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India to adopt a new poverty line to identify poor
In India, so far the poverty line is measured only in terms of the food basket as per the standards laid down in 1998, an urban family (of five) earning Rs.2200 per month or less and a rural family (of five) earning Rs.1650 or less.
A FEW months back there was a news that India will go for a new measurement of the poverty line. This news has now become a reality. The Government has accepted the Tendulkar Committee Report in this respect. Before we look at what it is let us look at some of the aspects of the poverty line, and then how it is measured and constructed.
There is a distinction between absolute poverty indices and relative poverty indices. Relative poverty indices are also known as inequality indices. Poverty line is thus measured in terms of absolute poverty. Absolute poverty line can be lower than the lowest income and higher than the highest income.
There are no restrictions placed on it. This line is conceptually extraneous to the distribution of income. Even in some approaches the distribution may be used for determining its magnitude. It must also be remembered that poverty in the ultimate analysis is a relative concept. It is era-relative as well as society specific. Poverty line differs from era to era, and also from area to area, and country to country. This is so because of the different development levels and the consumption baskets. Even when we determine poverty line on a single criterion, poverty lines will be different for different states and communities. The planning commission in India, during the late seventies considered a poverty line and a modest (reduced) poverty line.
There are also distinctions between the line of poverty of primary poverty and the line of secondary poverty, or between poverty line and distribution line, or between poverty line and hunger line.
Since the size and consumption of the households do vary significantly, poverty line can be defined in terms of a person or a household. Different poverty lines can be fixed for different categories of households depending on their size in terms of the number of members. In India, only per capita household poverty line is used for measuring the extent of poverty, and also household poverty line for identifying the poor households.
Poverty line is considered in terms of private final consumption expenditure or disposable income. It is not discussed in terms of wealth or standard of living. In any given span of time there exists an absolute core of minimum living which everybody should enjoy. But then the question is what constitutes this minimal core? It is said that more money can enable an individual or a household escape from the poverty trap. In fact, there are a number of approaches for determining the poverty line.
In all these approaches, the first step is the determination of minimal basket of goods and services. Quite often this basket is broken into (a) food basket, and (b) non-food basket, and we consider only the food basket. The next step is to work out the cost of the food basket, and the third step is to merge the cost of the food basket into total private consumption expenditure or income which is regarded as the poverty line. In this regard, there are some specific approaches that claim to have some scientific basis.
There are five such approaches:
1.Minimum Necessary Approach;
2.Minimum Sufficiency Approach;
3.Distribution Threshold Approach;
4.Committed Consumption Approach; and
5.Stated Minimum Approach.

All these approaches are based on the cost of the required food basket.
In India, so far the poverty line is measured only in terms of the food basket as per the standards laid down in 1998 according to which, an urban family (of five) earning Rs.2200 per month or less and a rural family (of five) earning Rs.1650 or less is poor. The new standards of the Planning Commission would consider more parameters than only the sufficient food basket for assessing poverty. Earlier a family was called poor if did not have the required income to buy sufficient food containing a minimum number of calories (2100 for urban areas and 2400 for rural areas) per day. Now, the minimum income required to rise above the poverty line, apart from food, would also depend on expenditure on education and health.
There will be no distinction between urban and rural households as far as the calorie intake is concerned. According to the new standards, the monthly incomes, both of the urban and rural areas, will be raised respectively to Rs. 3000 and Rs.2250. The new poverty estimate would not change the urban poverty figure but for rural India, the number of poor would increase from 28.3 per cent to 41.8 per cent. As many as 372 million Indians will be categorized as poor. It means that additional 97 million people would be classified as poor. The basic reason as to why this new estimation would be done is to go ahead with the overall development of the rural India essentially in terms of food, education, and health facilities.
As we have seen this revised measurement of poverty will surely increase the number of people below the poverty line, but there is a silver lining too in terms of the provision of subsidized food, education and health facilities to the poor to ameliorate their lot. But what is the guarantee that the benefits would surely reach the real and deserving poor of the country? There are in fact many non-friendly barriers that would obstruct the percolation of these benefits. The Government has to take strict measures to see that these barriers are not able to obstruct the whole process.
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