Context:
The release of the 2023-24 Household Consumer Expenditure Survey (HCES) fact sheet has reignited the poverty debate in India. While recent estimates suggest a sharp decline in poverty levels, the methodological challenges and historical context continue to complicate the discourse.
Key Developments in the Poverty Estimates
- 2023-24 Poverty Estimates:
- Rural Poverty: Declined from 7.2% (2022-23) to 4.9%.
- Urban Poverty: Declined from 4.6% (2022-23) to 4.1%.
- National-level poverty dropped significantly from 21.5% in 2011-12 to below 5% in 2023-24 (SBI report).
- Historical Trends:
- The poverty line traditionally reflected the minimum expenditure required to meet basic calorie needs.
- Evolving methodologies (Tendulkar and Rangarajan Committees) and shifts in survey techniques have introduced inconsistencies over time.
Evolution of Poverty Measurement in India
Early Methodology
- Anchored to a calorie-based poverty line proposed by Dandekar and Rath (1960s).
- Adopted by the Planning Commission with periodic revisions using price inflators.
Shift from Calorie Norms (Tendulkar Committee)
- Recommended moving away from calorie-based thresholds to a broader consumption basket.
- Used urban poverty benchmarks for rural areas and introduced the Mixed Reference Period (MRP).
Rangarajan Committee’s Redefined Basket
- Defined the poverty line with specific calorie, fat, and protein requirements.
- Added normative expenses for non-food essentials (clothing, housing, mobility, and education).
- The report was not officially adopted but highlighted higher poverty estimates compared to Tendulkar’s method.
Recent Methodological Innovations
- Modified Mixed Reference Period (MMRP):
- Records consumption across three timeframes: weekly (food), monthly (regular goods), and yearly (large expenditures).
- Inclusion of Imputed Values:
- Expenditures now account for free provisions like laptops, bicycles, school uniforms, and food.
- Improved Data Collection:
- Adoption of three-monthly household visits for better accuracy.
Challenges in Comparing Poverty Estimates
- Data Inconsistencies:
- New methodologies (2022-23 and 2023-24 surveys) are not strictly comparable with the 2011-12 data, leading to underestimated poverty figures.
- Urban-Rural Gap:
- Decline in rural-urban poverty disparity attributed to unchanged urban boundaries since 2011. Inclusion of potential “census towns” could increase rural poverty estimates.
- Impact of Methodological Changes:
- Enhanced expenditure recording through imputed values and multiple visits inflates consumption figures, complicating longitudinal comparisons.
