A panel headed by C Rangarajan, former chairman of the Prime Minister’s Economic Advisory Council, has put together a new report on poverty estimates in India. The Suresh Tendulkar committee report in 2010 stated that 22.5% of the population in 2011-12 lived in poverty.
The Rangarajan committee uses a different method, which raises the poverty line, resulting in an increase to 29.5%. In absolute terms, it places the estimate of the number of Indians below the poverty line at 36.3 crore. Tendulkar found there were around 27 crores living in this manner, so the nation is contending with an increase of 9.3 crore people. In other words, almost one in three Indians is now being classified as poor.
Looking at the two poverty maps, one notices that in the Tendulkar report, the poor are a more scattered, though the Rangarajan report finds greater concentrations. Uttar Pradesh’s poor have increased from 5.98 crores (Tendulkar report) to 8.09 crores (Rangarajan report).
In Tamil Nadu, the number of poor have doubled from 82.6 to 163.9 lakh. In Assam, they have increased from 1 crore to 1.3 crores. Greater percentage changes are observed in the smaller states – the number of poor in Meghalaya more than doubled, from 3.6 to 7.4 lakh; in Sikkim, from 0.5 to 1.1 lakh. Nagaland was the only state where a decrease in poverty is observed – a decline from 3.8 to 2.8 lakh.
The Rangarajan report identifies someone living in poverty as having a per person spend of Rs 32 a day in rural areas and Rs 47 in urban areas, or less; those above this poverty cut-off are the non-poor. The Tendulkar panel’s recommendations in 2011-12 used Rs 27 in rural areas and Rs 33 in urban areas as its baselines.
For the two National Sample Survey Organisation survey years, 2009-10 and 2011-12, the results of the two different poverty methods are as follows:
Note that since the poverty line was raised, the Rangarajan method, by definition, shows a higher level of poverty for the same year.
Can someone live on Rs 47 a day?
In an interview to the news channel Times Now, Rangarajan said, “We would all be happy if people have a much, much higher standard of living than what is being prescribed, but basically, what is poverty then? Poverty has to be measured in terms of something.”
Rangarajan also advocates a household expenditure approach: “People look at it very often not really in terms of per person per month, they also look at it per person per day. I would like to urge people to look at it in terms of the household. The household of five, how much is the consumption expenditure per month?” The Rangarajan poverty line is pegged to a monthly per capita consumption expenditure of Rs 972 in rural areas and Rs 1,407 in urban areas. For a family of five, this translates into a monthly consumption expenditure of Rs. 4,860 in rural areas and Rs. 7,035 in urban areas.
New methodology
The upward revision in the poverty line is due to a change in the methodology. The new methodology includes expenses that are mostly covered by public expenditure, such as education and healthcare. Some experts are saying that the difference between the two reports is due to the fact that the Rangarajan committee is using a household's ability to save as the definition of poverty, instead of the earlier definition of per capita expenditure.
State-wise poverty lines
The charts below document the poverty lines in different states of India, rural and urban. A poverty line attempts to capture constant purchasing power, which can differ from urban to rural, and from one state to another.
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The Rangarajan committee uses a different method, which raises the poverty line, resulting in an increase to 29.5%. In absolute terms, it places the estimate of the number of Indians below the poverty line at 36.3 crore. Tendulkar found there were around 27 crores living in this manner, so the nation is contending with an increase of 9.3 crore people. In other words, almost one in three Indians is now being classified as poor.
Looking at the two poverty maps, one notices that in the Tendulkar report, the poor are a more scattered, though the Rangarajan report finds greater concentrations. Uttar Pradesh’s poor have increased from 5.98 crores (Tendulkar report) to 8.09 crores (Rangarajan report).
In Tamil Nadu, the number of poor have doubled from 82.6 to 163.9 lakh. In Assam, they have increased from 1 crore to 1.3 crores. Greater percentage changes are observed in the smaller states – the number of poor in Meghalaya more than doubled, from 3.6 to 7.4 lakh; in Sikkim, from 0.5 to 1.1 lakh. Nagaland was the only state where a decrease in poverty is observed – a decline from 3.8 to 2.8 lakh.
The Rangarajan report identifies someone living in poverty as having a per person spend of Rs 32 a day in rural areas and Rs 47 in urban areas, or less; those above this poverty cut-off are the non-poor. The Tendulkar panel’s recommendations in 2011-12 used Rs 27 in rural areas and Rs 33 in urban areas as its baselines.
For the two National Sample Survey Organisation survey years, 2009-10 and 2011-12, the results of the two different poverty methods are as follows:
Note that since the poverty line was raised, the Rangarajan method, by definition, shows a higher level of poverty for the same year.
Can someone live on Rs 47 a day?
In an interview to the news channel Times Now, Rangarajan said, “We would all be happy if people have a much, much higher standard of living than what is being prescribed, but basically, what is poverty then? Poverty has to be measured in terms of something.”
Rangarajan also advocates a household expenditure approach: “People look at it very often not really in terms of per person per month, they also look at it per person per day. I would like to urge people to look at it in terms of the household. The household of five, how much is the consumption expenditure per month?” The Rangarajan poverty line is pegged to a monthly per capita consumption expenditure of Rs 972 in rural areas and Rs 1,407 in urban areas. For a family of five, this translates into a monthly consumption expenditure of Rs. 4,860 in rural areas and Rs. 7,035 in urban areas.
New methodology
The upward revision in the poverty line is due to a change in the methodology. The new methodology includes expenses that are mostly covered by public expenditure, such as education and healthcare. Some experts are saying that the difference between the two reports is due to the fact that the Rangarajan committee is using a household's ability to save as the definition of poverty, instead of the earlier definition of per capita expenditure.
State-wise poverty lines
The charts below document the poverty lines in different states of India, rural and urban. A poverty line attempts to capture constant purchasing power, which can differ from urban to rural, and from one state to another.