Poverty Measurement and trends of poverty in India

Measuring Poverty:

While measuring poverty, there are atleast three distinct types of objectives:

  • to build awareness on poverty and to keep in the agenda of discourse,
  • to design policies, programs and institutions to alleviate poverty;
  • to monitor and evaluate these programs, policies and institutions that are associated with it.

The poverty estimate is a calculation of a sample proportion who does not achieve defined criteria of needs.

Poverty Estimation in India:

  • Since 1979, this has been done by the Planning Commission.
  • They first described an average calorie norm, worked out in consideration of the age, sex and activity composition of the population. The monetary value for this norm was then derived from the expenditure pattern of 1972-73 NSSO consumer expenditure survey. This was then termed as the base year Poverty line.
    • National Sample Survey Organization (NSSO) estimates provide the percentage of people below poverty line based on consumption expenditure, specific calorific norms and the BPL surveys.
  • This base year line was then periodically revised by adjusting for inflation.

Socio Economic Caste Census (SECC) helps in identifying the poor households by using a different set of concepts.

Indicators of Poverty in India:

  • GDP based measures are not relevant in identifying poverty in India as well as other developing countries.
    • GDP measures depend on market transactions. And as the poorer sections don’t have any market transactions, GDP measures are not relevant in measuring poverty.
  • Therefore, Per capita consumption expenditure is widely used as an index for measuring poverty in India.
    • This can measure how poverty is spread among various regions of the country.
    • Also measures the access to different economic variables by the people.
  • Indicators also use human development parameters like housing, sanitation and drinking water in order to measure poverty.
    • These parameters depend on the financial status of the people as well as the state’s policies.
  • Poverty is also measured in India in terms of homelessness along with slum population growth, literacy rate.

 Trends of Poverty in India:

The estimate is that there are 8 to 10 crore rural poor and vulnerable households spread over 2.5 lakh gram panchayats in more than 630 districts of the country.

About 1.7 billion people in the world are estimated to live in absolute poverty.

Slightly more than a third (37%) of India’s population falls in the category of ‘poor’. This means the country is home for 1/3rd of all the poor in the world.

  • There has been a general fall (almost 16%) in absolute number of poor in both rural and urban areas.
    • In the last few years, poverty levels in rural areas have come down to 25.7% in 2011-12 at a relatively faster rate than before.
    • Rural poverty has been falling at a more rapid rate than urban poverty, because of some interventional programs by the government, increased spending on social sectors (MGNREGS, ICTS, SGSY, SJSRY) and rural development programs (IRDP).
  • Inequalities have been worsening in India, which implies an increase in Relative poverty.
    • Average per capita consumption expenditure of the 20% of the poorest households has been remained unchanged in the past 5 years.
    • Average per capita consumption expenditure of the 20% richest households has increased in the past 5 years.
    • 20% of the richest rural households’ expenditure is 286 times more than that of the 20% of the poorest rural households.
  • Consumption based poverty has been falling in India though calorie based poverty has been increasing.
    • Calorie based poverty is increasing because of higher prices.
  • Poverty in terms of Human Development parameters is worsened in India, particularly in terms of some parameters.
    • Economic growth which is high has not transformed the poor household conditions.
    • Gini coefficient has gone up for all the states in the last five years.
    • Inter states as well as Intra States conditions are also being worsened.

Note: Gini Co-efficient is a measure of the inequality of a distribution, a value of 0 expressing total equality and a value of 1 maximal inequality.

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