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Comprehensive Answer on Poverty

Definition of Terms
a) Poverty Line:
The poverty line is the minimum income level necessary to meet basic human needs like food, clothing, and shelter. In India, it is defined in terms of per capita consumption expenditure, updated periodically to reflect changes in price levels and living standards.

b) Poverty:
Poverty refers to the state where individuals or groups lack the financial resources and access to essential services required for a basic standard of living. It encompasses deprivation of food, healthcare, education, and employment opportunities.

c) Head Count Ratio (HCR):
The Head Count Ratio measures the proportion of the population living below the poverty line. It is calculated as the number of poor people divided by the total population, expressed as a percentage.

d) Calorie Deficit/Calorie Gap:
The calorie deficit, or calorie gap, refers to the difference between the average daily calorie intake of an individual and the minimum required calorie intake for a healthy life. In India, the calorie norm is 2,400 calories for rural areas and 2,100 calories for urban areas.

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Definition and Measurement of Poverty in India

Definition:
Poverty in India is defined as the inability to afford a minimum standard of living. It includes economic deprivation, inadequate access to healthcare, education, and basic infrastructure, reflecting a multidimensional concept of poverty.

1. Headcount Index (HCI):

The Headcount Index tells us what percentage of people in a population are poor. It simply counts how many people earn less than the poverty line.

Formula:

$$HCI = \frac{\text{Number of poor people}}{\text{Total population}}$$

Example:

Imagine a village has 100 people. The poverty line is set at ₹1,000 per month. If 30 people earn less than ₹1,000, then:

$$HCI = \frac{30}{100} = 0.3 \text{ or } 30\%$$

This means 30% of the village’s population is poor.

2. Poverty Gap Index (PGI):

The Poverty Gap Index measures how far poor people are from the poverty line on average. It shows how much money would be needed to bring all poor people up to the poverty line.

Formula:

$$PGI = \frac{1}{\text{Total population}} \sum \left( \frac{\text{Poverty line} - \text{Income of each poor person}}{\text{Poverty line}} \right)$$

Example:

Let’s take the same village. The poverty line is ₹1,000. Three poor people earn ₹400, ₹600, and ₹800, respectively. The gaps are:

• For ₹400: $\text{Gap} = 1,000 - 400 = 600$
• For ₹600: $\text{Gap} = 1,000 - 600 = 400$
• For ₹800: $\text{Gap} = 1,000 - 800 = 200$

Average gap:

$$PGI = \frac{1}{100} \left( \frac{600}{1,000} + \frac{400}{1,000} + \frac{200}{1,000} \right)$$ $$PGI = \frac{1}{100} (0.6 + 0.4 + 0.2) = 0.012$$

This shows the depth of poverty is 1.2%.

Key Differences:

• HCI: Measures how many people are poor (e.g., 30% of the population).
• PGI: Measures how poor they are on average (e.g., 1.2% shortfall).

Why This is Important:

• HCI helps understand how widespread poverty is.
• PGI shows how severe poverty is and helps plan how much money is needed to reduce it.

These tools help governments design better poverty-reduction programs like PM Garib Kalyan Yojana or MNREGA to improve people’s lives.

Methodology of Poverty Estimation in India

Poverty estimation in India involves several steps, and it has evolved over time. The process aims to assess the proportion of the population that lives below the poverty line, i.e., those unable to meet their basic needs. Here’s an overview of the methodology:

Step 1: Defining Minimum Basic Requirements

The first step in poverty estimation is to define what constitutes the minimum basic requirements needed for a person to live a healthy life. This is called the poverty line. It includes factors such as:

• Food: A minimum amount of calories required daily.
• Clothing and shelter: Basic living conditions like a house and clothing.
• Basic services: Access to healthcare, education, and sanitation.

Several important committees have helped define these requirements:

1. The Planning Commission's Expert Group (1979):

   • Headed by Dr. D.T. Lakdawala, this committee set up the first methodology to define poverty lines in India, considering both food consumption and non-food items.

2. The Tendulkar Committee (2009):

   • Chaired by Suresh Tendulkar, this committee revised the poverty line using updated methods, considering urban and rural consumption patterns. It focused on consumption expenditure as the basis for determining poverty.

3. The Rangarajan Committee (2014):

   • This committee further refined the poverty line by updating the method of calculating poverty using a more comprehensive measure of consumption, including both food and non-food items. It also adjusted the poverty line for inflation and regional differences.

Step 2: Data Collection

The next step is to gather data about people's income and consumption patterns. This data is crucial for understanding how much people spend on food, shelter, and other essential needs. It is usually collected through:

• National Sample Survey (NSS): Conducted regularly by the Ministry of Statistics and Programme Implementation, it provides detailed information on the consumption patterns of households.

• Income and Expenditure Surveys: These surveys focus on how much money people earn and spend, helping to estimate poverty levels.

Step 3: Estimation of Poverty Line

Once the minimum requirements are defined and data is collected, the poverty line is established by comparing household consumption with the defined threshold. The poverty line helps to determine:

• Percentage of Population Below the Poverty Line (BPL): It shows what proportion of people are unable to meet the minimum basic needs.

• Regional Disparities: The poverty line may be adjusted for rural and urban areas since living costs differ across regions.

This process helps to assess how many people in the country are living in poverty and requires government intervention.

In summary, poverty estimation in India is a multi-step process that begins with defining the basic needs of people, followed by data collection and calculation of the poverty line, based on which the percentage of people living in poverty is estimated.

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Poverty Debate in India

Divergent Estimates:
India has witnessed debates regarding the definition and estimation of poverty.

1. Official Estimates:
   The Tendulkar Committee (2009) estimated poverty based on revised consumption baskets. The Rangarajan Committee (2014) proposed higher thresholds to include a broader section of the population under poverty.

2. Criticism:
   Critics argue that income-based definitions fail to capture multidimensional aspects like health, education, and social exclusion. The poverty line is often seen as too low, underestimating the actual number of poor.

3. Shift to MPI:
   The introduction of MPI highlights the importance of addressing structural deficiencies, but its comprehensive approach requires robust data and implementation mechanisms.

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Reduction of Poverty in India

Progress in Poverty Reduction:
India has made significant strides in reducing poverty. According to the World Bank, the poverty rate declined from 37% in 2004-05 to approximately 10% in 2019. The Multidimensional Poverty Index (MPI) report (2023) indicated that India lifted 415 million people out of poverty between 2005-06 and 2019-21.

Government Initiatives to Reduce Poverty:

1. Economic Reforms:
   Post-1991 liberalization reforms spurred economic growth, creating jobs and lifting many out of poverty.

2. Social Welfare Schemes:

   • MGNREGA: Provides rural employment and a minimum income guarantee.
   • National Food Security Act (NFSA): Ensures subsidized food for vulnerable populations.
   • PM-KISAN: Offers income support to farmers.

3. Skill Development and Education:

   • Skill India Mission: Improves employability through vocational training.
   • Samagra Shiksha Abhiyan: Focuses on universal access to education.

4. Financial Inclusion:

   • Pradhan Mantri Jan Dhan Yojana (PMJDY): Encourages savings and access to banking facilities.
   • Mudra Yojana: Supports micro-entrepreneurs with collateral-free loans.

5. Health and Nutrition:

   • Ayushman Bharat: Provides health insurance to low-income families.
   • POSHAN Abhiyaan: Targets malnutrition among children and women.

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Conclusion

India's efforts to reduce poverty have yielded remarkable results, but challenges remain, including addressing regional disparities, urban poverty, and income inequality. Moving forward, India must adopt a holistic approach that combines economic growth with equitable distribution, robust social welfare, and sustainable development strategies to eradicate poverty entirely.

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