is the need of hour, to make the whole SDGs successful.

    • Pacify

      Nice ans,,, Pl advice how to approach such ques …

    • Aspirant

      U deliberately wrote poverty rates approximately right?
      Can we provide this way?

    • raju gogula

      Nicely structured…few observaions:
      1.comparison part is good(would have been more effective of few committee names included like Tendulkar, Rangarajan etc.)
      2.WB raised the cutoff from $1.25 to $1.90 in the recent report still there is a decline in the poverty in India.
      3. Adding the cutoffs, commodities considered(which u hv done), base year in Indian reports would boost the analysis part.
      4.Conclusion is lucid.
      keep writing.

      • Aspirant

        Can u elaborate ur third point in this regard?

        • Merit List

          we have separate meaning of poverty for urban and rural areas as the minimum levels of consumption and expenditure pattern is different in rural and urban areas. whereas WB only considered ppp model of $1.25 spending a day irrespective of localisational and consumption factors which are a strong reality in india.

          • chetan

            for example suresh tendulkar committee suggested that urban poverty is less than rural poverty and overall poverty he had taken was 29%

    • keerthi

      Conclusion is good comparing withSDG. Nicely structured

    • Harsh Sharma

      Nice answer Vivek, covered all the points.

    • pink

      good answer pl do review mine

    • Akki

      Regarding your second point – As far as my knowledge is concerned, world bank does not use any methodology to calculate poverty. It uses Indian poverty line only but converts it into dollars PPP. So the problem in world bank methodology is not in the calculation of poverty line but in its conversion to PPP dollars. Hence poverty line is still derived in both cases on the basis of NSSO consumption expenditure method.

      Basically PPP is calculated taking into account some consumption basket and the issue is that the consumption basket taken by world bank is not representative of Indian consumption choices. This is what your 4th point says.

      Regarding your 5th point – the poverty line calculated by Tendulkar committee takes into account the expenditure on health and education. Acctually data on per capita expenditure on health and education is collected by NSSO only along with per capita expendite on food consumption.

      • Vivek Kumar Singh

        Hi… First of all thanku for the review…
        1)World bank has fixed one cut off that is $1.90 for the whole world.
        2)I discussed the PPP thing in 2nd point itself.Also I wrote non-monetary indicators was was not covered by either of them.Even Tendulkar committee did not consider Sanitation etc. So i think the point stands. Regards!!!

      • BeingAddy

        Change in methodology is that WB used Modified Mixed Reference Period to arrive at its estimates
        Indian committees use Uniform Reference Period and Mixed Reference period
        That way WB is more dynamic and takes into account volatility in food consumption for every 7 days (important since India depends on monsoon which is erratic, hence consumption of poor changes according to seasons)

    • black mamba

      i’m not very sure if i’m right in saying this, but i feel that in the intro part of your answer, instead of starting with WB entered statement, you should be India centred. i.e. “According to India estimations, WB underestimated poverty in India by employing common expenditure cut off at $1.90 per person per day on PPP”
      It just feels more right for an all india govt services exam. Consider it if you wish to

  • Ashish Agrawal

    WB in its recent report estimated India’s poverty rate to be 12.4%, substantially lower that what Tendulkar Committee (21.9%) and Rangarajan Committee (29.5%) had calculated. It simply means that methodology followed to come up with monetary demarcation line (i.e. poverty line) is different. A comparative analysis is necessary here.

    > In India, data is collected on consumption expenditure (CE) only by two methods. First is URP (Uniform Reference Period) in which people are asked about their CE of last month. It was used till 1993-94. Second is MRP (Mixed Reference Period) in which in addition to URP procedure, data on less frequent used goods and services like heath, consumer durable is collected over one year period. It was used in Tendulkar & Rangarajan Committee. Now what WB did was to use MMRP (Modified MRP). In that, consumption data on food items was collected for 7 days in place of 30 days and for rest of items, time period was for one year. As people could better recall their expenditures in given time frame, consumption went higher for both rural and urban areas. Hence poverty rate declined.

    > After using above methodology, WB came up poverty line of $1.9 per person per day on PPP terms. And that lead to only 12.4% people being poor. But according to our national government, this figure can’t be true as India’s poverty can’t be this low. Although PPP has been used to compare GDP across countries but clearly use in poverty analysis seems faulty.

    There is and there will be too much debate on how to measure poverty. But they all focus on its material side. In estimation there is need to develop framework which not only account of monetary need but also psychological and mental deprivation. A lesson need to be learnt from HDI index.

    • Mritunjay Singh

      Even i was feeling how the World Bank can Calculate poverty rate on PPP basis.As according to PPP India is in top 3 countries.so does it mean we(INDIA) is the developed country ..obviously no..Although Reference period adopted seems rational in new method but considering poverty line on PPP basis seems faulty and not suitable for India.

    • IAS2K16

      very nice answer

    • Ankush

      Seven days recall period, I believe should not be the rationale behind measuring poverty in a country where agriculture sector is seasonal and more than 50% of the population derives its livelihood from it. Instead multiple batches of 7 days recall period should have been surveyed under various conditions. Of course, PPP concept plays no role in it.

    • Rahul

      Great ans

  • why_so_serious?

    According to the WORLD BANK’s data which released India’s poverty percentage for 2011-12, the percentage of poor stand for approx 12% based on the Purchasing power parity of $1= Rs. 15 and the expenditure cut-off of $1.9 per person per day. That means a person spending below Rs. 28.5 in day was considered poor.

    This percentage differs from the previous methodolody used by the WORLD BANK in which the PPP stood for $1.25 whiich meant that a person spending Rs. 18.5 per day was poor.

    The above methologies have been contested and contradicted ny the previous methodologies abopted by the Government.

    Under Tendulkar committee an expenditure of Rs. 33 per person per day in the urban and Rs. 27 per person per day was poor, while the Rangarajan committee held it at Rs. 47 /PERSON/day for urban and Rs. 30 /person/day for the rural.

    India has already been accused by the recent Noble prize winner in economics about the vague and ambiguous data used by the government to determine the poverty by poverty line and national income which are quite mileading and outdated.

    The Indian media had accused and their had been lot of bad publicity of the then government due to the methodology adopted.The Indian policy makers too need to come out with a more “empirical” method to determine the actual number of poor in India as the prevailing methods are too erroneous.

    • Kant

      Nice. Satisfies the need of the answer.
      You could have included why the govt criticised the world bank ( food basket and ask other stuff)
      Last two paras could be merged into a short one.

      • why_so_serious?

        yup duly noted and will make the changes

  • pandeyji

    The three main organizations or committees that have estimated the poverty scenario of India are the World Bank, the Rangarajan committee and the Tendulkar committee. Their estimates for the fiscal year 2011-12 are as follows:

    Organisation Percentage poor monthly consumption (rural) monthly consumption (urban)

    World Bank 12.4 ₹ 28.5 ₹28.5

    Rangarajan 29.5 ₹ 47 ₹30

    Tendulkar 21.9 ₹ 33 ₹27

    The World Bank has made its estimates using the Purchasing Power Parity factor and the dollar line. It has used a mixed reference period methodology assigning 7 days for daily consumption food items, 365 days for infrequently consumed household items such as clothing, durable goods etc. and 30 days for other items as reference period of consumption. The Indian Committees use a uniform reference period of 30 days for all items of consumption.

    The dissimilarities in the estimates mainly lie due to the different items chosen for the basket of frequent consumption and the PPP factor used in WB’s estimates. The basket should consist of basic items that our consumed by the Indian poor such as low cost rice, cereals, kerosene etc. and not pasta, mineral water or wine that the World Bank methodology incorporates. Also, the PPP factor ignores the subsidies involved in the products.

    Thus, the recent world bank report gives a misleading picture about the Indian poor.

  • pink

    Recently world bank data showed only 12.4%of indian population was poor in 2011-12,considering an expenditure cut off 1.9 dollar a person a day in ppp terms. but actual poverty was higher than suggested,there is lack of scientific basis of computation.

    the item consumed by poor is not properly represented in basket ,the 1.9$ percapita income is not correct in indian context. world bank use same formula that is ppp all over world in poverty estimation that is one size fits all approach which is not accurate as different countries have different consumption and living pattern.so world bank estimation is incorrect in indian context as indian poverty is not as low.

    world band used mmrp ,where consumption data collected on food item on basis of 7 days and other items on basis of one year.due to this consumption increase and shows reduction in poverty .

    world need to take more accurate approach in poverty calculation need to include wider aspect .

  • Pacify

    1) Compare and analyse poverty estimation made by World Bank for Indian population with that of estimations made by various committees in India. (200 Words)

    Recently WB in its new report titled Ending Extreme Poverty and Sharing Prosperity’ provide poverty estimation according to which India’s estimated does not reflect the ground reality.

    Comparisons and analysis-

    –> Estimates – Recent WB estimation of 12.4% on the level of 2011-12 on an expenditure cutoff of $1.9 are actually differing a lot from what estimated by Tendulkar committee which shows poverty rate of 21.5% in India which more or less on line when compared to earlier WB data which pegged poverty at 21.2 % at an expenditure cut off of $1.25.

    –> Consumption basket and product weight – consumption basket used by WB are not even reflecting the spending of common man so simply forget about India poor strtata. Also the weight assigned by WB is not appropriate in India’s case.

    –> PPP method – estimation of poverty data based on PPP method is not appropriate for India and due to this approach the resultant poverty data is not correct.

    –> Dollar vs Rupee – Rs 15 a dollar in no sense able to reflect true picture and ground reality of poverty estimation in India.

    –> Reference Price – difference in methodology adopted regarding reference price also showing wide variation among data as earlier reference period was “last 30 days” and currently its “last 7 days”.

    Due to such methodological difference which are not able to present the true spirit of poverty estimates particularly in case of India and thus leading to widening of gulf between welfare measure for poverty eradication and its actual implications. Hence there arises a dire need to put some full proof genuine data estimation process having minimal error bracket to move ahead on the path of poverty eradication and development goals.

    • Pacify

      Kindly review

    • Mritunjay Singh

      Seriously Rs 15 a dollar is laughable…in your point of reference period ..i suppose present report of World Bank has taken “last 7 days” is only for food items..

      • Aspirant

        Yeah . U should avoid that point

      • Pacify

        ohh,, I was not aware of that,,,, thanks for pointing

    • Disco Dancer

      I like how u frame your answers..can you tell how can they put Rs 15 a dollar..What its mean?

      Plz review mine 🙂

  • The Failure.

    The world bank recently came out with its global estimates of poverty and fixed a new poverty line based on expenditure. WB says that a person is poor if his consumption expenditure is less than %1.9 a day.

    COmparison to Indian estimates:

    Indian economists condemn 2 outcomes of this world bank report, in comparison to indigineous reports
    – WB’s claim that as a result of this poverty line, only 12.5% of India is poor, which is hardly reflective of ground reality.
    – WB’s use of PPP (purchasing power parity) data to determine poverty line has always been criticised by Indian economists.

    Analsysis of the report:

    India’s PPP rate of $ stands at Rs15. Based on this, the WB report fixes the poverty line at an average of Rs 28 perday. COmpared to the 29Rs per day line fixed by the Tendulkar Committee and the 33 Rs fixed by the Rangarajan committee (for rural areas). Consequently, 21% and 29.5% are the percentage of India’s poor, based on the 2 reports respectively. This is a better reflection of India’s ground reality.
    Furthermore; WB has ignored the change in poverty line associated with rural and urban areas, as mentioned by the Rangarajan committee. Also, the food products included in WBs poverty line measurement, include pasta, basmati rice and wine, products which the INdian poor hardly consume.

    Hence the poverty estimation by WB needs to be taken with a pinch of salt, and the true levels of poverty reflected by our Indian estimates must be targeted and we must work towards bringing them down.

    PLEASE REVIEW

  • IAS @ 2016

    The poverty estimation in India has been done by The world bank , The Suresh Tendulkar committee, Rangarajan committee

    Comparison

    – According to world bank report only 12.5% were poor in India , the figure rise to 21.5% according to Tendulkar committee and 29.5% according to Rangarajan committee.

    – The worl bank use PPP (purchasing power parity) to determine poverty level but government’s stand that PPP should only be used to compare GDP (gross domestic product) across countries, not poverty .

    -PPP measure by world bank might be relevant for the US or Mexico, but not for India, as the consumption and living patterns here were very different.

    – The world bank use dollar line to estimate poverty, which is not the actual situation on the ground and is far from the reality, as far as poverty in India is concerned

    – Separate poverty analysis for Urban and Rural areas were done by the Indian committees but the world bank uses a general method for both urban and rural.

    – the world bank represent a range of high-end items consumed by the poor which is not relevant from the Indian perspective

    Hence there is a huge dissimilarities between the estimates done by world bank and the Indian committees .

    • IAS @ 2016

      pls review

      • Rohit

        good answer keep it up.

    • pink

      good answer pl review mine

  • Niharika

    According to the World Bank report,

    -> the poverty rate in India was one of the lowest among developing nations, even if one used the previous NSSO methodology.
    ->The people living below poverty line has been decreasing when compared to 1993 and 2011 ( from 493
    million to 273 million).
    ->The world bank estimate shows that the population of poor in India is 12.4 percent.

    However, this data is contradictory to the data provided by Indian committees.

    ->Rangarajan methodology (29.5%), Suresh Tendulkar methodology(21.9 %).
    -> As per the survey conducted by Planning commission in 2011-2012, the percentage of
    persons below the Poverty Line in India has been estimated as 21.9% for the country as a
    whole which is an improvement compared to 2004-05(37.2 %) and 1993-94(45.3%).

    It is a fact that many govt ministries are keen on
    manipulating this data to exaggerate the success in poverty eradicating
    schemes.

    • ankit

      well niharika …u hv written in a pretty concise manner that is the way we will be writing in mains paper….since everyone has flooded their answers with too many statistical data that they ultimately wont be recalling during the real answer writing….in a
      way i personally feel ur answer comprehensively dealt with the issue after scrutinizing every answer…only the portion of the question which asked for analysis of different committees is rather left out in answer which i think u could hv done it…rest i appreciate ur answer….thank you…keep writing good answers….

      • Niharika

        Thanks for your review. I will improve my answer through incorporating your suggesstions

    • NEAL

      nice
      simple and smart evaluvation

      • Niharika

        thanks for your review

  • Niharika

    Please review mine

  • Mama

    Please review. New to answer writing.

    The methodologies provided by various organisation like world bank and committees like Tendulkar & Rangarajan committees for estimation of poverty line are different.According to Indian analysis the poverty line figure is underestimated by World bank.
    Rangarajan committee and Tendulkar committee estimated poverty rate at 29.5% and 21.9% respectively where as world bank estimated it as 12.4% which is far below than these 2 committees report.
    – Indian committees used uniform recall period of 30 days for all consumption of items where as world bank used a mixed reference recall period i.e.7 days for food items, 365 days for clothing and durables and 30 days for rest of the items.
    – The monetary value for consumption is different for rural and urban poverty demarcation by Indian committee reports but it is same i.e. 28.5 rupees for both these areas in world bank report.
    – Highend, packaged products and consumption items are used by World bank for estimation are not used by rural people which are not taken into account by Indian committees during estimation.
    – World Bank used PPP data for analysis of poverty line which underestimates the actual figure.
    All these dissimilarities in comparison lead to variable end results.

  • Vm

    According to the recently formed committee under the chairmanship of Rangarajan it estimated that in India about 29.5% of its population live in utter poverty .
    Methodology used by Rangarajan commitee.
    a) It estimated that urban population spending Rs .40 per day and above would be considered above poverty and rural population spending above Rs 33 per day is consider above the poverty line .
    b)This on conversion to PPP becomes $2.44 per day
    c)This committee included food ,non food items like education , transportation, health care .
    d)According to their estimates it included a huge population under the below poverty line, thus led to the increase in the expenditure on a number of welfare schemes to lift the 29% of population out of poverty. But on the contrary reports released by world Bank estimated a mere 12.4% of the Indian population reeling under poverty in 2011-12.as it considered
    a)Expenditure cut of $1.9 per day PPP.
    b)Items consumed by Indians were not considered as the consumption and living patterns of Indians differ with that of other nations.
    c)World bank did not consider essential non food items .

    Thus it can be said that actual poverty is much higher as the world bank report lacked scientific basis an computing poverty line as in India PPP is not an appropriate method to measure poverty .

  • Legolas

    Poverty estimations in India have been done by various committees, apart from global agencies like World bank. Some important poverty estimates are by Suresh Tendulkar committee and Rangarajan committee.

    Suresh Tendulkar committee suggested a daily minimum of Rs 33 for urban poverty line and 27 for rural poverty line. The same figures for Rangarajan committee wer Rs. 40 and Rs. 30. The % of poor in the country as per Suresh Tendulkar committee was
    approximately 22% and 29% by Rangarajan committee.

    Previously World back estimates were closer to Suresh committee report. However, current World bank estimate suggests that only 12% of the population are poor.

    The key point of contention here is the usage of PPP model for estimating poverty. PPP method uses the same basket of goods across the globe. However, requirements of the poor in India could be very different from those in developed countries like US or UK, considering the better public infrastructure there.

    Another change has been the usage of ‘mixed reference’ method which estimates food expenses based on last 7 days, durables for a 365 day period and other goods for 30 day period. Previously, all expenses were seen for a fixed reference period of 30 days.

    The new method of estimation is expected to be more accurate. However, coupled with the PPP model, it has thrown a very surprising picture of Indian poor.

  • PK

    World Bank in its latest report on poverty estimates in India for year 2011-12 has claimed that only about 12% of India’s population was poor. This was not accepted by Indian government stating the limitations in the methodology of WB’s poverty estimation.

    Comparison:
    Indian government has appointed Suresh Tendulkar committee which has said that 21.5% of India’s population was poor. This estimation also drew a lot of flak from many sections of the society. Thus, C.Rangarajan committee was formed to revise the estimates of poverty and it has estimated the proportion of poverty to be around 29.5%. Thus, these comparisons show that the poverty estimates are ranging from 12% to 30%.

    Analysis:
    With respect to the methodology of estimation, World Bank has undertaken PPP method of comparison across the world. The basket of goods which the WB devised wasn’t actually in tune with the realities of Indian consumption pattern. The weightage assigned to the items of the basket were also not suitable for India. However, the Tendulkar committee and Rangarajan comittee have followed consumption expenditure methodology with appropriate basket of goods which are separate for rural as well as urban population. Mixed reference period is the common principle in all the studies which is a much better method than uniform reference period.

    It is important to note that none of these studies have taken poverty as a multi-dimensional phenomenon. the measures were all based on the uni-dimensional aspect of income/expenditure. The Indian government’s efforts in conducting SECC is a right step in the direction of measurement of poverty.

    • @li

      nice attempt
      no need to mention as comparison and analysis
      but mention of uni dimensional is good……

      • PK

        true. agree 🙂

  • FinalAttempt

    pls review..

    • skyhighambition

      compared very well tendulkar,rangrajan cmt n WB..intro vd WB gud 🙂

      • FinalAttempt

        thanks friend..

  • VW

    As per recent world bank poverty estimates, poor population in India has fallen to 12.4% (2011-12) as per PPP based estimates according to a common consumption basket. The consumption basket chosen comprises of high end rice, mineral water consumption, holiday package etc. At 1.95$ the WB has fixed the poverty line for India bringing down the number of poor from its earlier estimations.
    These estimates are very low as compared to Tendulkar estimates (21.5%) as well as recent Rangarajan estimates (21.2%). According to suresh tendulkar estimates, poverty line had been fixed at Rs 33/day for urban area and 27/day for rural area based on a uniform monthly per capita expenditure. The new rangarajan estimates have been accepted as more accurate as it adopts a mixed reference period for calculating poverty line figures at Rs 44/day for urban areas and 33/day for rural areas.
    On comparing the world bank estimates with tendulkar and rangarajan estimates, It comes to attention that the WB estimates are completely flawed as it takes a consumption basket which is not even representative of Indian consumption behaviour. Secondly, the PPP based estimates cannot be used for making poverty line estimates because it values some items uniformly across all countries.

  • Poverty estimation of Indian population made by world bank in its recent report is 12.4%. This estimation of poverty rate is very less in comparison to the estimation given by committees made in India, which are as follows:

    Rangarajan 29.5%

    Tendulkar 21.9%

    The loopholes of the methodology used by world bank need a fair analysis:

    – The WB calculated the poverty considering an expenditure cut off of $1.9 a person a day on puchasing power parity(PPP) terms. As per the estimation given by Indian committees, this estimation of WB is not based on scientific lines and the consumption basket used to derive PPP did not reflect the spending pattern of the common man in India.

    – There is a difference in method for poverty calcualtion, used by world bank and committees made in India: The World bank calculate it using a mixed reference period method considering different time frames for different items, while committees in India use a uniform reference period for all the items to calculate it.

    – Further, the weights assigned to items weren’t appropriate. “The problem is with the weighting structure and the selection of items. For example, the rice variety consumed by majority of the poor is very different from what is priced in the consumption basket to determine PPP.

    – Rs 15 a dollar, the PPP for India was too low to reflect the ground reality, as estimated by the World Bank. This is lower than the Rs 33 a day of per capita expenditure estimated by the Suresh Tendulkar methodology, which drew flak from several quarters. However, it is slightly higher than Rs 29 a day for rural areas, also computed through the Tendulkar methodology. An another panel headed by economist C Rangarajan, appointed by planning commission, estimated the poverty line based on per capita expenditure of Rs 47 a day for urban areas and Rs 33 a day for rural areas.

  • aashish 2000

    There is a wide gap between the reports on poverty
    estimation released by World Bank and committees constituted in India.

    – World Bank(WB) has mapped the poverty at 12.9% in
    India, while committes framed by India placed it at 29% in 2011-12.

    – Wide gap, because of calculation method by World
    Bank considering Expenditure cut off of $1.9 a person a day on purchasing power
    parity(PPP).

    – India committees like Rangarajan and Tendulkar
    committee consider rural and urban areas different due to consumption and
    living patterns are different where WB lacks it and compares both as a single
    unit.

    -Weighing Structures and Selection of items on HighEnd
    basis stated as not suitable for India poverty estimation.

    The secret reason behing these estimations on India
    poverty is to minimize the subsidies line which benefits developed countries
    like U.S. and increase the burden on India economy where the actual results
    remain same.

    To avoid these India has opted new reforms such as
    aggregate period for estimating changes from 30 days to 7days on certain items.
    Due to heavy pressure on back of India by SDG and effective policies of India
    will make the WB results true.

  • Manu

    World Bank explains, PPP GDP is gross domestic product converted to international dollars using purchasing power parity rates. And an international dollar has the same purchasing power over GDP as the US dollar has in the US. There are all kinds of issues with PPP conversion, but let’s keep it aside and look what our nation has taken into consideration Since 2005, Indian government adopted the Tendulkar(Report submitted 2009) methodology (Monthly per CAPITA Expenditure method). during 2009-10 and 2011-12 which moved away from calorie anchor to a basket of goods and used rural, urban and regional minimum expenditure per capita necessary to survive.Rangarajan committee estimation (Monthly Expenditure of family of five.) is based on an independent large survey of households by Center for Monitoring Indian Economy (CMIE).It has also used different methodology wherein a household is considered poor if it is unable to save.The methods also include on certain normative levels of adequate nourishment, clothing, house rent, conveyance, education and also behavioral determination of non-food expenses.Hence , Rangarajan committee(Submitted report in 2014) estimated the number of poor were 19 per cent higher in rural areas and 41 per cent more in urban areas than what was estimated using Tendulkar committee formula.

  • TheBigDaddy

    Recently, World Bank released a new poverty estimation based
    on the purchasing power parity (PPP) at the level of $1.9 per person per day.

    Previously in 2009, the erstwhile planning commission had
    commissioned a committee under Suresh Tendulkar to delve into the poverty
    estimation methodology. Until then, the Lakdawala committee recommendations of
    calorie intake were considered. The Tendulkar committee had then decided to
    move away from the calorie intake norm and included expenditure on food,
    health, clothing, education etc. After widespread uproar against the low
    poverty lines released by the committee, a new committee under C. Rangarajan
    was setup in 2012. The Rangarajan committee further included non-food items
    like transport, rent etc.

    Many analysts have raised concern about the recent World
    Bank new estimate on grounds that it is based on many high-end items which are
    not relevant from Indian perspecive, such as high-end rice, pasta, mineral
    water, wine and packaged holidays. Further, the PPP measure is not relevant in
    the case of India as the consumption and living patterns are different here.
    Also the weights and the items included in the basket are not appropriate in
    India’s context. For instance the rice variety consumed by poors in India is
    very different from what is considered in the basket.

    Many poverty estimates have often come out with contrasting
    poverty estimates. It is of utmost importance to develop an India-specific and
    appropriate methodology for poverty estimates, which targets the real
    beneficiaries so that better targetting of its subsidies can be achieved.

  • dinesh

    India should travel a long road to achieve the figures estimated by WB on indian poverty…
    -as some of the indian experts made a right contradiction on the estimation by WB ppp cannot be used to measure poverty in a country
    -in a country like india poverty depends on number of factors where as WB used a set of rich necessary goods like mineral water,wine,and high quality rice which are least used by poor people in india for setting poverty line
    -estimations made by commitiees in india are more realistic as they set poverty line correct
    -ppp mostly used to determine relative values of two currencies is more suitable to measure the GDP of the country than poverty
    -from the past decade the inflation gap is widening between rural and urban areas so it is erratic to take urban and rural areas in the same scale

    • Merit List

      at least rangarajan committee and tendulkar committee names must be mentioned.

  • Disco Dancer

    World Bank in its recent methodology to calculate poverty for India has taken $1.9 per person per day as the cutoff based on purchasing power parity(PPP) terms. The poverty line surprised everyone with only 12.5% poors in India in 2011-12. On comparing this with previous Indian committee reports:
    –> PPP Model : WB report calculated poverty on PPP terms, which previous committees has never used. The problem with PPP is that it is not concomitant with Indian people lifestyle due to its unique consumption basket

    –> Poverty line : Compared to high poverty lines of Tendulkar(21.9%) & Rangarajan(29.5%) committee, the poverty line(PL) for WB report is less i.e. 12.5% for 2011-12.
    –>Rural vs Urban : While the previous committees compared PL separately for rural & urban, it is not same in the WB report.
    –>Comaparison with Rangarajan committee : Rangarajan actually calculated PL for a family of 5 based on family’s expenditure, which in terms of PPP is $2,25 per person per day, much higher compared to WB report. Hence, the poverty line decreases.
    –>Non monetary Indicators : WB report didnt recognize it, whereas tendulkar & Rangarajan committee gave separate space for health, education in their estimation.
    –> Period of reference : It has moved completely from uniform reference period (Household expenditure for a period of 30 days for every item) to Modified Mixed reference period(Household expenditure different for food , non food & other items)

    Overall, the present WB report doesn’t show the actual picture of poverty in India, and require a careful check. Govt should give its consensus view on the report & continue to fight poverty to realize its Millennium Development Goals(MDGs) & further SDGs(Sustainable development goals).

  • shankar

    Compare and analyse poverty estimation made by World Bank and various committees in India.?

    Comparing the poverty estimation in India between the World Bank and that of done by various committees of India, a mark distinction can be seen in every aspects of poverty estimation;

    –while the world recently released the data showing only 12.4% of Indian population was poor in 2011-12, the data released by Indian authorities was 21.9% in 2011-12.
    –No distinction has been made to estimate rural and urban expenditure separately by the World Bank, the committees in India has put a separate norms for rural and urban expenditure.
    –The world Bank set the PPP model for measuring poverty in India, the flaws are that the items in PPP are comparable across the world, therefore, high-end because PPP based on the common list of items consumed across the world include a range of high-end items, not relevant from an Indian perspective, such as high-end rice, pasta, wine, mineral water and packaged holidays.

    –the items consumed by the poor are not properly represented in the basket
    –The methods adopted by the World Bank may be relevant for the USA as well as Mexico but not for India due to diverse consumption items

    The poverty in India has been a historical reality. From the late 19th cent. to the early 20 the century, the poverty got intensified and mass killings occured due to diseases and famines. After Independence, India once again got struck in the grasp of poverty till 1960s. But the economic growth after the Liberalistion of 1991, poverty in India reduced sharply. But there is still around 30 crore or a quarter of its population is below poverty line which is devoid of their basic essentials such as; safe drinking water, sanitation, housing, health infrastructure as well as malnutrition impacts the million of people especially to children the future of India’ prosperity.

    To be sure, the situation is not matter of satisfaction to the Indian authorities, there is a need to target the most deprived and vulnerable section of our population. This is need of the hour for India aspiring to be in the elite class of developed and prosperous country

    plz rvw frnds

  • amit

    critics welcome

  • Dilip Kumar

    plz review ….

    • skyhighambition

      vry well dealt with questn.. keep writing

  • Vikram

    Please review !!

    In India estimation of poverty and drawing poverty line has been very controversial and hotly debated. Media and social groups has heavily criticized the C. Rangarajan report on poverty, because they felt that amount that come for per capita per person was very low. However , Rangraja committee did not estimated the poverty on individual basis, It was based on family with 5 members. Since in a group certain expenditure can be minimized which otherwise contribute to the expenditure such as light, water, house etc.

    Poverty estimation by the Suresh Tendulkar committee:
    Committee was setup in 2005 which submitted its report in 2009. Report
    indicated 33 rupee per person for Urban areas and 27 rupee per person in rural areas as a boundary to estimate determine poverty. According to the report 21% of Indian lived below poverty line in 2005.

    Poverty estimation by the C Rangaraja committee:
    Committee was setup in 2009 which submitted its report in 2014. Report indicates that rupee 7035 per month
    for family of five in urban area and rupee 4860 per month for family of five members in rural area as a base for poverty estimation.
    As per the C Rangarajan committee 29% of Indian lives below poverty line based on 2011-12 census.

    Poverty estimation by the world bank: As per the estimates of World bank in the report of ” Eliminating extreme poverty and sharing prosperity” only 12% live below poverty line with per capita per day expenditure below 1.9 dollar on basis of PPP.
    India economist believe that in India poverty can not be as low as 12% estimated by the World Bank. There is few drawback in the WB estimation.
    1)Consumption pattern which was taken by world bank does not reflect to the ground reality of Indian’s expenditures.
    2)PPP used by the WB is not suitable for estimating poverty, it is only suitable for comparing GDP between countries, Indian expert argue.
    3)Survey sample taken by the WB does not account entire country comprehensively as done by Indian committees.

    So reports from the WB and various Indian committees points different facet of same reality. both base on different data set that’s why result looks diverse. However, In India poverty is still very high roughly more than 20% and thus government has big mandate to bring people above poverty line in sustainable manner.

  • sonu

    Recent analysis of poverty estimation by World Bank has all together put forward a deviating figure from what various committe of India has presented. The remarkable difference has been jotted down as follows :

    1. According to world bank, 12.4% of India’s population was poor in 2011-2012, considering expenditure cut-off of

    $1.9 a person per day on PPP(Purchasing Power Parity).

    2. Projected figure of poverty by the committee of India :

    Rangarajan Methodology : 29.5% in 2011-2012, estimating a day 47 RS and 33 RS per capita expenditure for Urban and Rural areas respectively.

    Tendulkar Methodology : 21.5% in 2011-2012, based on per capita expenditure of 33 RS.

    World Bank has release the data based on the new methodology by National Sample Survey Office(NSSO). However, we the older methodology is adopted, poor will constitute the 21.2% of countries population. This worrisome deviation in figure is indicating that there is loophole in methodology adopted though the latest one is better.

    The matter of concern is, according to the India official’s, is that :

    1. PPP is NOT the method for the estimation for the poverty rather for comparing with GDP.

    2. The common list of item included in the estimation is NOT relevant from Indian perspective.

    3. Weight-age assigned for each items, were NOT appropriate.

    Also, we can see that as methodology differ, the number of poor drastically went down instead of going up. These fact can be supported by the weight-age assigned to items and inclusion of items.

  • Yashaswi

    Attached.

  • ananya mittal

    1) Compare and analyse poverty estimation made by World Bank for Indian population with that of estimations made by various committees in India. (200 Words)
    a: In its recent report ‘ending extreme poverty and sharing prosperity’ world bank has estimated that in 2011-2012, 12.4% of india’s population was below the poverty line. The claims of world bank in the report have been severly contested by government for their lack of scientific basis and complete separation from ground reality.
    1) world bank in its report has estimated poverty line at per capita daily consumption expenditure of $1.9 and while considering Rs15 per dollar on PPP basis, in indian currency it comes to Rs28.5 per capita daily consumption expenditure, thus bringing 12.4% of india’s population under poverty. This analysis is based on new methodology developed by NSSO involving modified mixed reference period
    And according to older methodology of uniform reference period, per capita consumption expenditure was set at 1.25$ converted to 18.75rs in indian currency, bringing 21.2% of indian population under poverty
    2) according to tendulkar committee, per capita consumption expenditure was set at rs33 and rs27 in urban and rural areas respectively bringing 21.9% of india’s population under poverty
    3) amidst criticism against tendulkar methodology, former planning commission established committee under C rangarajan, which set rs47 and rs30 for per capita consumption expenditure in urban and rural areas bringing 29.5% of india’s population under poverty
    The poverty estimates of world bank are criticized on grounds that PPP consumption basket is not accomodative of goods consumed by middle class people in india, let alone poor, with goods comparable globally and are high end comprising wine, packaged holidays, mineral water, pasta, rice. Besides weightage given to products is also flawed with respect to india’s reference since rice consumed by poor in india is different from high end rice prices taken into estimate
    Such PPP consumption basket is appropriate for comparison purposes in usa, mexico but not with india