Poverty Estimation in India - 1 | Agriculture Optional Notes for UPSC PDF Download

Rural Poverty in India: A Critical Analysis

Overview: Recent reports highlight that over 25% of India's rural population lives below the poverty line. Specifically, 25.7% of rural inhabitants are grappling with poverty, while urban areas exhibit a relatively better scenario with 13.7% of the population living below the poverty line.

Understanding Poverty Estimation in India: 

• Methodology: Poverty estimation in India revolves around evaluating income or consumption levels. Households falling below a predetermined minimum threshold, either in income or consumption, are classified as Below the Poverty Line (BPL).
• Poverty Line Calculation: Currently, poverty estimation in India is conducted by NITI Aayog's task force, using data collected by the National Sample Survey Office under the Ministry of Statistics and Programme Implementation (MOSPI). This marks a shift from the earlier role of the Planning Commission, which was responsible for determining the poverty line.

Consumption vs. Income: India's poverty line is primarily based on consumption expenditure rather than income levels due to several key factors:

• Income Variability: Income levels fluctuate significantly for self-employed individuals, daily wage laborers, and others, both temporally and spatially, whereas consumption patterns are more stable.
• Additional Income: Even regular wage earners often have additional side incomes, complicating income-based assessments.
• Data Collection: Consumption-based poverty lines rely on sample-based surveys with a specific reference period (e.g., the last 30 days) to capture households' consumption, making it a more practical and stable metric. In contrast, tracking income patterns poses challenges.

Reference Period: The reference period represents the duration during which NSSO surveys are conducted, typically 30 days, during which households are queried about their consumption patterns.

Significance of Poverty Estimation:

• Impact of Welfare Schemes: Poverty estimates serve not only academic purposes but also play a pivotal role in monitoring the impact and efficacy of various government policies, particularly social welfare programs aimed at poverty alleviation.
• BPL Census: The Ministry of Rural Development, often in collaboration with state governments, conducts the Below Poverty Line (BPL) Census to identify impoverished households.
• Poverty Elimination Plans: The poverty estimates, including the poverty line, serve as the foundation for designing poverty-centric elimination strategies.
• Constitutional Requirement: Poverty estimation sets the stage for poverty eradication, ultimately contributing to the establishment of a just and equitable society.

Key Terms:

• Poverty: As per the World Bank, poverty represents severe deprivation across multiple dimensions, including low incomes and the inability to access basic goods and services required for dignified survival.
• Poverty Line: The conventional approach to poverty measurement stipulates the minimum expenditure (or income) essential for purchasing a basket of goods and services necessary to meet fundamental human needs. This minimal expenditure is termed the poverty line.
• Poverty Line Basket: The assortment of goods and services essential to satisfy fundamental human needs constitutes the Poverty Line Basket (PLB).
• Poverty Ratio: The proportion of the population falling below the poverty line is referred to as the poverty ratio or headcount ratio (HCR).