Poverty in India: Measurement, Trends and Other Issues

Eradication of poverty is an important objective of economic policy. Therefore, measurement of poverty has to be sound as it has significant policy implications. This paper presents the methodology followed by the Expert Group (Rangarajan) and explains some of the issues that were raised after the publication of the Report. Apart from the methodology, some of the issues discussed in the paper are: use of calories, multidimensional poverty, urban poverty, NAS (National Accounts Statistics)-NSS (National Sample Survey) consumption differences, poverty measures in other countries, public expenditure and poverty, NSS and SECC (Socio-Economic Caste Census), headcount and depth of poverty, inequality and poverty and criteria for eligibility under programmes. The methodology adopted by the new group on poverty is based on sound principles. However, as the group has clearly indicated, this measure is not considered as an appropriate basis for determining entitlements under various programmes. But to obtain a general picture of the progress of the country, a suitable measure on poverty is useful. It represents absolute minimum. Obviously, policy should work towards not only to reduce the number of people below that line but also to ensure that people in general enjoy a much higher standard of living. Policy-makers must continue to follow the twofold strategy of letting the economy grow fast and attacking poverty directly through poverty alleviation programmes.