Estimates of Poverty

Why do governments measure poverty? Accurate poverty estimates help direct welfare schemes to those who need it most.

Earlier, India’s poverty line was based mainly on how much a person spent on food, especially on calorie intake. Non-food needs like health, education, and transport weren’t considered.

1. In 2014, the Rangarajan Committee defined new poverty levels for both rural and urban areas.
2. Poverty is now measured on a monthly consumption basis:
   Rural: Rs. 972 per person/month (Rs. 32 per day).
   Urban: Rs. 1407 per person/month (Rs. 47 per day).
3. Unlike previous estimates, the new poverty line includes necessities like health, education, house rent, clothing, and transport.

• The methodology was based on the average cost of essentials for survival and well-being.
• It used a large survey (CMIE) and a “modified mixed recall period” for data.
• The new poverty estimates are higher, meaning more people qualify for welfare benefits.

Source: Economic Survey 2017-18

Think of poverty measurement like checking whether your monthly household spending meets the basic needs basket—if not, you’re “below the line”.

• Poverty is now measured beyond just food, covering key needs like health and education.
• The Rangarajan Committee’s estimates show around 29.5% of India’s population living below the poverty line in 2011–12.
• State-wise data helps tailor policies.