Measurement of Extreme Poverty

Recently, in the ‘National Indicator Framework (NIF) 2024’, the government announced that it is creating a national indicator to measure “extreme poverty”.

About Poverty, and Extreme Poverty

• About: As  per World Bank,  “Poverty is pronounced deprivation in well-being, and comprises many dimensions. It includes low incomes and the inability to acquire the basic goods and services necessary for survival with dignity. 
  • Poverty also encompasses low levels of health and education, poor access to clean water and sanitation, inadequate physical security, lack of voice, and insufficient capacity and opportunity to better one’s life.
• Extreme poverty: It was defined by the United Nations in its 1995 report of the World Summit for Social Development as “a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to services.

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National Indicator Framework (NIF) 

• About: NIF monitors India’s progress on the Sustainable Development Goals (SDGs), which include the aim to eradicate extreme poverty by 2030.
• Prepared by: The Ministry of Statistics and Programme Implementation (MoSPI) has developed the SDG-NIF in collaboration with relevant ministries, UN agencies, and other stakeholders.
  • This annual report enables the monitoring of progress on the SDGs at the national level.
• Objectives: The framework enables tracking progress on individual SDGs, as well as cross-cutting themes and targets, promoting an integrated approach to sustainable development.
  • It will play a crucial role in aligning national development plans, policies, and budgets with the SDGs, ensuring a coordinated approach to sustainable development.
  • Additionally, it fosters transparency and accountability by providing a common framework for tracking progress and facilitating public access to information on SDG indicators.

Need for National Indicator

• Absence of an Updated Official Poverty Line: India’s official poverty line is based on the Suresh Tendulkar Committee’s report from 2009. Committees led by D.T. Lakdawala (1993) and C. Rangarajan (2014) also proposed criteria for determining the poverty line. However, the C. Rangarajan Committee’s report was not adopted by the central government.
• Discrepancies in Global Indicators: According to the IMF, less than 1% of Indians lived in extreme poverty in 2021, whereas the World Bank estimated this figure to be 12.92% for the same year.
• Policy Making and Monitoring Progress: Accurate poverty estimates are crucial for designing, implementing, and monitoring anti-poverty programs.

Poverty Estimation in India

• VM Dandekar and N Rath: The study conducted by VM Dandekar and N Rath in 1971 was the pioneering systematic assessment of poverty in India.
  • It utilized National Sample Survey (NSS) data from 1960-61 and argued for setting the poverty line based on expenditure levels that could provide 2250 calories per day in both rural and urban areas.
• YK Alagh Committee: The Alagh Committee in 1979 formulated a poverty line for rural and urban areas based on nutritional requirements.
  • It suggested that rural areas should have 2400 Calories (at Rs 49.1 per capita per month), while urban areas should have 2100 Calories (at Rs 56.7 per capita per month) based on the price levels of 1973-74.
• Lakdawala Committee: The Lakdawala Committee in 1993 put forward the following suggestions:
  • Base consumption expenditure calculations on calorie consumption as previously established. Develop state-specific poverty lines and update them using the Consumer Price Index of Industrial Workers (CPI-IW) for urban areas and the Consumer Price Index of Agricultural Labour (CPI-AL) for rural areas.
• Revised Poverty Line Criteria: A person living on a monthly expenditure of Rs 1,000 or less (Rs 33 or less per day) in cities, and Rs 816 or less (Rs 27 or less per day) in villages is categorized as poor.
  • The Rangarajan Committee increased this threshold, setting an income limit of Rs 32 for rural India and Rs 47 for urban India as the poverty line.

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Measurement of Poverty in India

• Poverty Line Determination: The Official Poverty Line is determined based on consumption expenditure in rupees. The National Sample Survey Office conducts Consumption Expenditure Surveys (CES) every five years.
• National Multidimensional Poverty Index (NMPI): NITI Aayog introduced the National Multidimensional Poverty Index (NMPI), which indicates a decrease in poverty from 24.85% in 2015-16 to 14.96% in 2019-21.

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