School of Economics | Poverty Estimation
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Poverty Estimation

Recently, Global Multidimensional Poverty Index (MPI) and Indian MPI was published as per which India’s multidimensional poverty reduced to 16.4% and 15% in 2019-21 respectively. But Multidimensional poverty estimates which focus on deprivations based on education and health are different from Consumption based poverty estimates.

Multidimensional indicators/measures raise several issues regarding their measurability and aggregation across indicators. For example, access to safe drinking water cannot be aggregated with indicators such as child mortality.

In the minds of most people, being rich or poor is associated with levels of income. The various non-income indicators of poverty are in fact reflections of inadequate income. Defining poverty in terms of income or in the absence of such data in terms of expenditure seems most appropriate, and it is this method which is followed in most countries.

How has poverty been estimated in India?
Since the time of Dadabhai Naoroji’s 1901 book ‘Poverty and Un-British Rule in India, poverty has been estimated using a monetary measure. The idea has been to arrive at an amount of money that is considered necessary to either eat a subsistence died or to achieve a minimum standard of living.

Since data on income was difficult to collect, India used regular (five-yearly) consumption expenditure surveys which showed how much people were spending on consumption of food and non-food items. Based on this data, several expert committees – led by DT Lakdawala (1993), Suresh Tendulkar (2009), and C Rangrajan (2014) – drew a ‘poverty line’. The line is the level of consumption expenditure (in Rupees) that divides those who are poor from those who are not.

India’s last official poverty statistics (based on consumption expenditure) are from 2011. [In 2011-12, there were 21.9% (27 crore) people poor in India as per Tendulkar Committee report and 29.5% (36 crore) were poor as per Rangarajan Committee.] Since then poverty estimates have not been published as Govt. junked the consumption expenditure survey of 2017-18. That survey showed a decline in rural consumption and, as such, pointed to an increase in poverty. (This may be because of the impact of GST and Demonetization).

The 79th round of National Sample Survey (NSS) was again on Household Consumption Expenditure which has already been completed (1st July 2022 to 30th June 2023). May be very soon we get the latest poverty estimates based on consumption expenditure approach.

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