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Understanding the Importance of Poverty Estimation

  • Impact of Welfare Schemes: Poverty estimation serves a dual role, not only as an academic pursuit but also as a vital tool to monitor the effectiveness of various government policies, particularly social welfare programs aimed at eradicating poverty.
  • BPL Census and Poverty Alleviation: The Ministry of Rural Development, in collaboration with state governments, conducts the Below Poverty Line (BPL) Census to identify impoverished households. These poverty estimates, presented in the form of a poverty line, are essential for crafting targeted poverty reduction strategies.
  • Constitutional Necessity: Accurate poverty estimation plays a pivotal role in paving the way for poverty elimination, ultimately fostering a more just and equitable society.

Measuring the Poverty Line

  • Absolute Poverty Measurement: Absolute poverty, as defined by the United Nations World Summit for Economic Development, signifies extreme deprivation of fundamental human needs, encompassing food, clean drinking water, sanitation, healthcare, housing, education, and access to information. It hinges not solely on income but also on access to social services. The poverty threshold in absolute measurement relies on a set monetary value representing essential items necessary for basic needs. Households with incomes below this threshold are classified as impoverished. However, this method has its limitations, such as the inability to account for regional variations and differing living costs.
  • Relative Poverty Measurement: Relative poverty occurs when a household's income falls below the median income in a specific country and is predominantly utilized in developed nations. Those categorized as relatively poor may not necessarily lack all basic necessities but experience a lower standard of living compared to the majority of society. This approach, however, disregards the significance of an absolute standard of living, assuming that relative income alone determines well-being.

Methods of Data Collection

  • Uniform Resource Period (URP): Until 1993-94, the poverty line was based on URP data, involving inquiries about consumption expenditures over a 30-day period. This method relied on people's recollection of their expenses during the preceding 30 days.
  • Mixed Reference Period (MRP): From 1999-2000 onwards, the National Sample Survey Organization (NSSO) shifted to the MRP method, which assesses the consumption of specific low-frequency items (e.g., clothing, footwear, durables, education, and health expenses) over the previous year, with all other items assessed over the previous 30 days. In essence, it combines both long-term and short-term consumption data to estimate poverty.

Historical Perspectives on Poverty Estimation

Pre-Independence Poverty Estimation

  • Dadabhai Naoroji's Pioneering Work: In his book "Poverty and Unbritish Rule in India," Dadabhai Naoroji provided the earliest estimate of the poverty line, suggesting a range of ₹16 to ₹35 per capita per year. His proposed poverty line was grounded in the cost of a subsistence or basic diet, including rice or flour, dal, mutton, vegetables, ghee, vegetable oil, and salt.
  • National Planning Committee (1938): In 1938, the National Planning Committee, established under the chairmanship of Jawaharlal Nehru by Subhash Chandra Bose, set forth a poverty line ranging from ₹15 to ₹20 per capita per month. This poverty line was based on a minimum standard of living perspective with implicit consideration of nutritional requirements.
  • The Bombay Plan (1944): Advocates of the Bombay Plan, a proposal put forth by a small group of influential business leaders in Bombay for India's post-independence economic development, recommended a poverty line of ₹75 per capita per year.

    These historical approaches offer insights into early attempts to define and address poverty in India.


The document Poverty Estimation in India - 2 | Agriculture Optional Notes for UPSC is a part of the UPSC Course Agriculture Optional Notes for UPSC.
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FAQs on Poverty Estimation in India - 2 - Agriculture Optional Notes for UPSC

1. What is poverty estimation and why is it important?
Ans. Poverty estimation refers to the process of measuring and quantifying the number and proportion of people living in poverty in a given population. It is important because it helps in understanding the extent and severity of poverty, identifying the most vulnerable groups, and designing targeted policies and interventions to address poverty effectively.
2. How is poverty estimated in India?
Ans. In India, poverty is estimated using the methodology recommended by the Expert Group chaired by Suresh D. Tendulkar in 2009. The estimation is based on the concept of poverty line, which is a threshold income level that separates the poor from the non-poor. The poverty line is determined based on the cost of a specified basket of goods and services, taking into account the nutritional requirements and other basic needs of individuals.
3. What are some challenges in poverty estimation in India?
Ans. Poverty estimation in India faces several challenges. One challenge is the large and diverse population, which makes it difficult to collect accurate and representative data. Another challenge is the debate and criticism surrounding the methodology used for estimating poverty, with some arguing that the poverty line is set too low and does not capture the true extent of poverty. Additionally, there are issues of data quality, regional disparities, and the dynamic nature of poverty, which makes it challenging to track changes over time.
4. How does poverty estimation help in policymaking?
Ans. Poverty estimation plays a crucial role in policymaking by providing policymakers with evidence-based information about the extent and nature of poverty. It helps in identifying the key drivers of poverty and understanding the specific needs and vulnerabilities of different groups. This information enables policymakers to design and implement targeted policies and interventions that address the root causes of poverty and improve the well-being of the poor.
5. Can poverty estimation be used to monitor the effectiveness of poverty reduction programs?
Ans. Yes, poverty estimation can be used to monitor the effectiveness of poverty reduction programs. By regularly estimating poverty levels, policymakers can track changes in poverty over time and evaluate the impact of various poverty reduction initiatives. This information allows for the identification of successful interventions and the modification or termination of ineffective programs. Monitoring poverty levels also helps in setting realistic targets and assessing the progress made towards achieving sustainable poverty reduction goals.
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