Question

In what terms should poverty line be defined, income or consumption? Explain your answer.

Answer 1

The poverty line should ideally be defined in terms of consumption rather than income. This is because consumption reflects the actual living standards and basic needs fulfilment of a person better than income, which can be irregular and fluctuate. In India, the poverty line is based on the monthly per capita consumption expenditure required to meet a minimum calorie intake of 2,400 calories in rural areas and 2,100 in urban areas, reflecting the energy needs of physical work. This approach accounts for the essential foods and other minimum necessary expenditures, making consumption a more accurate and practical measure to identify the poor. Hence, consumption is a preferred term for defining the poverty line, as it captures the real ability to meet basic needs.