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Understanding the Poverty Line in India

The concept of the poverty line has always been central to India's social and economic policies. 

This line acts as a threshold, distinguishing those who live above it from those who live below it, thereby guiding the allocation of resources and implementation of welfare schemes.

But how is this poverty line determined? 

Evolution of poverty line

The measurement of poverty in India has evolved significantly since independence (1947).

Initially, the focus was on caloric intake, influenced by the standards set by the Planning Commission in the 1960s. The 1971 Task Force led by Y.K. Alagh was the first to define the poverty line based on nutritional requirements: 2,400 calories per day in rural areas and 2,100 calories in urban areas.

In the following decades, this approach saw modifications. The Lakdawala Committee in 1993 retained the calorie intake criteria but updated the expenditure data to reflect the cost of living more accurately. The Tendulkar Committee, in 2009, marked a significant shift by moving away from calorie intake to broader criteria, including health, education, and other essentials.

poverty rate in India over the years
Trends in Poverty Rate in India: 1977-2021

Current poverty line 

Today, the poverty line in India is determined based on consumption expenditure data collected by the National Sample Survey Office (NSSO). The Rangarajan Committee, constituted in 2012, provided the most recent methodology, considering a basket of essential goods and services.

  • Urban Areas: The poverty line is set at ₹47 per day per person.

  • Rural Areas: The poverty line is set at ₹32 per day per person.

These figures account for expenditures on food, education, healthcare, clothing, and shelter, ensuring a more comprehensive understanding of basic needs.

poverty line estimates in india

Global Comparisons of poverty line

When comparing India's methodology with other countries, several differences emerge:

  • United States: The poverty line is calculated based on the cost of a minimum diet multiplied by three, with adjustments for family size and composition.

  • China: Uses a per capita income threshold.

  • European Union: Considers those earning less than 60% of the median income as being at risk of poverty.

These methods illustrate the varied approaches countries adopt, reflecting different socio-economic contexts and priorities.

Recent Data and Statistics on poverty line

According to the Discussion Paper, India has registered a significant decline in multidimensional poverty in India from 29.17% in 2013-14 to 11.28% in 2022-23. 

Despite the robust methodologies, the poverty line in India has faced several criticisms:

  1. Underestimation: Critics argue that the threshold is too low and does not accurately reflect the cost of living.

  2. Calorie Intake Irrelevance: The initial focus on calorie intake ignored other essential needs like education and healthcare.

  3. Urban-Rural Discrepancies: The line does not adequately capture the higher living costs in urban areas.

These criticisms have sparked debates about the need for a more dynamic and inclusive approach to poverty measurement.

Impact on Policy on poverty line

The determination of the poverty line significantly influences policy-making and social programs. Welfare schemes like the Public Distribution System (PDS), Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), and Pradhan Mantri Awas Yojana (PMAY) rely on this metric to identify beneficiaries. Accurate measurement ensures that resources are directed to those most in need, thereby maximising the impact of these programs.

Understanding the poverty line is crucial for grasping the broader socio-economic landscape of India. As policymakers and researchers continue to refine these measures, the goal remains to provide a more accurate and humane representation of poverty, driving effective interventions and inclusive growth.

By staying informed and engaged with these discussions, we can better appreciate the complexities of poverty and contribute to more equitable and just social policies.You can eradicate poverty by investing in the growth of rural businesses thus increasing livelihood and job opportunities multifold. To know how, visit Recommended read : NITI report

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