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Poverty Estimation in India

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  • Last Updated : 01 Jul, 2022
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Poverty is defined as a circumstance in which a person is unable to obtain the bare essentials of existence. It is a situation when a person lacks in sufficient funds to cover basic requirements such as food, clothing, and shelter. on the other hand, Poverty is much more than a lack of resources.

When parents are unable to send their children to school, or in situations where sick individuals cannot afford care and families lack access to clean water and sanitation, as well as regular employment at a minimum wage level, it means living in a state of helplessness. 

Poverty Estimation

The income or consumption levels are a typical measure used to evaluate poverty in India, and if the income or consumption goes below a certain minimal level, the household is considered to be below the poverty line (BPL).

  • Poverty Line Calculation: Poverty assessment in India is presently carried out by the NITI Aayog task force using data collected by the National Sample Survey Office under the National Bureau Of statistics Implementation to calculate the poverty line (MOSPI).
  • The Planning Commission, which was formerly in charge of establishing the poverty line in India, has been replaced by NITI Aayog as a policy think tank. 
  • Consumer vs. Income Level: In India, poverty lines are calculated based on consumption spending rather than income levels for the following reasons:
  • Income Variation: The income of self-employed persons, daily wage laborers, and others is extremely changeable both in time and space, although consumption patterns are rather consistent.
  • Additional Income: Even for normal salary workers, there are often additional side revenues, which might be difficult to account for. 
  • Data collection: In the case of a consumption-based poverty line, sample-based surveys employ a reference period (say, 30 days) in which families are questioned about their consumption in the previous 30 days, which is then used to reflect general consumption. It is not feasible to trace the main trend of revenue. The reference period refers to the time frame in which NSSO staff conduct the survey and ask specific questions about homes. 

Poverty Line

In India, the method commonly used to estimate poverty is through the measurement of income and consumption levels. If a personal income level falls below a minimum level that fails to meet his/her basic needs then he/she is considered being poor. This minimum level of basic necessities is known as the poverty line.

When the income or consumption of an individual or the household falls below the minimum level then they are designated to be Below the Poverty Line. It is to be noted that both income and consumption levels are measured while identifying the poor in India, but first, it was consumption expenditure taken primarily into account because of the following reasons:

  • Fluctuation in income: Daily wage laborers, contract workers, etc, the income of these workers vary as it depends on the availability of work and the income they are offered although the consumption pattern is comparatively stable
  • Additional Income: Daily wage laborers or contract employees do not depend on a single income or they have will have other sources of income. There will be other works from which they can earn their wages and this will be difficult to take into account
  • Collection of Data:  When estimating a consumption level of a household Sample-based surveys use a reference period of 30 days and are taking general consumption patterns as tracing because the income tracing pattern is not possible.

While determining the poverty line minimum level of food requirement, clothing, and rest of basic necessities, these things have been taken into the calculation. After that their physical quantities are multiplied by their prices in rupees the poverty line calculation is conducted by sample survey every five years and the surveys are carried out by the National sample survey organization (NSSO).

Sample Questions

Question 1: What is Pradhan Mantri Gramodaya Yojana (PMGY)?


This yojana was launched in 2000 with central assistance given to states. Its aim is to provide basic services such as primary health, primary education, rural shelter, rural drinking water, and rural electrification to all the poorer people of rural areas.

Question 2: What does it mean by poorest of poor?


There are inequality of income with in the family apart from social groups. In the poor families, people suffer but some of the family member suffer ore than others such as women, elderly people and female infants (especially girls child). They are systematically denied to equal access of resources available to family. Hence these members of the family are the poorest of poor.

Question 3: What are the principal measure taken in West Bengal to reduce poverty?


The principal measure taken in West Bengal to reduce poverty is land reforms as they helped in the reduction of poverty.

Operation Barga has started which encourages and protects the interest of sharecroppers and prevents them from the exploitation of landowners.

Question 4: Explain colonial rule as the cause of poverty?


This is one of the most important causes of poverty in India as the British colonial government has reformed the policies to increase their economic growth which result in a decline of economic growth of India, This government have also ruined the Indian traditional handicrafts industry and discouraged the development of industries like textile and cottage.

Question 5: What are the characteristics of the Rural Employment Act?


National Rural Employment Act was enacted in the year 2005. Its characteristics are,

  • Assured employment of 100 days every year to selected number of rural houses.
  • Reservation of job for women in one – third proportion.
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