The poverty line in India is estimated primarily based on consumption expenditure rather than income, as consumption better reflects the living standards and actual resource availability of households
. The process involves the following key steps:
- Determining a Basket of Essential Goods and Services: The poverty line is calculated by identifying a "minimum level" of consumption necessary to meet basic needs such as food, clothing, footwear, fuel and light, education, and medical care
. This basket includes items like cereals, pulses, milk, edible oil, vegetables, fruits, sugar, salt, spices, clothing, footwear, education, medical expenses, and other essentials
- Calorie Norms and Expenditure: Earlier methods focused on calorie intake norms (e.g., 2400 calories per person per day in rural areas and 2100 in urban areas), but newer methodologies have shifted away from calorie-based poverty lines to broader consumption baskets
- Data Collection: The National Sample Survey Office (NSSO) collects detailed consumption expenditure data through household surveys. This data forms the basis for poverty estimation
- Committee Recommendations: The Tendulkar Committee (2009) introduced significant changes by recommending a uniform poverty line basket for rural and urban areas, incorporating private expenditure on health and education, and using Mixed Reference Period (MRP) consumption data. It set the poverty line at about ₹27 per day in rural areas and ₹33 per day in urban areas (2011-12 prices)
- Adjustments for Inflation and Regional Differences: Poverty lines are adjusted for inflation and vary between rural and urban areas due to differences in lifestyle and costs. State-specific poverty lines also exist to reflect local price levels and consumption patterns
- Current Estimations: NITI Aayog now oversees poverty estimation using updated NSSO data and methodologies. For example, the Rangarajan Committee (2014) proposed poverty lines of ₹32 per day in rural areas and ₹47 per day in urban areas, considering a comprehensive basket of goods and services
In summary, India's poverty line estimation is a consumption-based approach that defines poverty as falling below a minimum expenditure threshold necessary to meet essential needs, with methodologies evolving to reflect changing consumption patterns and costs across regions and time
Summary of Key Points
- Based on consumption expenditure, not income
- Minimum consumption basket includes food, clothing, healthcare, education, etc.
- Data from NSSO household surveys
- Tendulkar Committee (2009) and Rangarajan Committee (2014) major methodological influences
- Separate poverty lines for rural and urban areas, adjusted for inflation and region
- NITI Aayog currently responsible for poverty estimation
This approach aims to provide a realistic measure of poverty aligned with actual living conditions in India.
