Write a note on poverty estimation methods in India and the current level of poverty.

Poverty Estimation Methods in India

Poverty estimation in India involves assessing the prevalence and severity of poverty across different demographic groups and geographic regions. Various methods and criteria have been used over the years to measure poverty levels and trends, each with its own strengths and limitations.

1. Official Poverty Measurement Methods

The primary method used for official poverty estimation in India is based on income or consumption expenditure data collected through large-scale household surveys. The methods have evolved over time:

• Planning Commission Methodology (until 2014): Historically, poverty estimation in India was based on the methodology developed by the Planning Commission. It used consumption expenditure data from the National Sample Survey (NSS) and defined poverty lines based on calorie intake norms.

• Tendulkar Committee Methodology (2011): The Tendulkar Committee revised the poverty estimation methodology to reflect changing consumption patterns and expenditure on non-food items. It introduced the concept of a poverty line based on a monthly per capita consumption expenditure threshold.

• Rangarajan Committee Methodology (2014): The Rangarajan Committee further revised the poverty line calculation by considering variations in consumption patterns across rural and urban areas. It recommended higher poverty lines to capture the true cost of living.

2. Current Level of Poverty

As of the latest estimates:

• Official Poverty Line: The official poverty line in India is based on the methodology recommended by the Rangarajan Committee. As per the latest data, the poverty line is set at a monthly per capita consumption expenditure of ₹1,407 in rural areas and ₹2,203 in urban areas (as of 2011-12 prices).

• Poverty Estimates: According to the official estimates released by the Ministry of Statistics and Programme Implementation, the poverty rates in India have shown a declining trend over the years. For instance, in 2011-12, the national poverty rate was estimated at 21.9% based on the Tendulkar poverty line, which declined to 21.2% using the Rangarajan poverty line.

• Multidimensional Poverty Index (MPI): Apart from income-based measures, India also uses the Multidimensional Poverty Index (MPI) to capture deprivations across various dimensions such as health, education, and living standards. The MPI provides a broader understanding of poverty by assessing non-monetary aspects of deprivation.

3. Critique of Poverty Estimation Methods

• Criticism of Income-Based Measures: Income-based poverty measures have been criticized for not fully capturing the complexity of poverty, especially in terms of access to basic services, social exclusion, and vulnerability to shocks.

• Urban-Rural Disparities: Poverty lines vary significantly between urban and rural areas, leading to disparities in poverty estimates and policy targeting. Urban poverty tends to be underestimated due to higher living costs and consumption patterns.

• Data Limitations: Poverty estimates heavily rely on data from periodic household surveys, which may suffer from sampling errors, recall biases, and underreporting, affecting the accuracy and reliability of poverty estimates.

Conclusion

In conclusion, poverty estimation methods in India have evolved to capture the multidimensional nature of deprivation, reflecting changes in consumption patterns and living standards over time. The official poverty line continues to be a crucial tool for policy formulation and targeting of welfare programs aimed at reducing poverty and promoting inclusive growth. While income-based measures remain central to poverty assessment, efforts to integrate multidimensional indicators and address methodological challenges are essential for refining poverty estimates and designing effective poverty alleviation strategies in India.