Introduction to Measurements of Poverty

Measurements of Poverty is a crucial aspect of understanding and addressing socioeconomic challenges. Various methods and indicators are employed globally to assess and quantify the extent of poverty, providing valuable insights for policymaking and interventions.

Understanding the Importance and Factors of the Poverty Line

The concept of the “poverty line” is central to discussions and measurements of poverty.

• Income or Consumption-Based Poverty Assessment Methods: 

• • It is a common method used to assess poverty, primarily based on income or consumption levels.
  • Essentially, a person or household is considered poor if their income or consumption falls below a specified “minimum level” required to fulfill their basic needs.
• Factors Influencing the Determination of the Measurements of Poverty:  
  • The determination of the poverty line is influenced by various factors, including the country’s level of development.
  • Its prevailing social norms and economic conditions. 
  • What constitutes basic needs can vary significantly across different times and places.
  • Example: Owning a car may be seen as a luxury in some countries but a necessity in others.

Poverty Line Calculations: A Method of Measurement of Poverty in India

• • Calculation of the Poverty Line:
    •  In India, Measurements of Poverty are calculated by considering the minimum requirements for food, clothing, footwear, fuel, light, education, medical care, and more. 
    • These requirements are measured in physical quantities and are multiplied by their respective prices in rupees. 

• Calculation Based on Calorie Intake and Demographic Factors:

• • The present formula for determining the food requirement is based on the desired calorie intake, with different calorie needs for various age groups, sexes, and types of work. 
  • In rural areas, the accepted average calorie requirement in India is 2400 calories per person per day, 
  • While in urban areas, it is 2100 calories per person per day.
• Periodic Revisions of Monetary Expenditure: 
  • The monetary expenditure needed to meet these calorie requirements through food grains and other items is revised periodically to account for rising prices. 
  • Example: 
    • In 2011-12, the poverty line was set at Rs 816 per month for rural areas and Rs 1000 per month for urban areas. 
    • The higher amount for urban areas reflects the generally higher prices of essential products in cities.

Measurements of Poverty: Understanding Progress and Global Standards

• National Sample Survey Organisation: Measurements of Poverty are conducted through sample surveys, usually every five years, by organizations like the National Sample Survey Organisation (NSSO) in India. 
• World Bank: 
  • However, for international comparisons, organizations like the World Bank often use a standardized poverty line, such as the minimum availability of $1.90 per person per day (2011, purchasing power parity) to assess global poverty levels across developing countries. 
  • This uniform standard allows for cross-country comparisons of poverty rates.

Poverty Estimates

Estimates of Poverty in India

• Significant Reduction in Poverty Ratios in India Over the Years: Data Analysis

• • Refer Figure, Here’s a summary of the trends:
    • In 1993-94, the poverty ratio was approximately 45 percent.
    • By 2004-05, it had declined to 37.2 percent.
    • Further progress was made, with the poverty ratio dropping to about 22 percent in 2011-12.
  • These trends indicate substantial progress in reducing poverty in India during this period. 
  • If this trajectory continues, it is expected that the percentage of people living below the poverty line could decrease to less than 20 percent in the coming years.
  • Furthermore, the data reveals that not only did the poverty ratio decrease, but also the number of people living in poverty reduced significantly. 
  • Example: The number of poor individuals decreased from 407 million in 2004-05 to 270 million in 2011-12. 
  • This implies an average annual decline of 2.2 percentage points in the number of poor people during the period from 2004-05 to 2011-12.
• These figures illustrate the ongoing efforts and policies aimed at reducing poverty in India and suggest that significant progress has been made in this regard over the years.

Conclusion
Measurements of Poverty by organizations like the NSSO in India and the World Bank are crucial for addressing challenges and refining standards. India’s progress, reflected in declining poverty ratios, emphasizes the ongoing commitment to accurate measurements and informed policymaking.