The history of poverty estimation in India reflects the country’s evolving socio-economic landscape and the efforts of various committees and methodologies to capture the extent of poverty. Since independence, India has used various methods and approaches to estimate poverty. These estimates have influenced government policies and poverty alleviation programs over time.
1. Pre-Independence Era
Before independence, poverty was a prevalent issue due to colonial exploitation, but there were no formal efforts to measure poverty systematically. Poverty in colonial India was evident through famines, poor agricultural productivity, and widespread illiteracy.
- Example: The Great Bengal Famine of 1943, in which millions died due to starvation, was a stark reminder of poverty and food insecurity under British rule. This period highlighted the importance of estimating and addressing poverty, though no formal estimations were conducted at the time.
2. Post-Independence Era (1950s-1970s)
In the post-independence period, India’s planners began focusing on poverty estimation and developing economic plans to tackle poverty. However, initial efforts lacked systematic frameworks, and poverty estimates were not the primary focus of economic policy.
A. V.M. Dandekar and N. Rath (1971)
The first serious attempt to estimate poverty in India was made by V.M. Dandekar and N. Rath in 1971. They used data from the National Sample Survey (NSS) to calculate a poverty line based on the minimum nutritional requirement of 2,250 calories per person per day. They introduced the idea of using per capita consumption expenditure to define the poverty line.
- Poverty Line: Dandekar and Rath proposed separate poverty lines for rural and urban areas based on different consumption patterns.
- Example: According to their estimates, around 40% of India’s population lived below the poverty line in the early 1970s, with significant variations between rural and urban areas. This methodology was a departure from earlier, less formal methods and laid the foundation for future poverty estimation methods.
3. The Planning Commission’s Poverty Line (1979)
In 1979, the Planning Commission of India developed its own poverty line, which was based on the Task Force on Projections of Minimum Needs and Effective Consumption Demand under the chairmanship of Y.K. Alagh. This approach marked a more formal and standardized method for estimating poverty.
Methodology:
- The task force defined the poverty line in terms of per capita consumption expenditure required to meet a minimum daily intake of 2,400 calories in rural areas and 2,100 calories in urban areas.
- The poverty line was expressed in terms of consumption expenditure rather than income and was adjusted for price variations between rural and urban areas.
Example:
- Rural Poverty Line: Based on the calorie requirement of 2,400 calories per person per day, the poverty line was set at a monthly per capita expenditure of ₹49 in rural areas.
- Urban Poverty Line: The urban poverty line was set at ₹56 per month, reflecting the different consumption patterns and higher cost of living in urban areas.
This method became a benchmark and was widely used by the government for poverty alleviation programs in the 1980s and 1990s.
4. Lakdawala Committee (1993)
In 1993, the Lakdawala Committee was set up to revise the methodology of poverty estimation. This committee played a crucial role in further refining how poverty was measured in India.
Key Features:
- The Lakdawala Committee retained the calorie-based poverty lines defined by the 1979 task force but made significant changes in how poverty estimates were calculated.
- It recommended using state-specific poverty lines and adjusting them for price variations between states, allowing for better reflection of the actual cost of living across different regions.
- The poverty line was calculated in terms of per capita expenditure based on the consumption of food, clothing, shelter, and other essentials.
Example:
- The Lakdawala methodology led to poverty estimates showing a significant reduction in poverty over time. For instance, in 1993-94, around 36% of India’s population was estimated to be below the poverty line, but by 1999-2000, the figure had dropped to 26%, largely due to economic reforms and growth.
5. Tendulkar Committee (2009)
In 2005, the Planning Commission set up the Tendulkar Committee, chaired by Suresh D. Tendulkar, to revise the methodology for poverty estimation. This committee introduced significant changes that reflected the evolving understanding of poverty in India.
Key Changes:
- Shift from Calorie Intake to Consumption-Based Estimates: The Tendulkar Committee moved away from the calorie intake approach and emphasized a broader consumption basket that included spending on food, healthcare, education, and other essentials.
- Uniform Poverty Line Across Rural and Urban Areas: The Tendulkar Committee proposed a uniform poverty line for both rural and urban areas, adjusted for inflation. This was done to address the varying consumption patterns and price levels.
- Use of NSSO Data: The committee recommended using data from the National Sample Survey Office (NSSO) for estimating consumption expenditure and determining the poverty line.
Example:
- According to the Tendulkar Committee’s revised estimates, 37.2% of India’s population lived below the poverty line in 2004-05. By 2011-12, this had dropped to 21.9%, partly due to the rapid economic growth experienced during this period.
6. Rangarajan Committee (2014)
In 2012, concerns arose that the Tendulkar Committee’s poverty line was too low and did not accurately reflect the cost of living in India. As a result, the government set up the Rangarajan Committee in 2012 to review and revise the poverty estimation methodology.
Key Changes:
- The Rangarajan Committee reverted to a separate poverty line for rural and urban areas, based on broader consumption norms that included adequate expenditure on food, education, health, housing, and clothing.
- The committee recommended a higher poverty line than the Tendulkar Committee, reflecting a more realistic estimate of the cost of living.
Example:
- Under the Rangarajan Committee’s methodology, the poverty line was set at ₹972 per month for rural areas and ₹1,407 per month for urban areas in 2011-12.
- The committee’s estimates showed that 29.5% of India’s population was living below the poverty line in 2011-12, higher than the Tendulkar Committee’s estimate.
7. Current Approaches to Poverty Estimation
In recent years, poverty estimation in India has continued to evolve, with greater emphasis on multidimensional measures of poverty. The traditional income and consumption-based poverty line is increasingly seen as insufficient to capture the full complexity of poverty.
Multidimensional Poverty Index (MPI):
- India has also adopted the Multidimensional Poverty Index (MPI) developed by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative (OPHI). The MPI considers multiple deprivations across health, education, and living standards.
- Example: According to the Global MPI 2020, India saw significant reductions in multidimensional poverty, with over 270 million people being lifted out of poverty between 2005-06 and 2015-16. This method provides a broader view of poverty, accounting for aspects beyond just income.
NITI Aayog:
- With the replacement of the Planning Commission by NITI Aayog in 2015, the focus has shifted toward promoting sustainable development goals (SDGs) and using data-driven approaches to tackle poverty.
- NITI Aayog has been working on developing new poverty measures that incorporate both traditional economic measures and indicators of human development, such as education, healthcare, and social security.
Conclusion
India’s history of poverty estimation reflects the country’s economic, social, and political changes. Starting from calorie-based approaches in the 1970s, India has moved towards more nuanced and comprehensive methods of measuring poverty, incorporating factors such as consumption patterns, regional variations, and multidimensional deprivations. Committees like the Tendulkar and Rangarajan Committees have played crucial roles in refining poverty measurement, influencing government policies, and shaping poverty alleviation programs aimed at improving the lives of millions of Indians.
