Context: The discussion on whether India needs a new poverty line centers on the criteria used to measure poverty and its implications for welfare benefits. This issue addresses the adequacy of current poverty thresholds, regional economic disparities, and the capacity of statistical machinery to capture accurate data.

What is Poverty?

• Poverty goes beyond income scarcity, encompassing challenges like poor health, inadequate education, unsafe living conditions, and vulnerability to violence.

• The NITI Aayog currently measures poverty through Multidimensional Poverty Index (MPI). The MPI captures overlapping deprivations (dimensions of poverty) in health, education and living standards.

• Multidimensional Poverty: Measures multiple deprivations in daily life such as poor health, lack of education, inadequate living standards, disempowerment, poor quality of work, the threat of violence, and living in areas that are environmentally hazardous, among others.

• Multidimensionally poor: An individual who is deprived of one-third or more of the weighted indicators.

• Extreme Multidimensional Poverty: Any person deprived of one-half or more of the weighted indicators.

Challenges

• As India progresses towards equitable development, adapting social protection programs becomes crucial.

• Required measures: The research emphasizes that traditional strategies for chronic poverty may need revision, as economic growth shifts the focus towards addressing transient factors like natural disasters, health crises, and changes in employment opportunities.

Government Measures to eliminate poverty

• October 17 is observed as the International Day for the Eradication of Poverty.

• National Food for Work Programme: The National Food for Work Programme was launched on November 14, 2004 in 150 most backward districts of the country with the objective to intensify the generation of supplementary wage employment.

• Swaranjayanti Gram Swarozgar Yojana (SGSY): SGSY, launched in April 1999, aims at bringing the assisted poor families (Swarozgaris) above the poverty line by organizing them into Self Help Groups (SHGs) through a mix of Bank credit and Government subsidy.

• Sampoorna Grameen Rozgar Yojana (SGRY): SGRY, launched in 2001, aims at providing additional wage employment in all rural areas and thereby food security and improve nutritional levels. The SGRY is open to all rural poor who are in need of wage employment and desire to do manual and unskilled work around the village/habitat. The programme is implemented through the Panchayati Raj Institutions (PRIs).

• Pradhan Mantri Gramodaya Yojana (PMGY): PMGY launched in 2000-01 envisages allocation of Additional Central Assistance (ACA) to the States and UTs for selected basic services such as primary health, primary education, rural shelter, rural drinking water, nutrition and rural electrification.

• Rural Employment Generation Programme (REGP): To create self-employment opportunities in rural areas and small towns, it is being implemented by the Khadi and Village Industries Commission (KVIC).

• Prime Minister’s Rozgar Yojana (PMRY): The objective is making available self-employment opportunities to the educated unemployed youth by assisting them in setting up any economically viable activity.

Poverty Thresholds in India

• Introduction to the Issue: The poverty line in India has evolved over time, with various committees proposing different definitions based on calorie intake and non-food expenditures. The Tendulkar Committee's thresholds from 2009 and 2011 remain the official benchmarks.

• Calorie-Based Definition: Initially, poverty was measured by calorie intake, determining the income needed to consume around 2,000 calories per day. This simplistic approach was later expanded to include essential non-food expenditures.

• Committee Recommendations: The Tendulkar Committee set the poverty line at Rs 447 per month in rural areas and Rs 579 in urban areas in 2009, revised to Rs 816 and Rs 1,000 respectively in 2011. Despite subsequent recommendations from other committees, these thresholds persist.

Measuring Poverty for Welfare Transfers

• Urban vs. Rural Perspectives: It's crucial to avoid judging poverty thresholds through an urban lens, as purchasing power varies significantly across regions. A single definition may not encompass India's economic heterogeneity.

• Relative Poverty: Poverty can be viewed as relative to societal standards. A poverty threshold could be defined as an income below a certain percentage of the median income, varying by region.

• Statistical Machinery: Accurate poverty measurement requires robust statistical tools to capture household expenditures and incomes. The absence of a recent Census hampers this effort, making it difficult to implement effective poverty measurement on the ground.

Expansive Definition of Poverty

• Amartya Sen’s Perspective: Economist Amartya Sen's view of development emphasizes expanding people's freedoms. Poverty should be seen as a lack of agency to aspire for a better life.

• Escaping State Dependence: In India, escaping poverty often means minimizing dependence on the state by accessing private services. This includes private security, healthcare, education, and other amenities.

• Measurement of Agency: Household surveys should include questions about interactions with the bureaucracy and government services. The fewer interactions needed, the greater the indicator of prosperity and reduced poverty.

What is the Need of a New Official Poverty Line in India?

• Outdated Data: India's poverty line estimate based on the Tendulkar Committee (2005) is two decades old. 

• Estimating poverty on the basis of this data is a futile exercise and this grossly underestimates poverty.

Inconsistent with Global Data

• The World Bank's 2022 report says, India saw "an increase of 56 million poor people" in 2020 (at USD 2.15) due to the pandemic. 

• Pew Research Institute's March 2021 report said the number of Indian poor increased by 75 million and added that  its middle class shrinking by 32 million. 

• But India never acknowledged that poverty increased due to the pandemic or due to pre-pandemic economic shocks of demonetisation of 2016 and GST of 2017.

• Less Realistic Data

• The poverty threshold varies from state to state according to people’s social and economic conditions but the current poverty estimation is based on rural, urban and pan-India level.

• This data is less realistic due to inadequate customised measurement and inconsistent data collection methods.

• Accuracy Issues

• There is a lack of comprehensive consumption and inflation data making it impossible to get an accurate picture. 

• Indian authorities do not provide inflation data segmented by household income.

• Multidimensional poverty Index (MDPI) evaluates health, education and standard of living across 12 indicators. It relies more on survey-based data rather than actual consumption metrics.

• Institutional Issues

• India’s statistical system, which was applauded globally in the early 1950s, had been criticised by people outside as well as inside the government system in recent times.

• The Ministry of Statistics and Programme Implementation has failed to provide empirical data and struggled to effectively communicate its actions to the relevant stakeholders.

• Example: The findings of the Consumption Expenditure Survey 2017-18 were so abysmal that they were withdrawn by the government. 

Conclusion

• Poverty and inequality are deeply interconnected issues that affect societies worldwide, hindering social and economic progress. 

• Addressing these challenges requires a multifaceted approach that includes equitable economic policies, access to quality education, healthcare, and social protection. 

• India needs to address data uncertainties by establishing a more accurate and reliable measure of the poverty line and the number of people living in poverty. A revamping of poverty data for equitable distribution of income will be a step in the right direction.