Poverty Estimation in India - 2 | Agriculture Optional Notes for UPSC PDF Download

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.