Various Methodologies Proposed by Various Committees for Calculation of Poverty

Various expert groups constituted by the Planning Commission have estimated the number of people living in poverty in India

Working Group (1962)

    • The poverty line in India was quantified for the first time in 1962, by this Group in terms of a minimum requirement (food and non-food) of individuals for healthy living
    • The Group formulated separate poverty lines for rural and urban areas (₹20 and ₹25 per capita per month respectively in terms of 1960-61 prices) without any regional variation
    • The poverty line excluded expenditure on health and education, both of which, were to be provided by the State

Study by VM Dandekar and N Rath (1971)

    • Although this was not a study commissioned by the Planning Commission, the origins of India’s poverty line lie in the seminal work of these two economists
    • They first established the consumption levels required to meet a minimum calorie norm,  of 2,250 calories per capita per day
    • Unlike previous scholars who had considered subsistence living or basic minimum needs criteria as the measure of poverty line, they derived poverty line from the expenditure adequate to provide 2250 calories per day in both rural and urban areas
    • They found poverty lines to be Rs. 15 per capita per month for rural households and Rs. 22.5 per capita per month for urban households at 1960‐61 prices

Task Force on “Projections of Minimum Needs and Effective Consumption Demand” headed by Dr. Y. K. Alagh (1979)

    • Official poverty counts began for the first time in India based on the approach of this Task Force
    • Poverty line was defined as the per capita consumption expenditure level to meet average per capita daily calorie requirement of 2400 kcal per capita per day in rural areas and 2100 kcal per capita per day in urban areas
    • Based on 1973-74 prices, the Task Force set the rural and urban poverty lines at 49.09 and Rs.56.64 per capita per month at 1973-74 prices.

Lakdawala Expert Group (1993)

    • It did not redefine the poverty line and retained the separate rural and urban poverty lines recommended by the Alagh Committee at the national level based on minimum nutritional requirements.
    • However, it disaggregated them into state-specific poverty lines in order to reflect the inter-state price differentials
    • Over the years, this method lost credibility. The price data were flawed and successive poverty lines failed to preserve the original calorie norms

Tendulkar Expert Group (2009)

    • The Tendulkar Committee suggested several changes to the way poverty was measured
      • It recommended a shift away from basing the poverty lines from calorie norms used in all poverty estimations since 1979 and towards target nutritional outcomes instead
      • Instead of two separate poverty line baskets (PLBs) for rural and urban poverty lines, it recommended a uniform all-India urban PLB across rural and urban India.
      • It recommended using Mixed Reference Period (MRP) based estimates, as opposed to Uniform Reference Period (URP) based estimates used in earlier methods for estimating poverty.
      • It recommended incorporation of private expenditure on health and education while estimating poverty.
      • It validated the poverty lines by checking the adequacy of actual private consumption expenditure per capita near the poverty line on food, education and health by comparing them with normative expenditures consistent with nutritional, educational and health outcomes respectively.
      • Instead of monthly household consumption, consumption expenditure was broken up into per person per day consumption, resulting in the figure of Rs 32 and Rs 26 a day for urban and rural areas.
      • As a result, the national poverty line for 2011-12 was estimated at Rs. 816 per capita per month for rural areas and Rs. 1,000 per capita per month for urban areas

Rangrajan Committee (2014)

    • Due to widespread criticism of Tendulkar Committee approach as well as due to changing times and aspirations of people of India, Rangarajan Committee was set up in 2012
    • It reverted to the practice of having separate all-India rural and urban poverty line baskets and deriving state-level rural and urban estimates from these.
    • It recommended separate consumption baskets for rural and urban areas which include food items that ensure recommended calorie, protein & fat intake and non-food items like clothing, education, health, housing and transport.
    • This committee raised the daily per capita expenditure to Rs 47 for urban and Rs 32 for rural from Rs 32 and Rs 26 respectively at 2011-12 prices
    • Monthly per capita consumption expenditure of Rs. 972 in rural areas and Rs. 1407 in urban areas is recommended as the poverty line at the all India level
    • However, The government did not take a call on the report of the Rangarajan Committee