Poor definitions, poorer people

  • Hindustan Times
  • Updated: Jul 07, 2014 23:01 IST

Just how many people has the government lifted out of poverty? The answer to that question is critical, but clouded by a controversy over how the all-important ‘poverty line’ has been fixed. According to a new study by a panel headed by the former chairman of the prime minister’s economic advisory council, there were 363 million people, or 29.5% of India’s 1.2 billion people, who lived in poverty in 2011-12. The Rangarajan panel considers people living on less than `32 a day in rural areas and `47 a day in urban areas as poor. In contrast, the official estimates, using a different methodology suggested by a panel headed by the late economist Suresh Tendulkar, fixed the poverty line at an income threshold of `27.2 a day in rural areas and `33.3 in cities.

What does it mean to be poor across the world? It means different things in different countries, depending on the definition of the poverty line. In most of Europe, a family with a net income of less than 60% of the ‘median net disposable income’ — a broad measure of the national average income net of taxes income — is counted as poor. This would imply that a family in Britain would be poor if its current net income is less than £250 (about `22,500) a week or about `11 lakh a year. A poverty line ‘relative’ to the national average also gives an idea about the state of inequality. A sharp jump in the income of the richest will set the poverty line higher by pulling up the national average income. In the United States, the poverty line represents the basic cost of food for a family multiplied by three. The threshold level is adjusted for inflation every year. A family is counted as poor if its pre-tax income is below this threshold. In 2011, the poverty threshold for a family of four stood at $22,811 (about `11 lakh then). There were 46 million such poor families, accounting for 15% of the US population.

Economists set a poverty line to fix a threshold income to get a headcount of poor people. Households earning below the threshold are considered poor. The question is: How does one define the poverty line in India, in which old yardsticks may not hold good, either in terms of the food that money can buy, or in terms of defining who the poor are. Do these statistics accurately measure what poverty is, and what is the next step in poverty reduction for middle-income countries like India? These conceptual questions aside, one aspect appears certain: The definition of poverty line needs to be kept constant. It should be adjusted only for inflation.

From Around the Web
Sponsored by Revcontent

also read

Show comments

Steps to disable Ad Blocker on your browser


In order to serve content on our website, we rely on advertising revenue which helps us to ensure that we continue to serve high quality unbiased journalism. From our end, we will aim to show clean and unobtrusive ads to provide you with a great browsing experience.

Request to please follow the steps below and once done, please refresh your page.


For Chrome and Ad BlockPlus users

1.Press the ‘ABP’ icon in your toolbar at top right of this page

2. Click on ‘Enabled on this site’; this should now change to ‘Disabled on this site’


chrome



For Chrome and Ad Block users

1.Press the ‘AdBlock’ icon in your toolbar

2.Select the option ‘Don’t run on pages on this domain’ and then click ‘exclude’ on the pop up


chrome

Steps to disable Ad Blocker on your browser


In order to serve content on our website, we rely on advertising revenue which helps us to ensure that we continue to serve high quality unbiased journalism. From our end, we will aim to show clean and unobtrusive ads to provide you with a great browsing experience.

Request to please follow the steps below and once done, please refresh your page.


For Mozilla and AdBlock Plus (ABP) users

1.Press the ‘ABP’ icon in your toolbar

2.Select the option ‘Disable on hindustantimes.com’


chrome

Steps to disable Ad Blocker on your browser


In order to serve content on our website, we rely on advertising revenue which helps us to ensure that we continue to serve high quality unbiased journalism. From our end, we will aim to show clean and unobtrusive ads to provide you with a great browsing experience.

Request to please follow the steps below and once done, please refresh your page.


For Internet Explorer and AdBlock Plus users

1.Press the ‘AdBlock Plus’ icon in your status bar at the bottom of the screen

2.Select the option ‘Disable on hindustantimes.com’


chrome

Steps to disable Ad Blocker on your browser


In order to serve content on our website, we rely on advertising revenue which helps us to ensure that we continue to serve high quality unbiased journalism. From our end, we will aim to show clean and unobtrusive ads to provide you with a great browsing experience.

Request to please follow the steps below and once done, please refresh your page.


For Safari and AdBlock users

1.Press the ‘AdBlock’ icon in your toolbar

2.Select the option ‘Don't run pages on this domain’ and then click 'exclude'


chrome