Poverty: India

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Defining poverty

Indian states with the highest/ lowest proportion of population below the poverty line, 2004-12. Source: The Times of India

Planning Commission's formula

Plan panel sticks to old formula to define poor

Mahendra Singh, TNN | Jul 24, 2013

The Times of India

NEW DELHI: People spending more than Rs 27.2 per day in villages and Rs 33.3 in cities are not poor, according to latest data released by the government.

The proportion of the poor has come down to 21.9% of the country's population in 2011-12 from 37.2% in 2004-05, a decline of 2.18 percentage points every year during seven years of UPA rule.

The absolute number of poor declined by nearly 137.4 million between 2004-05 and 2011-12 and by around 85 million between 2009-10 and 2011-12.

However, there are still 269.7 million poor — 217.2 million in villages and 53.1 million in cities — across the country as against 407.3 million in 2004-05.

The percentage of persons below the poverty line in 2011-12 has been estimated at 25.7% in rural areas and 13.7% in urban areas.

The sharp decline in poverty levels across the country is based on the benchmark of a fresh poverty line. But the timing and the methodology for estimating poverty is questionable as the fresh estimates are based on the Tendulkar methodology, which was junked by the Planning Commission last year after a huge public outcry.

The plan panel's earlier figures showed that poverty was declining by 1.5 percentage points from 37.2% to 29.8% between 2004-05 and 2009-10, but the data was disowned after it was criticized for pegging the poverty line too low at Rs 22.42 per person per day in rural areas and Rs 28.65 in urban areas.

After intervention from the UPA's top leadership, the government set up another committee headed by C Rangarajan to look at a methodology for determining poverty lines and estimating poverty.

The commission justified the release of the data using the old methodology saying the data from the National Sample Survey (NSS) 68th round (2011-12) was now available and the Rangarajan committee recommendation will only be available in mid-2014 so it had updated the poverty estimates for the year 2011-12 as per the methodology recommended by the Tendulkar committee.

After the controversy, a special survey was conducted by the NSSO to determine poverty, an exercise which taken up after a gap of five years.

The official argument is that whatever be the poverty line, there will be a decline in poverty in percentage terms.

The commission argued that it is important to note that although the declining trend is based on the Tendulkar poverty line, which is being reviewed and may be revised by the Rangarajan committee, an increase in the poverty line will not alter the fact of a decline. "While the absolute levels of poverty would be higher, the rate of decline would be similar," it said.

Definition of poverty in 2011-12

According to the [Planning] commission, in 2011-12 for rural areas, the national poverty line by using the Tendulkar methodology is estimated at Rs 816 per capita per month in villages and Rs 1,000 per capita per month in cities.

This would mean that the persons whose consumption of goods and services exceed Rs 33.33 in cities and Rs 27.20 per capita per day in villages are [below the poverty line].

The commission said that for a family of five, the all India poverty line in terms of consumption expenditure would amount of Rs 4,080 per month in rural areas and Rs 5,000 per month in urban areas. The poverty line however will vary from state to state.

2014: McKinsey’s definition

McKinsey pegs poverty line at 1,336 per month

Prabhakar Sinha | TNN

The Times of India

A Global consultancy firm pegged a new level for poverty or empowerment line — at Rs 1,336 per month per person as against the poverty line prescribed by the government at around Rs 870 per month per person.

McKinsey, in a report, said the empowerment line determines the level of consumption required for an individual to fulfill his/her basic need for food, energy, housing, drinking water, sanitation, health care, education and social security at a level sufficient to achieve a modest standard of living.

According to the report —From poverty to empowerment: India’s imperative for jobs, growth, and effective basic services — 56% of the population lacks the means to meet essential needs as consumption level falls below Rs 1,336 per person per month or almost Rs 6,700 per month for a family of five. This translates to 680 million people whose consumption levels across both rural and urban area of the country fall short of this mark.


The Times of India 2013/08/10

Deprivation indicators for poverty survey

One-room kuchcha households No adult member (in the family)

Women-headed households without any [presumably male] adult

Households with disabled member and without any able adult


Households without literate adult

Landless households

Groups for automatic inclusion

Shelterless households


Manual scavengers

Primitive tribal groups

Legally released bonded labourers

Decline in 2011-12: I

Odisha, Bihar show biggest drop in percentage of poor

Mahendra Singh, TNN | Jul 24, 2013

The Times of India

Odisha and Bihar

Odisha and Bihar have registered the sharpest decline in poverty levels between 2004-05 and 2011-12, although the proportion of the poor in these states remains well above the national average.

Latest data released on Tuesday revealed that in Odisha, the proportion of people below the poverty line (BPL) in total population came down from 57.2% in 2004-05 to 32.6% in 2011-12, a decline of 24.6 percentage points.

In Bihar, which logged the fastest growth rate during the 11th five-year plan (2007-12), the share of BPL in total population was estimated at 33.7% in 2011-12, compared to 54.4% in 2004-05, a reduction by 20.7 percentage points.


At the all-India level, the share of the BPL population was estimated at 21.9%, which is almost 270 million. This means that roughly every fifth Indian lives below the poverty line. The government has set the bar low, defining anyone earning Rs 27.20 or less in rural areas as BPL, while those earning up to Rs 33.30 a day in urban areas are classified as poor, though these benchmarks vary from state to state.


Although things seem to looking up in the poor states, especially Bimaru, they still remain home to the maximum number of poor people in the country. While Uttar Pradesh has just under 30% of its population in the BPL group, the number adds up to almost 60 million. Bihar, despite the improvement, still has 35.8 million poor, and ranks second, followed by Madhya Pradesh where 23.4 million or 31.6% of the population is BPL.


Among the Bimaru states, only Rajasthan has managed to do better than the national average with the share of BPL in total population estimated at 14.7% in 2011-12, compared to 34.4% in 2004-05. In fact, the state now is a better performer than Gujarat, famed for its rapid growth and good infrastructure. The state ruled by Narendra Modi had 16.6% people below the poverty line.

Rural India has seen faster improvement than urban centres

The other important trend coming from the latest poverty estimates, which have traditionally created controversy, is the fact that rural India has seen faster improvement than urban centres. The decline in poverty was steeper in rural areas as BPL population came down to 25.8% (2011-12) from 42% (2004-05), around 17 percentage points, as against around 12 percentage points in urban areas.

On an all-India basis, there were 217 million poor in rural areas and 53 million in urban areas in 2011-12, as against 326 million and 81 million, respectively, in 2004-05.

The final figures for 2011-12 are likely to be revised once a government-appointed committee under C Rangarajan submits its report on a new methodology for fixing the poverty line, but the Planning Commission in its press release pointed out that this would only change the numbers, not the declining trend.

Decline in 2011-12: II

This article contains many points given in the article above.

Poverty declines to 21.9% in 2011-12: Planning Commission

According to the commission, in 2011-12 for rural areas, the national poverty line by using the Tendulkar methodology is estimated at Rs 816 per capita per month in villages and Rs 1,000 per capita per month in cities.

PTI | Jul 23, 2013

The Times of India

NEW DELHI: Poverty ratio in the country has declined to 21.9% in 2011-12 from 37.2% in 2004-05 on account of increase in per capita consumption, Planning Commission said.

The poverty ratio in 2011-12

The percentage of persons below poverty line in 2011-12 has been estimated at 25.7% in rural areas, 13.7% in urban areas and 21.9% for the country as a whole, a commission's press statement said.

The percentage of persons below poverty line in 2004-05 was 41.8% in rural areas, 25.7% in cities and 37.2% in the country as a whole.

In actual terms, there were 26.93 crore people below poverty line in 2011-12 as compared to 40.71 crore in 2004-05.

Suresh Tendulkar committee’s methodology

This ratio for 2011-12 is based on the methodology suggested by Suresh Tendulkar committee which factors in money spent on health and education besides calorie intake to fix a poverty line.

The commission said the decline in poverty is mainly on account of rising real per capita consumption figures which is based on 68th round of National Sample Survey on household consumer expenditure in India in 2011-12.

Earlier, a committee was appointed under Prime Minister's economic advisory council chairman C Rangarajan to revisit the Tendulkar committee methodology for tabulating poverty.

The committee is expected to submit its report by mid 2014.

Best and worst states

State-wise, the commission said the poverty ratio was highest in Chhattisgarh at 39.93% followed by Jharkhand (36.96%), Manipur (36.89%), Arunachal Pradesh (34.67%) and Bihar (33.47%).

Among the union territories, the Dadra and Nagar Haveli was the highest, with 39.31% people living below poverty line followed by Chandigarh at 21.81%.

Goa has the least percentage of people living below poverty line at 5.09% followed by Kerala (7.05%), Himachal Pradesh (8.06%), Sikkim (8.19%), Punjab (8.26%) and Andhra Pradesh (9.20%).

2011-12: BPL population

The Times of India

2011-12: the number and percentage of population below the poverty line, Graphic courtesy: The Times of India

Mar 20 2015

There are two ways to measure poverty--relative and absolute. Poverty estimates in advanced economies are based on the calculation of relative poverty, with the average standard of living used as the reference point. People are counted as poor if they cannot maintain this level. In India, poverty is estimated at absolute level or the minimum money required for subsistence. The poverty line is defined as the minimum money required for maintaining a per capita caloric intake of 2,100 calories in an urban area and 2,400 calories in a rural area. These estimates are done by analysing monthly per capita expenditure baskets of NSSO surveys.By this methodology, Chhattisgarh, Jharkhand, Manipur, Arunachal Pradesh and Bihar have the highest proportion of BPL persons in the latest estimates.

Decline in 2005-12-III

Number of poor reduced from 407 million to 269 million

Why no applause for 138 million exiting poverty?

Swaminathan S Anklesaria Aiyar

The Times of India 2013/07/28

When China reduced people in poverty by 220 million between 1978 and 2004, the world applauded this as the greatest poverty reduction in history. Amartya Sen, Joseph Stiglitz and all other poverty specialists cheered.

India has just reduced its number of poor from 407 million to 269 million, a fall of 138 million in seven years between. This is faster than China’s poverty reduction rate at a comparable stage of development, though for a much shorter period. Are the China-cheerers hailing India for doing even better?

No, many who hailed China are today rubbishing the Indian achievement as meaningless or statistically fudged. This includes the left, many NGOs and some TV anchors. The double standard is startling.

The Tendulkar Committee determined India’s poverty definition. The Tendulkar poverty line in 2011-12 came to Rs 4,000 per rural and Rs 5,000 per urban family of five. Critics say this is ridiculously low. But it is roughly equal to the World Bank’s well-established poverty line of $1.25 per day in Purchasing Power Parity terms (which translates into around 50 cents/day in current dollars). This is used by over 100 countries, by the United Nations and many other international agencies. When the whole world uses this standard, why call it statistical fudge?

When China claimed to have lifted 220 million people out of poverty, guess what its poverty line was? Just $85 per year, or $0.24 per day! Whatever statistical adjustments you make for comparability, it was far lower than today’s Tendulkar line. Did today’s critics of the Tendulkar line castigate China for fudging? No, they sang China’s praises.

Defining extreme (Tendulkar) and moderate poverty (Rangarajan)

The World Bank actually has two lines — $1.25 denoting extreme poverty, and $2 denoting moderate poverty. India can also adopt two lines, the Tendulkar line for extreme poverty and a new Rangarajan line for moderate poverty, at around $2/day.

But this will in no way diminish the great achievement of slashing the number of those historically called poor — we can call them the “extreme poor”— by 138 million in seven years. Allowing for rising population in this period, the number saved from extreme poverty is even higher at 180 million.

Given our rising GDP and expectations, we can rename the Tendulkar line as our extreme poverty line. But to condemn it as statistical fudge is ridiculous. The $1.25 line is a world standard, even if it is below the cynics’ line. Indian critics may not accept it, but the world will.

A higher poverty line is drawn

There is, of course, the separate issue of who should be entitled to various government subsidies, including food subsidies. Economists talk of targeting subsidies at those below the Tendulkar line. But for politicians, the aim of subsidies is to win votes. And clearly you win more votes by extending subsidies to two-thirds of the population, rather than the poorest one-third.

This spread of subsidies to those above the extreme poverty line was once called “leakages to the non-poor.” But it is considered good politics even if it is bad economics. This explains why the government chose to cover 67% of the population in the Food Security Bill, even though the poverty ratio at the time was 30%.

However, critics quickly exposed this as a double standard. They asked, if your Food Security Bill views two-thirds of the people as needy, how could you have a poverty line saying only one third are poor? The government found it difficult to say this was good politics even if it was bad economics. Instead, it appointed the Rangarajan Committee to devise a higher poverty line. This line will almost certainly be around the moderate poverty line ($ 2/day in PPP terms) of the World Bank.

Many critics and TV anchors will cheer at the prospect of freebies to two-thirds of the population. Yet here lie the seeds of fiscal disaster. India is poor because it has spent too much on ill-targeted subsidies, leaving too little for infrastructure and effective education that will raise incomes permanently. Total subsidies (mostly non-merit subsidies) exploded in the 1980s, reaching 14.5 % of GDP, almost as much as all central and state tax revenue. This ended in a fiscal and balance of payments crisis in 1991.

The risk of a new poverty line of $2/day is that it will create political demands for more freebies to twothird of the population. That will further erode limited funds for productive spending.

In theory we can limit subsidies to the poorest and cut out unworthy subsidies. In practice, the combined pressure of vote banks and TV anchors threatens to raise subsidies beyond all prudent limits. There lie the seeds of another 1991-style disaster.

2011-12: Rangarajan panel's estimate

3 out of 10 in India are poor: Rangarajan panel

PTI | Jul 6, 2014

The Rangarajan committee was set up in 2013 to review the Tendulkar committee methodology for estimating poverty and clear the ambiguity over the number of poor in the country.

NEW DELHI: A panel headed by former Prime Ministers economic advisory council chairman C Rangarajan has dismissed the Tendulkar committee report on estimating poverty and said that the number of poor in India was much higher in 2011-12 at 29.5 per cent of the population, which means that three out of 10 people are poor.

As per the report submitted by Rangarajan to planning minister Rao Inderjit Singh earlier, persons spending below Rs 47 a day in cities would be considered poor, much above the Rs 33-per-day mark suggested by the Suresh Tendulkar committee.

As per the Rangarajan panel estimates, poverty stood at 38.2 per cent in 2009-10 and slided to 29.5 per cent in 2011-12.

This is at variance with the Tendulkar methodology under which poverty was estimated at 29.8 per cent in 2009-10 and declined to 21.9 per cent in 2011-12.

The Planning Commission's estimates based on Tendulkar committee had drawn flak in September 2011, when in an affidavit to the Supreme Court it was stated that households with per capita consumption of more than Rs 33 in urban areas and Rs 27 in rural areas would not be treated as poor.

The Rangarajan committee was set up last year to review the Tendulkar committee methodology for estimating poverty and clear the ambiguity over the number of poor in the country. As per Rangarajan panel estimates, a person spending less than Rs 1,407 a month (Rs 47/day) would be considered poor in cities, as against the Tendulkar Committee's suggestion of Rs 1,000 a month (Rs 33/day).

In villages, those spending less than Rs 972 a month (Rs 32/day) would be considered poor. This is much higher than Rs 816 a month (Rs 27/day) recommended by Tendulkar Committee.

In absolute terms, the number of poor in India stood at 36.3 crore in 2011-12, down from 45.4 crore in 2009-10, as per the Rangarajan panel.

Tendulkar Committee, however, had suggested that the number of poor was 35.4 crore in 2009-10 and 26.9 crore in 2011-12.


New poverty line: Rs 32 per day in villages, Rs 47 in cities

Mahendra Kumar Singh New Delhi:



The Times of India Jul 07 2014

Rangarajan Panel Puts Number Of Poor At 363m

Those spending over Rs 32 a day in rural areas and Rs 47 in towns and cities should not be considered poor, an expert panel headed by former RBI governor C Rangarajan said in a report submitted to the BJP government last week.

The recommendation, which comes just ahead of the budget session of Parliament, is expected to generate fresh debate over the poverty measure as the committee's report has only raised the bar marginally . Based on the Suresh Tendulkar panel's recommendations in 2011 12, the poverty line had been fixed at Rs 27 in rural areas and Rs 33 in urban areas, levels at which getting two meals may be difficult.

The Rangarajan committee was tasked with revisiting the Tendulkar formula for estimation of poverty and identification of the poor after a massive public outcry erupted over the ab normally low poverty lines fixed by UPA government.

The panel's recommendation, however, results in an increase in the below poverty line population, estimated at 363 million in 2011-12, compared with the 270 million estimate based on the Tendulkar formula -a rise of 35%. This means 29.5% of InT dia's population lives below the poverty line as defined by the Rangarajan committee, as against 21.9% according to Tendulkar. For 2009-10, Rangarajan has estimated that the share of BPL group in total population was 38.2%, translating into a decline in poverty ratio by 8.7 percentage points over a twoyear period.

The real change is in urban areas where the BPL number is projected to have nearly doubled to 102.5 million based on Rangarajan's estimates, compared to 53 million based on the previous committee's recommendations. So, based on the new measure, in 2011-12, 26.4% of the people living in urban areas were BPL, compared to 35.1% in 2009-10.

In case of rural areas, the rise is of the order of 20% to 260.5 million, compared to around 217 million based on the Tendulkar formula. Rang arajan's estimates would put the BPL share of total population in rural areas at 30.9%, compared to 39.6% in 2009-10.

Documents accessed by TOI show that the Rangarajan panel has suggested to the government that those spending more than Rs 972 a month in rural areas and Rs 1,407 a month in urban areas in 2011-12 do not fall under the definition of poverty .

If calculated on a daily basis, this translates into a per capita expenditure of Rs 32 per day in rural areas and Rs 47 per day in urban areas in 2011-12.

8 Indian states poorer than Africa’s 26 poorest

Times of India

London: Eight Indian states, including Bihar, Uttar Pradesh and West Bengal, together account for more poor people than the 26 poorest African nations combined, a new ‘‘multidimensional’’ measure of global poverty has said.

The Multidimensional Poverty Index (MPI) was developed and applied by the Oxford Poverty and Human Development Initiative (OPHI) with UNDP support and will feature in the forthcoming 20th anniversary edition of the UNDP Human Development Report due late October. The MPI, which supplants the Human Poverty Index, assesses a range of critical factors or ‘‘deprivations’’ at the household level: from education to health outcomes to assets and services.

An analysis by MPI creators reveals that there are more ‘MPI poor’ people in eight Indian states (42.1 crore in Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh, and West Bengal) than in the 26 poorest African countries combined (41 crore).

In fact, according to the new measure that includes key services such as water, sanitation and electricity, half of the world’s poor live in South Asia (51% or 84.4 crore) and one quarter in Africa (28% or 45.8 crore).

Niger has the greatest intensity and incidence of poverty in any country, with 93% of its population classified as poor in MPI terms.

AGENCIES Deprivation Count 42 crore poor in Bihar, Jharkhand, UP, Madhya Pradesh, Chhattisgarh, Orissa, Rajasthan and West Bengal compared to 41 crore in 26 of Africa’s poorest countries Half of world’s poor (48.4cr) live in south Asia, a quarter in Africa (45.8crore), says new Multi-dimensional Poverty Index Of 104 countries surveyed (5.2bn people in all), 1.7bn live in poverty


Graphic courtesy: The Times of India

The Times of India, Jul 04 2015


Half of rural India touched by poverty

India has a problem at hand and its magnitude is much higher than what was imagined or reported. That is the short and succinct message of the SocioEconomic and Caste Census (SECC) released on Friday . According to the census, 49% of rural households show signs of poverty . And 51% of households have `manual casual labour' as the source of income. Whichever way the figures are sliced and diced, the poverty data leaves no scope for assurance or optimism. Till now, every survey had been showing poverty as receding.

The survey has used seven indicators of deprivation: All definite pointers to subsistence-level existence and seri ous handicaps like `kuccha houses', landless households engaged in manual labour, female-headed households with no adult working male member, households without a working adult, and all SC ST households.

While there can be room for correction, experts are unanimous that this would not change the bleak picture significantly . For instance, they are unanimous that all those dependent on `manual casual labour' for livelihood -51.14% of households -are bound to be poor.

The dismal scenario is illustrated by another set of dire figures: 2.37 crore households live in one-room kuccha houses, constituting 13.25% of the 17.91 crore rural households. At the same time, 30% of rural households own no land and are engaged in manual labour. The overall poverty figures for the country will also take into account the urban household survey that is yet to be released. But they , whenever they are out, are unlikely to change the overall picture.

The degree of deprivation as evidenced by the rural survey poses an intractable challenge for the Modi government if it wants to draw up a consolidated list of the poor, known as `Below Poverty Line'. If the government goes by the new evidence, the BPL category would balloon beyond its fiscal capacity . Conversely , if it seeks to put a ceiling and depress the figures, it would attract the kind of controversy that had hit the UPA.

The last government-commissioned figure had put the poverty line at a much lower 30%. The divergence is possibly the reason why the rural development ministry has desisted from coming out with a poverty figure while releasing the data for SECC.

A possible way out for the Centre would be to keep various deprivation figures -like on housing, employment, destitution -separate and use them for better targeting of niche welfare and development programmes. The option of drawing up a fresh consolidated poverty list a la BPL may not be exercised.

SECC may be the fuel to partisan political fire. For Prime Minister Narendra Modi, who does not tire of accusing Congress of keeping the country trapped in under-development, it will serve as the catalyst to intensify his campaign. But the negative messaging has its limits and there is risk of the damning statistics getting identified with the government of the day , that is BJP.

Poverty in rural households: Socio-economic census

The Times of India, Jul 13 2015

Subodh Ghildiyal

Poverty in rural households; Graphic courtesy: The Times of India, Jul 13 2015

Census: 5.4cr homes deprived on this count

`Landless manual workers most prone to poverty'

Landlessness and dependence on manual casual labour for a livelihood are key deprivations facing rural families, socio-economic census figures suggest. This, experts say , means they are far more vulnerable to impoverishment than indicated by a plain reading of the census data.

The rural census mapped deprivation on the basis of seven indicators -households with kuchha house; without an adult in working age; headed by a woman and without an adult male in working age; with a disabled member and without an able-bodied adult; of SCSTs; without literate adults over 25 years; and land less engaged in manual labour.

While 48.5% of rural households are saddled with at least one deprivation indicator, the eye-opener is how much the other factors over lap with the worst of them ­ landless households engaged in manual labour. The intersection of any of the six other handicaps with `landless-labour' makes it more acute than otherwise suggested by the observation that the household has “two deprivations“. Nearly 5.40 crore house holds are in the landless labourer category -dubbed by the rural development ministry as the “main running theme of deprivation“.

The more the number of parameters on which a household is deprived, the worse its extent of poverty . It has been found that nearly 30% have two deprivations, 13% have three, though mercifully , only 0.01% suffer from all seven handicaps. Explan panel member Mihir Shah said the correlation between poverty and landless labour was a worrying feature.

“That a very high number of deprived households are also landless doing casual manual labour is significant. Land being the most important asset in rural India, its absence with other deprivations means a household has no asset and is that much more vulnerable.“ He said small and marginal farmers are also getting pauperized and more engaged in manual labour.

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