Poverty levels below 5%, claims chief of Centre’s think tank

Subject: History

Section: Art and Culture

Poverty Line:

A Poverty Line is defined as the basic needs that an individual requires to sustain his or her livelihood.

Above the poverty line (APL):

A person who is able to earn enough money to cover his basic needs.

Below the poverty line (BPL):

A person who is not able to earn enough money to cover his basic needs.

The Tendulkar Committee:

According to this , a poverty level of Rs 29 per person per day in urban areas and Rs 22 per person per day in rural areas.
According to World Bank’s data on its Poverty and Inequality Platform, a new poverty line has been set at 15$ per day.

CEO of NITI Aayog’s stand:

Based on findings of Household Consumption Expenditure Survey (HCES) for 2022-23:

Less than 5% are going to be below poverty line
Retail inflation has been overstated
Growth is broad-based with rural Indian’s income and spending rising faster than Urban peers.
Inequality is declining as Urban-rural consumption divided narrowed down from 91% in 2004-05 to 71% in 2022-23.
Rural household’s spending on food has dropped below 50% of total expenditure.
Less than 5% of per capita consumer expenditure on pulses and cereals.
Higher expenditure on conveyances, consumer durables and consumer durables.
It indicates increase in earning of people and less spending on food.
Thus, in not absolute but relative spending on food is declining while consumption of products like TV sets, fridges, mobile phones and cars etc. are increasing.
It signifies change in income for betterment as well as change in lifestyle.

Based on Monthly per capita expenditure (MPCE) averages-

The average consumption level for the bottom 5% of rural households was ₹1,373 and ₹1,782 for the next 5% of households. Poverty lines and estimates are derived from this.
If we consider ₹32 a day as poverty line in 2011-12 along with inflation for totalling to ₹60 a day, thus poverty is around or less than 10%.
As also (as per HCES) ₹1,782 is average spending in bottom 5 to 10% of fractile class in rural India.
On addition of the imputed value of food transfers and subsidies received by households under schemes like the PM Garib Kalyan Anna Yojana or subsidised gas cylinders, poverty in India is certainly in the low single digits (below 5% ).
In addition to these, benefits like healthcare under the Ayushman Bharat scheme and free education have not been factored into the consumption expenditure survey.
Also as per the NITI Aayog’s multi-dimensional poverty index 11% of the population was below poverty line last year.
There is rise of 5 times from 2011-12 levels in urban and rural consumption and India’s growth is very broad-based.

Multi-dimensional Poverty Index:

Findings of NITI Aayog’s Discussion Paper ‘Multidimensional Poverty in India since 2005-06’:

METHODOLOGY:

The dual-cutoff approach of the Alkire-Foster (AF) methodology – the one used in the Global MPI Report – was considered suitable for the national context.
MPI captures broad qualitative aspects of people’s life across 3 dimensions – Health, Education, and Standard of living.
The national MPI largely follows the global methodology.
India’s national MPI retained 10 indicators from the Global MPI and has added 2 new indicators, namely Maternal Health (in the dimension of Health) and Bank Account (in the dimension of Standard of Living).

Computing MPI:

Each household is assigned a deprivation score based on its deprivation in each of the 12 indicators.

If the deprivation score of a household is above 33%, they are multidimensionally poor.

Indices of MPI:

Headcount ratio (H): How many are poor?

Proportion of multidimensionally poor obtained by dividing number of multi dimensionally poor persons by total population.
Intensity of poverty (A): How poor are the poor?
The weighted deprivation scores of all poor people are summed and then divided by the total number of poor people.

Finally , MPI = H x A

Recent MPI-INDIA findings 2023:

24.82 crore Indians escape Multidimensional Poverty in last 9 years.
Steep decline in Poverty Headcount Ratio from 29.17% in 2013-14 to 11.28% in 2022-23.
All 12 MPI indicators show significant signs of improvement.
Uttar Pradesh, Bihar, and Madhya Pradesh recorded largest decline in the number of MPI poor between 2013-14 and 2022-23.
Poorer states record faster decline in poverty – indicating reduction in disparities.
India is likely to achieve SDG Target 1.2 (reducing multidimensional poverty by at least half) much ahead of 2030.

Gini coefficient :

Gini coefficient is an indicator of income or wealth inequality and is derived from the Lorenz curve.

Loren curve :

The coefficient ranges from 0 (0%) to 1 (100%),with 0 representing perfect equality and 1 representing perfect inequality.