Poverty, Poverty Line, Below and Above poverty line (APL, BPL)
In India, Planning Commission estimates the number and proportion of people living below the poverty line at national and State levels, separately for rural and urban areas. It makes poverty estimates based on a large sample survey of household consumption expenditure carried out by the National Sample Survey Organization (NSSO) after an interval of approximately five years. The Commission has been estimating the poverty line and poverty ratio since 1997 on the basis of the methodology spelt out in the report of the Expert Group on 'Estimation of Number and Proportion of Poor' (popularly known as Lakdawala Committee Report).
Poverty is a social as well as a multidimensional phenomenon. According to the World Bank, “poverty is pronounced deprivation in wellbeing.” Amartya Sen in his capability approach perhaps gave the broadest meaning to well-being. According to him well-being comes from a capability to function in society. Poverty arises when people lack key capabilities due to inadequate income or education, or poor health, or insecurity, or low self-confidence, or a sense of powerlessness, or the absence of rights such as freedom of speech.
The Human Development Report (2010) pioneered the Multidimensional Poverty Index (MPI) which is grounded in the capability approach and an innovative effort to complement the income based poverty indices. It includes an array of dimensions from participatory exercises among poor communities and an emerging international consensus. The MPI shows the share of population that is multidimensionally poor adjusted by the intensity of deprivation in terms of living standards, heath and education.
Global Estimates: Based on new internationally comparable data, World Bank has found that “poverty levels across the globe have declined, with 1.4 billion people (one in four) in the developing world living below US$1.25 a day in 2005, down from 1.9 billion (one in two) in 1981. In other words, global poverty rates fell from 52% in 1981 to 26% in 2005.”
Estimates for India: World Bank estimates for India also indicate a continuing decline in poverty. The revised estimates suggest that the percentage of people living below $1.25 a day in 2005 (which based on India’s PPP rate) decreased from 60% in 1981 to 42% in 2005. Even at a dollar a day poverty declined from 42% to 24% over the same period.
In India there are two methods of estimation namely Uniform Recall Period (URP) and Mixed Recall Period (MRP). On the basis of NSS 61st Round (July 2004 to June 2005) consumer expenditure data, the poverty ratio is estimated at 28.3 per cent in rural areas, 25.7 per cent in urban areas, and 27.5 per cent for the country as a whole in 2004-05 using uniform recall period (URP). In URP, consumer expenditure data for all the items are collected for a 30-day recall period.
Whereas based on mixed recall period (MRP) for the same period, the poverty ratios are 21.8 per cent in rural areas, 21.7 per cent in urban areas, and 21.8 per cent for the country as a whole. In MRP, consumer expenditure data for five non-food items, namely clothing, footwear, durable goods, education, and institutional medical expenses, are collected for a 365-day recall period and the consumption data for the remaining items are collected for a 30-day recall period.
The poverty line in India is income based. The poverty line was originally fixed in terms of income/food requirements in 1978. It was stipulated that the calorie standard for a typical individual in rural areas were 2400 calorie and was 2100 calorie in urban areas. Then the cost of the grains (about 650 gms) that fulfill this normative standard was calculated. This cost was the poverty line. In 1978, it was Rs. 61.80 per person per month for rural areas and Rs. 71.30 for urban areas. Since then the Planning Commission calculates the poverty line every year adjusting for inflation. The poverty line in monetary terms (i.e. Rs. Per capital per month) during 2005-06 has been estimated at Rs. 368 in rural area and Rs. 560 in urban area as compared to Rs. 328 in rural area and Rs. 454 in urban area in 2000-01. The state specific poverty lines have also been estimated by the planning commission for the year 2004-05 in monetary terms (Rs. Per capital per month) (available at: http://planningcommission.nic.in/news/prmar07.pdf).
Methodology for estimating BPL: The methodology of estimating poverty and the identification of BPL households have been a matter of debate. Two committees under the chairmanship of Prof. Suresh D. Tendulkar and Dr. N.C. Saxena have submitted their reports on methodology for estimation of poverty and methodology for conducting BPL census in rural areas, respectively. Further, an Expert Group under the chairmanship of Prof. S.R. Hasim has been set up to recommend methodology for identification of BPL families in urban areas.