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As per World Bank, Poverty is pronounced deprivation in well being and it comprises many other dimension like low incomes, inability to acquire basic goods and services necessary for survival with dignity, low levels of health and education, poor access to clean water and sanitation etc.

Poverty has both subjectivity and objectivity. Poverty is measured based on absolute poverty and relative poverty: –

  • Absolute Poverty: – It is complete lack of means necessary to meet basic personal needs such as food, safe drinking water, sanitation etc. It is measured using set standards.
  • Relative Poverty: – It is observed by comparison of 2 people or 2 set of people. It basically signifies inequality.


Poverty Line basket is being prepared to measure absolute poverty which is basket of goods and services which the expert thinks that it is minimum amount of consumption of various items that a household should be incurring to live a life with basic dignity. If household able to afford that then it is out of poverty line and if not, then they are under poverty line.

Such measurement is based on consumption expenditure and not incomes of a household because income being highly volatile and consumption expenditure is more truthful and less volatile or stable.

A questionnaire is being prepared and survey is conducted from the sample of the population. Post survey data is structured to calculate the consumption expenditure of the household to identify the absolute poverty. Based on the survey of the sample, result of sample is being put over the overall population to come to the conclusion of status of a nation in poverty line.


World Bank has provided the standard which is based on classification of the countries which is: –

S No Classification of Countries Sub Classification Gross National Income per person (in USD)  Consumption Expenditure Per person Per Day (In USD)
1 High Income Countries (HIC) More than 12000 11
2 Middle Income Countries (MIC) High Middle Income Countries 6000-12000 6
Low Middle Income Countries 1500-6000 3.2
3 Low Income Countries (LIC) Less than 1500 1.9 (Extreme Poverty Line)

India is classified as Low Middle Income Country, which means that if consumption expenditure per person per day in India is less than $ 3.2 then such person would be classified as poor in India.

Further such USD rate shall be converted in INR using Purchasing Power Parity rather than Market Exchange Rate. This is because same product can be purchased in India at low cost as compared to cost of the same product in some other country. So such rate shall be converted using PPP.


Poverty line basket has gone through various evolutions from Dada Bhai Naroji (1860’s) to Tendulkar committee to Rangarajan Committee (2013).

Initially it was based on energy consumption i.e., calories consumed per day by a person which is evolved to inclusion of both normative (consumption of calories per person per day) and also behavioural components including expenditure on education, health or other behavioural component etc.

Tendulkar also introduced some modification in National Consumption Expenditure Survey (NCES) data by changing the recall period from being uniform to modified. Shorter recall period for high frequency consumption item (like food) and Longer recall period for low frequency consumption items (like mobile phone purchases). This leads to more accuracy of NCES data.

Poverty and its Critical Analysis (India)


Poverty is measured for broadly 2 purposes: –

  • To identify the poor for purpose of providing then with benefits of various governments Anti- Poverty Programmes. (Such schemes like PMAY, PDS etc)
  • To measure or estimate the number of poor so that progress of poverty reduction can be ascertained.


  • The pace of Poverty reduction in India in the post independence period was very less for about initial 45 years.
  • Post reforms in 1991, the pace of poverty reduction increased with an increase in growth rate. Head count ratio was 56% in 1950s which is reduced to 22% in 2011-12. It is also noted that there is strong correlation between growth and poverty reduction. So if Indian economy growth is increased, it will lead to reduction in poverty.
  • End of poverty is every form is also Sustainable Development Goal (SDG-1) in which India is performing quite well.
  • As per World Bank, India is overestimating its poverty which is according to world development report in 2014 which is 11-14% approximately.
  • As per world poverty clock, poverty in 2018 in India was around 8% which was expected to come down to 5% in 2020 and further to 3% in 2023. (If adversities like COVID didn’t happen in India).


  • India is now a low middle income country and accordingly should measure poverty with the group specific poverty line of $ 3.2 per person per day. According to estimates of various economists, the head count ratio takes $ 3.2 as poverty line is around 38-46% whereas according to $1.9, it is only about 8-10%.
  • This shows that even though a large number of people have been uplifted, most of them are barely above the poverty line i.e., they are still vulnerable to falling back into poverty. Any loss of income due to economic slowdown or loss of job/livelihood or any emergency out of pocket expenditure will result in falling back to poverty.
  • As such while the progress has been commendable, what is needed is to ensure vulnerabilities are addressed so that the risk of falling back is reduced.


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One Comment

  1. JAMSHED F. MEHTA says:

    1. We have executive orders like demonetization, hasty implementation of GST. , total lockdown for COVID, piecemeal reforms. public sector bad debts, expensive populist subsidies.
    2. COVID, Ukraine war, crude/gas prices and runaway inflation.
    3. Very low stimuli and absence of employment-oriented sectors like food processing, healthcare, education garments, agricultural productivity.
    4.Too much effort on hobby of democracy..

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July 2024