Revisiting the Poverty Line

Source-This post on Revisiting the Poverty Line has been created based on the article “India’s poverty debate needs to move on- Let’s define new norms” published in “Live Mint” on 16 May 2024.

UPSC Syllabus–GS Paper-3– Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

Context-The National Sample Survey Office (NSSO) has released the Household Consumer Expenditure Survey (HCES) data. This has reignited discussions on poverty estimation in India. The article highlights the need for adoption of new norms for estimation of poverty in India.

Estimates based on Tendulkar and Rangarajan Committee methodologies suggest a sharp reduction in poverty since 2011-12, with poverty levels around 6.3% and 10%, respectively, in 2022-23. Revisiting the Poverty Line

What has been the evolution of consumption-based poverty measurement in India?

Consumption-based poverty measurement in India traces its roots to the 1962 Working Group and the 1979 Task Force.

1) The 1979 task force –As per the task force, the poverty line was defined as the per-capita consumption expenditure level that could meet the average per capita daily calorie requirement of 2,400 Kcal in rural areas and 2,100 Kcal in urban areas, along with associated non-food expenditure. The monetary value of this norm formed the basis of poverty lines in all subsequent revisions.

2) Tendulkar and Rangarajan Committees-They have revisited the calorie norms and expenditure levels. However, they did not adequately address the non-food components.They argued that if money spent on certain necessities meets nutritional requirements, then it should also cover other essential, or non-food needs.

What is the need to revisit consumption-based poverty estimation in India?

1) Rethinking the Poverty Line-The recent changes in HCES survey methodology may render older ways of measuring poverty inaccurate.Further,the consumption-based poverty estimation has not been examined adequately since its inception.

2) Demographic and Societal Changes– India has changed a lot since the 1970s, including increased life expectancy, a rising share of the elderly population, and improved gross enrolment ratios in education. These changes have implications for out-of-pocket expenditures on health and education, which the existing poverty norms do not account for adequately.

Read more- All India Household Consumption Expenditure Survey 2022-23

3) Limitations of Consumption-Based Poverty Measures- Measuring poverty based on what people consume gives an average view of the population but doesn’t consider the growing differences among people.

4) Insufficient Resources for a Decent Standard of Living– Households may exceed the poverty thresholds.However,they still lack resources for a ‘decent standard of living,’ such as healthcare for the elderly or private tuition for children.

To meet the Sustainable Development Goal of ending poverty in all its forms, India should define fresh norms for poverty line that are appropriate for the ‘Amrit Kaal’ era.

Question for practice

Highlight the need for revisiting consumption-based poverty estimation in India?