4.4.1 Concept of Poverty
Poverty in India is described as a situation where an individual lacks the income necessary to afford the minimum means of subsistence. The minimum means of subsistence encompass:
(a) a reasonably satisfactory level of nutritional diet,
(b) the minimum required clothing, housing, and furniture, and
(c) the minimum level of health facilities, clean water, and education.
4.4.2 Relative and Absolute Poverty
It is essential to differentiate between two types of poverty:
Relative Poverty: This type refers to the economic status of people in comparison to others, whether within the same group, region, or nations. It indicates that individuals in lower-income groups are considered poorer compared to those in higher-income groups. This poverty is relative to the affluence of another group, and due to unequal income distribution, relative poverty exists in nearly all countries, be it the USA or India. Measures such as the Lorenz Curve and Gini Coefficient can be used to assess relative poverty. India’s Gini coefficient was 33.6 in 2012, according to the Economic Survey 2015-16.
Absolute Poverty: This type refers to the total number of people living below the poverty line and is characterized by a state of absolute deprivation. The concept is particularly relevant for less developed countries. In India, the concept of absolute poverty is employed to gauge poverty levels. Measurement methods include the Headcount Ratio, Multidimensional Poverty Index (MPI), and the Poverty Line concept. The Poverty Line establishes a minimum consumption standard, and individuals failing to meet this standard are considered ‘poor.’ In India, nearly 21.9 percent of the total population falls below the absolute poverty line.
4.4.3 Different Norms/Methods of Establishing Poverty Line
Various efforts have been made to formulate a scale for assessing poverty, and some notable approaches include:
Dadabhai Naoroji’s ‘Jail Cost of Living’: In pre-independent India, Dadabhai Naoroji pioneered the measurement of poverty. He utilized the ‘jail cost of living’ to determine the poverty line. By examining the menu for a prisoner and considering prevailing prices, he calculated the cost of consumption for an adult prisoner. He categorized the population into two groups:
(a) One-third of the population consisted of children, with half of them consuming very little and the other half consuming half of the adult diet.
(b) Two-thirds of the population comprised adults who consumed a full diet.
The average poverty line was derived as three-fourths of the adult jail cost of living.
Task Force on Projection of Minimum Needs and Effective Consumption Demand: In the post-independent era, efforts were made to identify the number of poor in the country. In 1979, the ‘Task Force on Projection of Minimum Needs and Effective Consumption Demand’ was established. It determined the poverty line based on the minimum nutritional level of food energy required for subsistence, expressed in terms of the minimum daily intake of calories. The poverty line was defined based on the recommended nutritional requirements of 2400 calories per person per day for rural areas and 2100 calories for urban areas, focusing on food poverty.
Monthly Per Capita Consumption Expenditure (MPCE): The cost of purchasing a consumption basket that provides the minimum calorie intake is estimated using price indices for rural and urban areas separately. This calculation yields the per capita consumption expenditure for rural and urban areas, forming the basis for the poverty line. The Planning Commission (Tendulkar committee) determined this cost to be ₹816 per person per month in rural areas and ₹1000 per person per month in urban areas in 2011-12. Individuals whose monthly consumption expenditure falls below ₹816 in rural areas and ₹1000 in urban areas are considered below the poverty line and classified as ‘poor’
Objective Type Questions
1. What does the concept of poverty in India primarily involve?
A. Lack of education
B. Insufficient income for minimum means of subsistence
C. Limited access to technology
D. Inadequate social connections
Answer: B. Insufficient income for minimum means of subsistence
2. Which of the following is NOT considered part of the minimum means of subsistence?
A. Nutritional diet
B. Clean water
C. Entertainment facilities
D. Housing and furniture
Answer: C. Entertainment facilities
3. What is the focus of relative poverty?
A. Absolute deprivation
B. Economic status compared to others
C. Lack of basic amenities
D. Food poverty
Answer: B. Economic status compared to others
4. Which measures are used to assess relative poverty?
A. Headcount Ratio
B. Lorenz Curve and Gini Coefficient
C. Poverty Line concept
D. Multidimensional Poverty Index (MPI)
Answer: B. Lorenz Curve and Gini Coefficient
5. What does the Poverty Line concept establish?
A. Maximum consumption standard
B. Average income level
C. Minimum consumption standard
D. Social equality standard
Answer: C. Minimum consumption standard
6. In India, what percentage of the total population falls below the absolute poverty line?
A. Approximately 15.3%
B. Nearly 21.9%
C. About 30.5%
D. Approximately 40.2%
Answer: B. Nearly 21.9%
7. Who pioneered the measurement of poverty in pre-independent India using the ‘Jail Cost of Living’?
A. Jawaharlal Nehru
B. Sardar Patel
C. Dadabhai Naoroji
D. Mahatma Gandhi
Answer: C. Dadabhai Naoroji
8. How did Dadabhai Naoroji calculate the average poverty line using the ‘Jail Cost of Living’?
A. One-half of the adult jail cost of living
B. The full adult jail cost of living
C. Three-fourths of the adult jail cost of living
D. The average child and adult diet cost
Answer: C. Three-fourths of the adult jail cost of living
9. When was the ‘Task Force on Projection of Minimum Needs and Effective Consumption Demand’ formed to identify poverty in post-independent India?
A. 1955
B. 1967
C. 1979
D. 1985
Answer: C. 1979
10. What did the ‘Task Force on Projection of Minimum Needs and Effective Consumption Demand’ use to determine the poverty line?
A. Minimum wage standards
B. Recommended nutritional requirements
C. Industrial production data
D. Urban development indices
Answer: B. Recommended nutritional requirements
11. What does the Monthly Per Capita Consumption Expenditure (MPCE) method use to estimate the poverty line?
A. Employment rates
B. Consumer price indices
C. Producer price indices
D. Population growth rates
Answer: B. Consumer price indices
12. What did the Tendulkar committee determine as the Monthly Per Capita Consumption Expenditure (MPCE) for rural areas in 2011-12?
A. ₹700 per person per month
B. ₹816 per person per month
C. ₹950 per person per month
D. ₹1000 per person per month
Answer: B. ₹816 per person per month
13. What criterion is used to classify individuals as ‘poor’ based on the Monthly Per Capita Consumption Expenditure (MPCE)?
A. Below ₹700 in rural areas and ₹900 in urban areas
B. Below ₹800 in rural areas and ₹1100 in urban areas
C. Below ₹816 in rural areas and ₹1000 in urban areas
D. Below ₹900 in rural areas and ₹1200 in urban areas
Answer: C. Below ₹816 in rural areas and ₹1000 in urban areas
14. Which index was used to measure India’s inequality in 2012, according to the Economic Survey 2015-16?
A. Poverty Index
B. Gini Coefficient
C. Development Index
D. Equality Index
Answer: B. Gini Coefficient
15. What is the primary focus of the Absolute Poverty concept?
A. Economic status comparison
B. Total number of people below the poverty line
C. Social inequality measurement
D. Multidimensional poverty assessment
Answer: B. Total number of people below the poverty line