Post-Independence Estimation of Poverty in India

More than a quarter of the population in India’s rural areas, according to recent reports, lives in poverty. Poverty and hunger issues are contentious issues that affect the Indian population to this day. That fact is even more evident when identifying and valuing those who are impoverished. Since poverty is a broad concept, each country has its own definition, and some of these definitions will differ from one country to the next.

Keeping the Indian context in mind, Let’s elaborate on how are poor people identified by several committees on basis of calorific consumption or per capita expenditure.

VM Dandekar and N Rath

In 1971, VM Dandekar and N Rath conducted a systematic analysis of poverty using data from the National Sample Survey (NSS). The criteria for the poverty line should be based on the expenditure that would provide 2250 calories per day in both rural and urban areas, as opposed to the previous estimations’ emphasis on subsistence living or basic minimum needs. This suggestion was made by VM Dandekar and N Rath.

Alagh Committee (1979)

The Taskforce, established by the Planning Commission and led by YK Alagh, developed a poverty line for rural and urban areas based on dietary needs and associated consumption costs. The estimates for the ensuing years would be modified to account for inflation in the price level.

Lakdawala Committee (1993)

The Lakdawala committee’s conclusions were based on the supposition that the baskets used to calculate the Consumer Price Index-Industrial Workers (CPI-IW) and Consumer Price Index-Agricultural Laborers (CPI-AL) accurately represented the poor’s consumption habits.

Prof. DT Lakdawala’s expert group on “Estimation of Proportion and Number of Poor” (former Deputy Chairman Planning Commission)

In its 1993 report, the Lakdawala Committee made the following recommendations:

• Based on calorie intake, the poverty line method can continue (fixed consumption basket)
• It is necessary to create state-specific poverty thresholds and to update them using the CPI-IW for urban areas and the CPI-AL for rural areas.
• National Accounts Statistics shouldn’t be used as the foundation for scaling poverty estimates. Only NSS data, according to the Expert Group’s recommendation, should be trusted.
• In 1997, the Lakdawala Committee’s recommendations were adopted by the Indian government with a few modifications.

Tendulkar Committee (2009)

The following recommendations were made by the committee under Suresh Tendulkar’s leadership.

• An abandonment of calorie-based poverty estimation
• In both rural and urban India, the poverty line basket (PLB) is the same.
•  Amodification to the price adjustment process to address spatial and temporal problems
• The estimation of poverty while taking into account private spending on health and education

Instead of using the Universal Reference Period as previous committees had done, the committee used the Mixed Reference Period. Using this method, the committee came to the conclusion that the poverty line for rural areas in 2004–2005 was Rs. 446.68 per capita per month and for urban areas it was Rs. 578.80 per capita per month. It was Rs. 859.6 in urban areas and Rs. 672.8 in rural areas in 2009–2010. It was Rs. 1000 for urban areas in 2010–2011 and Rs. 816 for rural ones.

C Rangarajan Committee (2012)

A new panel on poverty estimation was established by the Planning commission, and it would

• Describe a different way to measure poverty levels.
• Look for differences between the National Accounts aggregates and the consumption data provided by the NSSO.
• Review of global poverty measurement techniques
• Explain how these techniques can be used to determine eligibility for the various poverty-reduction programmes the Indian government has established.