Economy: New Committee for Poverty Estimation

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Recently a new Committee headed by C. Rangarajan has been constituted to re-examine the methodology for fixing the poverty line and estimating the increase of poverty in the country. Initially last such review of the methodology was done by Lakdawala Committee (1993) which recommended poverty estimation on a minimum calorific intake. Which was later undertaken by Suresh Tendulkar Committee (2005), which submitted its report in 2009 and its recommendations were accepted in 2011. It included consumption expenditure on health & education in the estimation methodology. As per the Tendulkar Committee report, the national poverty line at 2004-05 prices was a monthly per capita consumption expenditure of Rs. 446.68 in rural area and Rs. 578.80 in urban areas. Though the above poverty line which refers to the national average, vary from state to state because of price differential.

Reason for Estimating the Methodology Again:

The first reason is the absolute value of the poverty line, because only Rs. 32/day in rural area and Rs. 26/day in urban area is a found to be inadequate to lift a person out of poverty.
The poverty estimation on the calorific value by the Lakdawala Committee also failed to serve the purpose because the calorific intake of the poor was found to be much shorter than that estimated.
Also the incidence of poverty at the national and the state level found to vary and unacceptable. So, in order to estimate the poverty line properly, the newly formed Committee should go for a set of standards rather than going for a single benchmark (such as only calorific value or daily income basis only).

Definition:

Poverty Line: It is defined as the level of income below which one cannot afford to purchase the basic resources required to live. While comparing poverty across countries, the purchase power parity exchange rate is used.

Importance from Examination point of view:

Short note - Poverty Line
Key points of the Committee and Recommendations
2004: Paper - II (Q. 4-b):- How is poverty level measured? Evaluate poverty eradication programmes in India.

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