Write a short note on Poverty Gap Index (PGI).

**Poverty Gap Index (PGI)**

The Poverty Gap Index (PGI) is a measure used to assess the depth of poverty within a population. It provides a more nuanced understanding of poverty compared to simple headcount ratios by taking into account the intensity of poverty among the poor. The PGI is calculated as the mean shortfall of the total population from the poverty line, expressed as a percentage of the poverty line.

**Key Features of PGI:**

1. **Depth of Poverty:** The PGI measures how far below the poverty line the average poor person falls, providing insight into the severity of poverty within a population.

2. **Sensitive to Income Distribution:** Unlike headcount ratios, which only consider the proportion of the population below the poverty line, the PGI is sensitive to income distribution among the poor. It takes into account the distribution of income among the poor and provides a more accurate reflection of poverty intensity.

3. **Policy Relevance:** The PGI is relevant for policymakers as it helps identify the segments of the population that are most affected by poverty. It can guide the design of targeted interventions to reduce poverty and improve the well-being of the poor.

4. **International Comparisons:** The PGI can be used to compare the depth of poverty across different countries or regions. It allows for a more meaningful comparison of poverty levels, taking into account not just the proportion of the population below the poverty line but also the intensity of poverty.

**Calculation of PGI:**

The Poverty Gap Index is calculated using the formula:

\[ PGI = \frac{1}{N} \sum_{i=1}^{N} \frac{Z – Y_i}{Z} \times 100 \]

Where:
– \( N \) = Total number of individuals in the population
– \( Z \) = Poverty line (threshold below which individuals are considered poor)
– \( Y_i \) = Income of the \( i \)th individual
– The sum is taken over all individuals in the population.

**Interpretation:**

– A PGI of 0 indicates that all individuals in the population are above the poverty line, implying no poverty gap.
– A higher PGI indicates a greater depth of poverty, with a larger proportion of the population falling below the poverty line by a larger margin.

In conclusion, the Poverty Gap Index (PGI) provides a more comprehensive measure of poverty by taking into account the depth of poverty among the poor. It is a valuable tool for policymakers and researchers seeking to understand and address poverty more effectively.