Context:  There has been no official estimate of poverty in India after 2011-12. However, many private estimates are available.

Poverty estimation in India:

• Poverty can be defined as a condition in which an individual or household lacks the financial resources to afford a basic minimum standard of living.

• Reliable estimation of poverty is the first step towards eradication of poverty as it provides input for the design, implementation and monitoring of anti- poverty programmes.
• Two critical components of the estimation of poverty in India:
  • Information on the consumption expenditures;
  • These expenditures are evaluated with reference to a given poverty line.
• In 2011, 21.9% of Indians were considered to be living below the national poverty line.
• Globally, 8% lived on less than the international poverty line (WB) of US$1.90 per person per day.
• Issues with estimates of poverty in India:
• Vary in a wide range: From as high as 35% of India’s population in 2017-18 (by S. Subramanian) to a low of 1.4% (by Bhalla, Bhasin and Virmani) found for 2019-20.
• No clear conclusion/consensus on whether poverty rose after 2011-12 or fell.
• Why do these differences arise?
• Due to varying consumption expenditure data used.
  • A modified version of data (by Bhalla) from the Consumer Pyramid Household Survey (CME) shows that poverty has declined in India.
  • While the National Statistical Office (NSO) data (by S. Subramanian) that poverty increased in India.
  • The only consumption expenditure survey conducted by NSO in 2017-18 was abandoned.
• Due to different poverty lines used:
  • The consumption aggregates from the PLFS estimate poverty at 17.9% in 2020-21, compared with 21.9% in 2011-12.
  • The latest (Panagariya and More) report a poverty ratio of 32% in 2019-20 and 26% in 2020-21 using the same PLFS consumption data.

Good news for India:

• A consumption expenditure survey is currently underway.
• This will update the national accounts and inflation indices.

Challenges:

• The new methodology adopted: The absence of a comparable survey means it won’t help answer what happened to poverty after 2011-12.
• No public discussion on the new methodology.

Conclusion: 

The discourse on poverty estimation has played an important role in highlighting the living conditions of the poor and the effectiveness of government policy. Thus, the adoption of a scientific methodology that will generate uniform-error-free data is the need of the hour.

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