Rising poverty bar: More Indians to qualify as poor

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Vinod Anand

29 October, 2009

The poverty bar is expected to raise to 38 per cent instead of 28.5 per cent, as at present. According to standards laid down in 1998, an urban family earning Rs 2,200 or less per month and a rural family earning Rs 1,650 or less is 'poor'.

IT IS expected that as against 28.5 per cent of the Indians falling below the poverty line presently, the number will soon go up to 38 per cent.

At present, as per the standards laid down in 1998, for the determination of poverty, 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.

But according to the new standards being prescribed by the government, the monthly incomes in both of the urban and rural areas, will be raised respectively to Rs 3000 and Rs 2250. This would raise the number of people below the poverty line. While urban poverty will increase slightly from 26 per cent to 28 per cent, rural poverty would jump from 30 per cent to 46 per cent. The new standards of the Planning Commission would consider more parameters for assessing poverty.

Earlier a family was called poor if it 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 poverty, apart from food, would also depend on expenditure on education, health and sanitation. There will be no distinction between urban and rural households as far as the calorie intake is concerned.

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 education, health and sanitation facilities to the poor to ameliorate their lot.

In case the measurement also accounts for many other socio-economic facilities, then the poverty line will further move up and may be the number of poor people (in the new sense) will reach say up to 70 or even 80 per cent. The government has, therefore, to work out an optimal trade-off between the various parameters to estimate the poverty line and its level. More are the parameters, more upwards would be the poverty line, and vice versa. The government should follow the international standard for determining the level of the poverty line.

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