Poverty Estimation in India is an important process used to measure how many people in the country are living below the poverty line. It helps the government understand who needs support and how welfare schemes can be planned. In India, poverty remains a major challenge, especially in rural areas. Recent reports show that about 25.7% of the rural population lives below the poverty line, while in urban areas around 13.7% of people are below the poverty line.

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What is Poverty?

According to the World Bank, poverty means severe lack of well-being. It includes low income and inability to afford basic needs such as food, clothing, shelter, healthcare, and education.

A poor person often struggles to live with dignity because basic facilities are not easily available.

What is Poverty Line?

The poverty line is the minimum amount of money needed to buy basic goods and services required for survival. If a person or family spends less than this amount, they are considered poor.

The goods and services included in this calculation are called the Poverty Line Basket (PLB).

Examples of items in PLB:

Food grains
Vegetables
Clothing
Shelter
Education
Healthcare
Fuel

How Poverty is Estimated in India

In India, poverty estimation is mainly based on consumption expenditure rather than income. This means the government studies how much households spend on daily needs instead of only checking their income.

Currently, NITI Aayog handles poverty-related policy analysis. Earlier, this work was done by the Planning Commission.

Data is collected by the National Sample Survey Office (NSSO) under the Ministry of Statistics and Programme Implementation.

Why Consumption is Preferred Over Income

There are several reasons:

1. Income is unstable
Daily wage workers, farmers, and self-employed people often do not earn the same amount every month.

2. Hidden income
Many people have side income that is difficult to measure.

3. Easier data collection
Families can usually remember what they spent in the last 30 days more easily than calculating total income.

Because of these reasons, consumption-based surveys are considered more reliable.

Why Poverty Estimation is Important

Poverty estimation is necessary for many reasons.

Welfare Scheme Planning

Government schemes for food, housing, health, and employment are designed using poverty data.

Identifying Poor Families

The BPL (Below Poverty Line) Census helps identify households needing support.

Policy Making

Accurate poverty data helps the government create poverty reduction plans.

Social Equality

Reducing poverty supports the goal of a fair and equal society.

Types of Poverty Measurement

There are mainly two methods to measure poverty.

1. Absolute Poverty

Absolute poverty means a person cannot meet basic needs such as:

Food
Safe drinking water
Shelter
Healthcare
Education

In this method, a fixed poverty line is set. Anyone below that level is considered poor.

Problems with Absolute Poverty

Does not reflect rising living costs in different regions
May ignore quality of life differences between states or countries

2. Relative Poverty

Relative poverty compares a person’s income with the average income of society.

For example, even if a person can meet basic needs, they may still be poor compared to most people in society.

This method is more common in developed countries.

Problems with Relative Poverty

Focuses only on comparison
May ignore actual survival needs

Survey Methods Used in India

India has used different survey methods over time.

Uniform Reference Period (URP)

Under URP, families were asked about their spending during the previous 30 days.

This method was used until 1993-94.

Mixed Reference Period (MRP)

From 1999-2000, India shifted to MRP.

Under this method:

Clothing, footwear, education, durable goods, and hospital expenses were measured over 365 days
Other items were measured over 30 days

This improved accuracy.

Modified Mixed Reference Period (MMRP)

A more advanced version added:

365-day recall for low-frequency items
7-day recall for fast-consuming food items
30-day recall for remaining goods

Poverty Estimation Before Independence

India’s poverty estimation history started before independence.

Dadabhai Naoroji

Dadabhai Naoroji made one of the earliest poverty estimates in his book Poverty and Un-British Rule in India.

He estimated the poverty line at ₹16–₹35 per person per year.

His estimate was based on the cost of a minimum diet.

National Planning Committee (1938)

This committee suggested a poverty line of ₹15–₹20 per person per month.

It was formed under Subhas Chandra Bose with Jawaharlal Nehru as chairman.

Bombay Plan (1944)

Business leaders proposed a poverty line of ₹75 per person per year.

Poverty Estimation After Independence

After 1947, several committees worked on better methods.

Major Committees on Poverty Estimation

Committee	Year	Main Recommendation
Planning Commission Expert Group	1962	Separate rural and urban poverty lines
Dandekar & Rath	1971	2250 calorie-based poverty estimation
Alagh Committee	1979	Nutrition-based poverty line
Lakdawala Committee	1993	State-specific poverty lines
Tendulkar Committee	2009	Consumption-based broader basket
Rangarajan Committee	2014	Updated food and non-food expenditure

Dandekar and Rath (1971)

V. M. Dandekar and N. Rath conducted the first systematic poverty study using NSS data.

They said poverty should be based on the spending needed to get 2250 calories per day.

This started major discussions on calorie-based poverty estimation.

Alagh Committee (1979)

The committee led by Y. K. Alagh created separate poverty lines for rural and urban India.

The poverty line was based on:

Nutrition requirements
Consumption expenditure
Inflation-adjusted prices

Lakdawala Committee (1993)

Led by D. T. Lakdawala, this committee recommended:

Continue calorie-based estimation
Create state-specific poverty lines
Update prices using inflation indexes

This method was widely used for years.

Tendulkar Committee (2009)

The committee led by Suresh Tendulkar changed poverty estimation significantly.

Why New Method Was Needed

Older methods had problems:

Old consumption patterns
Poor inflation adjustment
Health and education costs ignored

Key Recommendations

1. Move beyond calorie counting
The committee included broader daily expenses.

These included:

Food
Clothing
Education
Medical care
Fuel
Personal needs

2. Uniform Poverty Basket
Same basket used for both rural and urban calculations.

3. Include private spending
Health and education expenses were included.

Poverty Line Under Tendulkar Committee (2004–05)

Area	Monthly Per Capita Spending
Rural	₹446.68
Urban	₹578.80

This was roughly equal to ₹33 per day in purchasing power terms.

What is Purchasing Power Parity (PPP)?

PPP compares the value of money across countries.

It measures how much money is needed in one country to buy the same goods available in another country.

This helps compare poverty internationally.

Rangarajan Committee

The committee led by C. Rangarajan was formed after criticism of the earlier poverty line.

Many people felt ₹22 per day for rural India was unrealistically low.

Main Recommendations

Poverty should include both:

Nutrition needs
Non-food spending

Nutritional Requirements

Requirement	Rural	Urban
Calories	2155 kcal	2090 kcal
Protein	48 gm	50 gm
Fat	26 gm	28 gm

Poverty Threshold

Area	Daily Spending
Rural	₹32
Urban	₹47

Using this method, the number of poor people increased compared to Tendulkar estimates.

Criticism

The committee still focused mainly on expenditure and did not fully include multidimensional poverty.

International Poverty Line

The World Bank defines extreme poverty as living on less than $1.90 per day.

Asian Development Bank uses a poverty line of about $1.51 per person per day.

These global standards help compare poverty across countries.

Challenges in Poverty Estimation in India

India faces many difficulties while measuring poverty.

1. Price Differences

Prices vary from state to state.

Food in one state may cost much more than in another.

2. Changing Consumption

People’s spending habits change over time.

Modern needs now include:

Internet
Mobile connectivity
Better healthcare
Transport

3. Lack of Consensus

Different states support different poverty estimation methods.

Some support the Tendulkar method, while others prefer Rangarajan.

4. Poverty Line Too Low

Many experts believe current poverty lines are too low to reflect real living costs.

Way Forward

India needs better poverty estimation methods to match today’s economy.

Redefine Poverty Line

The poverty line should be updated regularly based on:

Income growth
Inflation
New living costs

Use Better Standards

Experts suggest a higher poverty line that allows:

Two proper meals daily
Basic healthcare
Education
Safe housing

Hybrid Approach

India can combine:

Absolute poverty measurement
Relative poverty measurement

This would provide a more realistic picture.

Focus on Public Services

Government spending should improve:

Schools
Hospitals
Drinking water
Sanitation
Transport

Better public services reduce poverty more effectively than subsidies alone.

Poverty Estimation in India remains essential for building a fair society. Accurate poverty measurement helps identify the needy, improve welfare schemes, and ensure that economic growth benefits everyone.

FAQs

Q1. What is poverty estimation in India?
Poverty estimation in India is the process of measuring how many people live below the poverty line based on their consumption or income levels.

Q2. Who calculates poverty in India?
NITI Aayog handles poverty-related policy analysis using survey data collected by the National Sample Survey Office (NSSO).

Q3. What is the poverty line?
The poverty line is the minimum amount of money needed to buy essential goods and services such as food, clothing, shelter, healthcare, and education.

Q4. Why is poverty estimation important?
It helps the government identify poor households and plan welfare schemes related to food, housing, health, and employment.

Q5. What are the main methods of poverty measurement?
The two main methods are:

Absolute Poverty
Relative Poverty

Q6. What is the Tendulkar Committee?
The Tendulkar Committee, led by Suresh Tendulkar, recommended a broader consumption-based method for poverty estimation in India in 2009.

Q7. What is the Rangarajan Committee?
The Rangarajan Committee, led by C. Rangarajan, suggested updated poverty lines by including both food and non-food expenses.

Q8. What are the major challenges in poverty estimation?
Major challenges include price differences across states, changing living costs, and lack of agreement on poverty measurement methods.