Poverty Estimation in India

Pre Independence

1. Dadabhai Naroji in his book "Poverty and the Un-British Rule in India" estimated subsitence based poverty line.
• Ranging from Rs. 16-Rs 35 per capita per year in various parts of India. It was based in 1867-68 prices. 
• based on cost of subsitence diet. i.e. rice/flour, dal(pulses), mutton, vegetables, ghee, vegetable oil and salt.
2. National Planning Committee, 1938
• poverty line Rs. 15 Rs - Rs. 20 per capita per month.
• based in 'a minimum standard of living perspective in which nutritional requirements are implicit'.
3. Bombay Plan authors (Thakurdas et al 1944) in 1944 suggested poverty line to be Rs. 75 per capita per year. 

Post Independence 

1. Working group constituted by Planning Commission in 1962 estimated poverty line as follows
• Rural: Rs. 20 per capita per year.
• Urban: Rs. 25 per capita per year.
2. Alagh Committee, 1979
• task force constituted by Planning Commission under Y K Alagh.
• poverty line on the basis of nutritional requirements.
• Rural: 2400 Calories, Rs. 49.1 per capita per month.
• Urban: 2100 Calories, Rs. 56.7 per capita per month.
3. Lakdawala Committee, 1993
• Chaired by DT Lakdawala
• Expert group contituted to review methodology for poverty estimation. 
• Recommendations:
• consumption expenditure should be calculated based on calorie consumption as earlier.
• state specific poverty lines shhould be constructed and these should be updated using CPI-IW in urban areas and CPI-AL in rural areas.
• discontinuaion of "sealing" of poverty estimates based on National Statistics. 
• Assumed basket of goods and services used to calculate CPI-IW and CPI-AL reflect the consumption pattern of the poor.
4. Tendulakr Committee, 2009
• Chaired by Suresh Tendulkar.
• Expert group to review methodlogy of poverty estimation.
• Formed to address following shortcomings of previous methods. 
• consumption patterns were linked to 1973-74 poverty line basket of goods and services; since then significant changes had occured.
• issues with adjustment of prices with inflation both spatially and temporally.
• earlier estimates assumed healthcare and education to be provided by state. 
• Recommendations:
• shift away from calorie consumption based poverty estimation. 
• uniform poverty line basket across rural and urban India. 
• change in price adjustment procedure to correct spatial and temporal issues with prices.
• inclusion of expenditure on healthcare and education. 
• recommended use of Mixed Reference Period (MRP) based estimates, as opposed to Uniform Reference Period (URP) based estimates.
• Poverty line:
• Rural: Rs. 446.48 per capita per month.
• Urban: Rs. 578.80 per capita per month
• based on 2004-05 prices.   
5. Rangrajan Committee, 2012
• Expert panel on poverty estimation chaired by C Rangrajan.
• Objectives:
• alternate method of poverty estimation.
• examine divergence between consumption estimates based om the NSSO methodology and these emerging from the National Accounts aggregates. 
• review of international poverty estimation methods, applicablity in Indian scenario.
• recommend how these estimates of poverty can be linked to eligiblity and entitlements under various schemes. 
• Poverty line:
• Rural: Rs. 4860 per month for a family of five.
• Urban: Rs. 7035 per month for a family of five.
• Rangrajan raised poverty line. 100 million poor included. 37 crore people below poverty line. 
• Rangrajan comittee recommends
• 35% rural population to be considered poor at any point of time.
• 25% rural population to be considered poor at any point of time.
• Poverty line should not be criteria for Government schemes. Poverty line shows general trend of economy.

Diffrence between Tendulkar Committee and Rangrajan Committee 

• In calorie expenditure Rangrajan committee considered calorie, protein and fat whearas Tendulkar committee considered only value expenditure. 
• Tendulkar recommittee recommended calorie intake of 2400 calories for rural and 2100 for urban areas. Rangrajan committee recommended 2155 calories for rural areas and 2090 for urban areas.
• Tendulkar committee counts expenditure on food, health, education and clothing. Rangrajan committee counts expenditure on food, health, education, clothing, transport, rent and non food items that meet nutritional requirements.