According to the United Nations Development Program (UNDP), poverty is not a one-dimensional phenomenon (e.g. “only” a lack of money) but a multidimensional issue that requires a wide range of solutions for a wide range of problems. When we talk about poverty, we are talking about absolute poverty. Absolute poverty can be defined when lack of one or more basic needs over a period long enough that it endangers your life or can cause it harm.

Everywhere in the world poverty estimation is statistical exercise. In India too its not very different. When economist and statisticians deal with poverty numbers, concerns and hardship faced by poor don’t translate in to numbers. If concerns of the poor would have been at centre, economist & statisticians would not have been discussing method of estimating poverty but method to reduce poverty.

Poverty Estimation by planning commission

Traditionally Poverty estimation in India has been based on the consumption basket. Rangarajan committee spend substantial amount of time on evolution of measurement of poverty in India and issues poverty estimation.

While defining New Poverty line basket, the Expert Group (Rangarajan)

“is of the considered view that it should contain a food component that addresses the capability to be adequately nourished as well as some normative level of consumption expenditure for essential non-food item groups (Education, clothing, conveyance and house rent) besides a residual set of behaviourally determined non-food expenditure.”

Food component of the poverty line basket has been revised with new calorie requirement. Non-food component of the poverty line get passing remarks. The word stuck to my mind is ‘Normative’. “The normative component relates to the private consumption expenditure aimed at capabilities in respect of education, clothing, shelter (rent) and mobility (conveyance). Since it is difficult to set minimum norms for these essential non-food items, the Expert Group (Rangarajan) recommends that observed expenditures on these items by households located in the median fractile (45-50 percentile) be treated as the normative minimum private consumption expenditure on these items.”

In short, The Monthly Per-capita Consumption Expenditure (MPCE) of Rs 972 (554+141+277) in rural areas and Rs 1407 (656+407+344) in urban areas constitute the new poverty lines at the all- India level as per the recommendation of the Expert Group (Rangarajan). They translate to a monthly per household expenditure of Rs 4860 / in Rural India and of Rs 7035/ for urban India—assuming a family of 5-members in each case.

Why do we need Below Poverty Line estimation?

Rangrajan report itself mentions that

“At present, substantial amount of investment of the Department of Rural Development, which are meant for income generation of the poor do not go through the BPL regimentation. In fact, as much as ninety two per cent of the funds flowing to the rural areas through the of Department of Rural Development do not require the BPL list since these programmes are no longer exclusively for the poor, and are universalized. For example, the wage employment programme Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), by far the single most important programme for the poor is not exclusively for the poor; it is universalized. The MGNREGA do not need a BPL list since both the poor and the non-poor access the employment equally.”

Report goes on to mention a) TPDS scheme which was linked with poverty ratio, now with large scale food security programme poverty line is no longer relevant. b) The National Rural Livelihood mission which also has additional criterion being homeless apart from being BPL.

This makes me wonder why we need such poverty estimation and these expert committees in first place. Of course expert committee report goes on to recommend that government should formulate schemes to target such selected groups from BPL. I am amused by this simple fact that we have army of economists who claims to be pro poor and yet our expert committee can only point out is two or schemes which is targeted for below poverty line population.

In the hindsight, our BPL doesn’t look very different from hunger index. If our Poverty line estimation is nothing more than food consumption & normative non-food component, I really don’t see any value addition of this statistical exercise of poverty line estimation.

Other Criterion mentioned in Rangrajan committee report in determination of BPL

  • To be or (at least minimally) educated: Rangrajan didn’t specified what does minimally educated means. Child labour law in India limits children below age of 14 to be employed. We assume that minimum education would be 10th Standard. Family which cannot afford its two kids to complete minimum education should be classified below poverty line.

    Let me go a step further if someone completes 10th Standard and enters in to job market what is employability of such kids? These kids invariable go to unskilled workforce. Gestation period for turning this unskilled workforce to skilled work force takes at least 3-5 years.

    Education has helped many to come out of poverty and live decent life. Affordable higher education is very important, whether government or private institutes provide such affordable education is least of concern for poor. Poor may want education for their kids which can get jobs. Today Public Schooling system quality has deteriorated; no one, not even poor wants to put their kids in govt run school. For children born below poverty line and not able to get higher education, Probability of them staying below poverty line is much higher than those children who get higher education.

  • To escape avoidable diseases: There is direct correlation between avoidable diseases and food poor can afford. Hygiene of the surrounding is very important, whether urban or slums our society and government has paid least attention to improve the pathetic hygienic situation on ground. Just to give example, we make joke on Mumbaikar defecate in railway tracks, how many aware of average queue time at public toilet build by local municipal corporation, in morning? It is anything between 15-45 min. Needless to say cleanliness of these toilets is normative only. Poor sanitations cause diseases.

    I am not sure of impact of many of the MBBS practicing in those slums, but yes they are the first medical help poor gets in case of emergencies. Public health system in their normative system does exist, however we should not be asking about quality and hygiene. Many of the health issues faced by poor are incidental to the vocation/profession they belong to. Needless to say unorganised sector doesn’t provide any health benefits. Minor health issues are sorted at neighbourhood private clinics, but its major illness which is cause of misery for poor. Prolonged illness causes loss of productivity which in turn causes lower income.

  • To be adequately sheltered: Adequately sheltered means poor should be able to protect himself, his family and his property in all-weather seasons. Most slums have been built initially without any authorisation from appropriate authorities. Civic amenities such as electricity, water, public toilets, roads, public street lights and most importantly drainage system comes very late. Magnitude and impact of water logging during monsoon, heat during summer and cold during winter are always higher for poor than rest of the population. Inadequate shelter is also one of the reasons for loss of productivity and loss of property as well.

While we are discussing other criterion, I think following criterions are equally important for any society which is trying to reduce poverty

  • Poverty and Rule of Law: Generally poverty is considered as economic subject rather than legal one. There are studies to correlate poverty and crime. However correlation between rule of law and poverty has not been established strongly. In my opinion, improved rule of law has positive impact on poverty reduction. Lethargic rule of law leads to exploitation of poor and weaker section of population. Poor end up suffering financially and psychologically due to bad implementation of rule of law. Let me give some example
    • Illegal liquor sale in neighbourhood can cause lot of problem. Customers of such illegal liquor suffer not only financially but it also impacts their health. Such sales typical done from residential area, neighbourhood of such locality incurs extra expenses to adjust their lifestyle to stay away from trouble.
    • Extortions: While our government might not be able to extract taxes from the SME which deals in cash, but our underworld and local goons doesn’t leave them alone. Shop owners and SME owners contribute very large sum to local mafia. They have to pay as low as Rs 10 for various frivolous reasons. Ganesh Chaturthi or Christmas or cleaning drainage system or cleaning public toilet system, local goons always find way to extract money out of poor. Anyone who stands up against such elements doesn’t have protection of rule of law.
  • Lack of Guidance, ideals & Motivation: Kids growing up in slums and poverty always struggles for a peer group whom they can look up to for motivation than kids who grows up in middle class environment. Lack of motivation and ideals doesn’t push them to excel in their education and work. There is simply no limit to distractions if anyone to study in that environment. Many times sheer magnitude of negativism which can drive kids crazy. While we may want to tell our kids to aim higher and sky is limit for their dreams. Challenges poor kids face are not only the challenges in terms of education or jobs which they take up, they also have to overcome “you cannot do “, “औकात देखि है अपनी?” every now and then. Some of this negativism is from fellow slum dwellers. Lack of guidance for kids and parents is another cause concern; many times parents have no idea what is good for the kids in terms of education. Poor guidance for parents means kids are not encouraged to study or in many cases discouraged to study as well. Poor guidance for kids means they end up taking up courses which doesn’t suite them.

    Statistically these factors are difficult established in correlation with poverty, but in my opinion this affects in multiple ways for a family struggling to come out of poverty.


Poverty is multi-dimensional issue; I do hope that government undertake initiatives which will address specific needs of the poor. Need of the hour is targeted solutions which can address issues and hardship faced by poor. I do hope that bureaucrats and economist, instead of spending years and wasting reams of paper to discuss method of estimation of poor, comes up with innovative solutions for well-being of poor. Not suggesting that everyone is born with equal intelligence and capabilities but what we need is to provide fair opportunity to poor to come out of misery and live respectful life. I do hope that we as society provides level playing field to poor section of our society to excel in their abilities.

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Kalpesh Chavda

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