{"id":46420,"date":"2025-06-27T21:41:15","date_gmt":"2025-06-27T16:11:15","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=46420"},"modified":"2025-06-27T21:41:31","modified_gmt":"2025-06-27T16:11:31","slug":"indias-poverty-estimation-under-new-global-poverty-line","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/27-06-2025\/indias-poverty-estimation-under-new-global-poverty-line","title":{"rendered":"India&#8217;s Poverty Estimation under New Global Poverty Line"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The recent revision of the International Poverty Line by the World Bank has reignited the global debate on how poverty should be defined and tracked.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Background<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The World Bank has announced a major revision to global poverty estimates, raising the<strong> International Poverty Line (IPL) <\/strong>from $2.15\/day (2017 PPP) to <strong>$3.00\/day (2021 PPP).&nbsp;<\/strong><\/li>\n\n\n\n<li>While the change led to a global increase in the count of extreme poverty by <strong>125 million<\/strong>, India witnessed a massive reduction in poverty.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is a Poverty Line?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A poverty line is a <strong>threshold level of income or consumption<\/strong> used to determine whether an individual or household is poor.&nbsp;<\/li>\n\n\n\n<li>Anyone living below this threshold is considered unable to afford basic necessities such as <strong>food, shelter, clothing, education, and healthcare.<\/strong><\/li>\n\n\n\n<li>It helps the government;\n<ul class=\"wp-block-list\">\n<li>to gauge the extent of poverty and <strong>shape welfare policies<\/strong> for the poor.<\/li>\n\n\n\n<li>to <strong>understand whether a set of policies has actually worked <\/strong>over time to reduce poverty and improve wellbeing.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>India\u2019s Revised Poverty Profile<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India\u2019s latest <strong>Household Consumption Expenditure Survey (HCES)<\/strong> adopted the <strong>Modified Mixed Recall Period (MMRP) method<\/strong>, replacing the outdated Uniform Reference Period (URP). This shift:\n<ul class=\"wp-block-list\">\n<li>Used shorter recall periods for frequently purchased items.<\/li>\n\n\n\n<li>Captured more realistic estimates of actual consumption.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>In 2011\u201312<\/strong>, applying MMRP reduced India\u2019s poverty rate from <strong>22.9% to 16.22%, <\/strong>even under the older<strong> $2.15 poverty line.<\/strong><\/li>\n\n\n\n<li><strong>In 2022\u201323<\/strong>, poverty under the new $3.00 line stood at <strong>5.25%<\/strong>, while under the older $2.15 line it dropped further to 2.35%.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Why Does India Use the World Bank&#8217;s Poverty Line?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India last officially updated its poverty line in <strong>2011\u201312 (Tendulkar method).&nbsp;<\/strong><\/li>\n\n\n\n<li>A committee led by <strong>C. Rangarajan in 2014<\/strong> proposed higher thresholds (\u20b947 urban and <strong>\u20b933 rural\/day)<\/strong>, but the recommendation was never adopted. Since then:\n<ul class=\"wp-block-list\">\n<li>India has lacked a nationally accepted poverty line.<\/li>\n\n\n\n<li>In its place, <strong>NITI Aayog\u2019s Multidimensional Poverty Index (MPI)<\/strong> and <strong>World Bank<\/strong> estimates have filled the vacuum.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong>Committees for Poverty Estimation<\/strong><br><strong>Lakdawala Committee (1993)<\/strong><br>&#8211; It was constituted in 1993, made the following suggestions:\u00a0<br>1. consumption expenditure should be calculated based on calorie consumption as earlier;\u00a0<br>2. state specific poverty lines should be constructed and these should be updated using the <strong>Consumer Price Index of Industrial Workers (CPI-IW)<\/strong> in urban areas and <strong>Consumer Price Index of Agricultural Labour (CPI-AL) <\/strong>in rural areas; and\u00a0<br>3. discontinuation of \u2018scaling\u2019 of poverty estimates based on National Accounts Statistics.\u00a0<br>&#8211; This assumes that the basket of goods and services used to calculate CPI-IW and CPI-AL reflect the consumption patterns of the poor.<br><strong>Tendulkar Committee (2009)<\/strong><br>&#8211; It was constituted in <strong>2005<\/strong> and submitted its report in <strong>2009.<\/strong><br>&#8211; The Committee recommended a shift away from calorie consumption based poverty estimation and incorporation of private expenditure on health and education while estimating poverty.\u00a0<br>&#8211; Instead of monthly household consumption, consumption expenditure was broken up into per person per day consumption, resulting in the figure of <strong>Rs 32 <\/strong>and <strong>Rs 26<\/strong> a day for urban and rural areas.\u00a0<br>&#8211; <strong>The national poverty line for 2011-12 <\/strong>was estimated at <strong>Rs. 816 <\/strong>per capita per month for rural areas and <strong>Rs. 1,000<\/strong> per capita per month for urban areas.<br><strong>Rangarajan Committee (2014)<\/strong><br>&#8211; It was constituted in 2012 and submitted its report in 2014.<br>&#8211; The Committee recommended separate consumption baskets for rural and urban areas.<br>&#8211; This committee raised the daily per capita expenditure to <strong>Rs 47 <\/strong>for urban and <strong>Rs 32<\/strong> for rural.<br>&#8211; The government did not take a call on the report of the Rangarajan Committee,\u00a0 therefore, poverty is measured using the Tendulkar poverty line.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Government steps for Poverty elevation\u00a0<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS): <\/strong>Guarantees 100 days of unskilled work\/year. Builds durable assets in rural areas.<\/li>\n\n\n\n<li><strong>National Food Security Act (NFSA), 2013:<\/strong> It gives legal entitlement to 67% of the population (75% in rural areas and 50% in urban areas) to receive highly subsidized foodgrains.<\/li>\n\n\n\n<li><strong>Pradhan Mantri Ujjwala Yojana (PMUY) (2016): <\/strong>This initiative was introduced to provide LPG (liquefied petroleum gas) connections to women belonging to Below Poverty Line (BPL) families.<\/li>\n\n\n\n<li><strong>Deendayal Antyodaya Yojana-National Rural Livelihood Mission (DAY-NRLM): <\/strong>It aims to reduce poverty by enabling the poor household to access gainful self-employment and skilled wage employment opportunities resulting in sustainable and diversified livelihood options for the poor.&nbsp;<\/li>\n\n\n\n<li><strong>Ayushman Bharat scheme:<\/strong> It offers health insurance coverage of up to \u20b95 lakh per family per year to shield beneficiaries from the financial burden of expensive medical treatments, thereby preventing them from falling deeper into poverty due to healthcare costs.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Concluding remarks<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India\u2019s poverty decline is a story of technical refinement meeting policy results. In the face of a raised poverty benchmark, India showed that more honest data, not diluted standards, can reveal real progress.&nbsp;<\/li>\n\n\n\n<li>As the global community recalibrates poverty goals, India\u2019s example sets a precedent: evidence-based governance, sustained reforms, and methodological integrity can together deliver transformational outcomes.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/explainspeaking-poverty-in-india-world-bank-data-10089567\/\" target=\"_blank\" rel=\"noopener\"><strong>IE<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<h3><strong>Context<\/strong><\/h3>\n<li class=\"ms-5\">The recent revision of the International Poverty Line by the World Bank has reignited the global debate on how poverty should be defined and tracked.<\/li>\n<p><\/p>\n<h3><strong>Background<\/strong><\/h3>\n<li class=\"ms-5\">The World Bank has announced a major revision to global poverty estimates, raising the International Poverty Line (IPL) from $2.15\/day (2017 PPP) to $3.00\/day (2021 PPP).\u00a0<\/li>\n<li class=\"ms-5\">While the change led to a global increase in the count of extreme poverty by 125 million, India witnessed a massive reduction in poverty.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/27-06-2025\/indias-poverty-estimation-under-new-global-poverty-line\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-46420","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/46420","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=46420"}],"version-history":[{"count":3,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/46420\/revisions"}],"predecessor-version":[{"id":46443,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/46420\/revisions\/46443"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=46420"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=46420"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=46420"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}