Estimating the Poverty Line in India

The poverty line in India is estimated to determine the number and proportion of people living below the poverty threshold. The estimation process involves several steps and factors to ensure accuracy and relevance. Here is a detailed explanation of how the poverty line is estimated in India:

Data Collection:
- The first step in estimating the poverty line is data collection. The National Sample Survey Office (NSSO) conducts large-scale surveys across different states and regions in India to gather data on various socio-economic indicators.
- The survey collects information on household consumption patterns, income sources, and expenditure details. It also includes data on non-food items such as clothing, education, healthcare, and housing.

Expenditure Calculation:
- Once the data is collected, it is used to calculate the monthly per capita expenditure (MPCE) for each household. MPCE is obtained by dividing the total monthly consumption expenditure by the household size.
- The consumption expenditure includes both food and non-food items, and it helps to determine the living standards and affordability of households.

Poverty Line Calculation:
- The poverty line in India is determined using the Tendulkar methodology, which was recommended by the Expert Group on Estimation of Poverty (2009). It takes into account the calorie intake requirement and the cost of food items.
- The methodology considers the minimum expenditure required to meet the calorie intake of 2,400 calories per person per day in rural areas and 2,100 calories per person per day in urban areas.
- The cost of food items is calculated based on the average prices of a specified basket of goods and services consumed by households.
- The poverty line is estimated by multiplying the cost of the basket of goods and services by the calorie intake requirement and adjusting it for inflation and other factors.

Poverty Ratio Calculation:
- Once the poverty line is determined, the poverty ratio is calculated. The poverty ratio represents the percentage of the population living below the poverty line.
- The poverty ratio is calculated by dividing the number of people whose MPCE is below the poverty line by the total population and multiplying it by 100.

Periodic Review:
- The poverty line estimation process is reviewed periodically to account for changes in consumption patterns, inflation rates, and other socio-economic factors.
- The estimation methodology is updated to reflect the evolving needs and living standards of the population.

By following this comprehensive process, the poverty line in India is estimated to provide insights into the economic conditions of the population and guide policy interventions to alleviate poverty and improve living standards.

The poverty line is estimated in India in following ways: Income Method: A person is considered poor if his or her income falls below a given minimum level necessary to fulfil basic needs. Consumption Method: A minimum nutrititioal food requirement for survival is estimated and energy obtained is measured in calories.