What is Poverty Line?

Meaning of Poverty Line

The poverty line is the cut off level of per capita consumption expenditure per month which is needed to maintain a minimum acceptable standard of living in a country. In pre-independent India, Dadabhai Naoroji was the first person to discuss the concept of a poverty line. After Independence, several attempts were made to identify a mechanism to measure the number of poor in the country. Accordingly, the ‘Taskforce on projections of minimum needs and effective consumption demand’ was formed in 1979.

Currently, the poverty line in India is based on private consumption expenditure which would be necessary to consume a food basket for the required amount of calories. The Planning Commission has fixed the daily minimum nutritional requirements for survival at 2400 calories for rural areas and 2100 calories for urban areas. People who cannot undertake this minimum amount of calories per day fall below the poverty line. The Planning Commission has fixed the daily minimum nutritional requirements for survival. Accordingly, the new formula states that the poverty line is consumption worth Rs 672.8 per person a month in rural areas and Rs 859.6 per person a month in urban areas.

Extent of Poverty

Data on poverty is estimated on the basis of consumption expenditure data collected by the National Sample Survey Organisation (NSSO). According to NSSO, Uttar Pradesh, Madhya Pradesh, West Bengal, Bihar, Odisha, Andhra Pradesh, Tamil Nadu and Maharashtra accounted for more than 90% of the poor in India in 2004–05. In 2009–10, the poverty ratio was 29.8%.

Rural–Urban Break-up of Poverty

The nature of poverty is the difference between poverty in urban and rural India. Based on the occupation and ownership of assets, poor people can be identified in society. Rural poor are engaged in agricultural activities in small landholdings or as landless labourers involved in non-agricultural work. Urban poor are mostly because of the overflow of the rural poor who have migrated to the urban set-up in search of better jobs, livelihood and labour. They are into casual work or are self-employed in various activities.

International Comparison

According to the World Development Report, 2010, 37% of the population in India lives below the poverty line. In the developed nations such as the USA, UK, Japan and Germany, the percentage of people living below the poverty line is only 1% of the total population in these nations. On the other hand, the poverty
ratios were comparatively lower in China (9.9%) and Sri Lanka (5.6%).

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