Indian Economy : Poverty Estimation
India is home to 1/3rd of poor people in the world. If we add the poor of Pakistan and Bangladesh into it, we find that almost half of world poverty exists in just these three nations. The next big Concentration of poverty is in the Sub-saharan Alfrica.
Estimation of poverty has been a
Contentious issue in India. Historically the first estimation of poverty line was done by Dadabhai Naoroji in he 19th century, though he himself did not use the word poverty line” According to him, subsistence was what is necessary for the bare wants of a human being, to keep him in ordinary good health and decency. He came to a conclusion on the subsistence costs based poverty line that varied from Rs.16 to RS.35 per capita per year in various regions of India (at 1867-68 prices)At that time, per eapita income of England was at Rs. 450.
VM DANDEKAR AND N RATH :
Based on the data from the National Sample Survey (NSS) data VM Dandekar and N Rath made a systematic assessment of poverty in 1971. While the previous estimations had stressed on subsistence living or basic minimum needs as a criterion for the poverty line, VM Dandekar and N Rath suggested that the poverty line’s criteria must be based on the expenditure that would provide 2250 calories per day both in rural and urban areas.
YK ALAGH COMMITEE :
Till 1979, the approach to estimate
poverty was traditional, i.e., lack of income. It was later decided to measure poverty on the basis of starvation, i,e. in terms of how much people eat. This approach was first adopted by the YK Alagh Committee’s recommendation in 1979, whereby the people consuming less than 2100 calories in the urban areas and less than 2400 calories in the rual areas were considered poor. The logic behind the discrimination between rural and urban areas was that the rural
people do more physical work.
Moreover, an implicit assumption was that the states would take care of the health and education of the people.
Thus, YK Alagh eventually defined the first poverty line in India.
Another Expert Group was instituted in 1993-chaired by Prof D.T. Lakdawala,
to examine poverty line for India. It
based its report on YK Alagh Committee
only (minimum caIorfic value of food).
It said people consuming less than 2100 calories in the urban areas and less than 2400 calories in the rural areas were poor. This committee deined poverty line on the basis of household per capita consumptions expenditure, The Committee used CPI-IL (Consumer Pice Index for Industrial Laborers) and CPI- AL (Consumer Price Index for Agricultural laborers) for esimation of the poverty line.
The current estimations of poverty are based upon the recommendations of Suresh Tendulkar committee, set up in 2009. This committee recommended to Shift away from the calorie based model and adopted the cost of living as the basis for identifying poverty. It
stipulatet a benchmark daily per capita Expenditure of Rs. 27 and Rs 33 in rural and urban areas, respectively, and arrived at a cut-off of about 22% of the population below poverty line.
However, this amount was so low that it immediately faced a backlash from all sections of media and society.
C. RANGARAJAN COMMITTEE 2012
The Planning commission created a new panel on poverty estimation that would
✹Provide an alternate method to identify poverty levels.
✹Examine divergences between the consumption data provided by the NSSO and the National Accounts aggregates.
✹Review of international poverty estimation methods.
✹Recommend how these methods can be linked to eligibility for various poverty elimination schemes created by the government of India.
The committee submitted its final report on 2014. The report dismissed the Tendulkar Committees estimation of the poverty level in India. The report said that was much higher in 2011-2012 at 29.5% of the population, which means that three out of 10 people in India were poor.
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