Explain the measures to define poverty, poverty line and various

approaches.

Introduction
 Poverty is a state or condition in which a person or community lacks the financial
resources and essentials for a minimum standard of living. Poverty means that the
income level from employment is so low that basic human needs can't be met.
 According to World Bank, Poverty is pronounced deprivation in well-being, and
comprises many dimensions. It includes low incomes and the inability to acquire the
basic goods and services necessary for survival with dignity. Poverty also
encompasses low levels of health and education, poor access to clean water and
sanitation, inadequate physical security, lack of voice, and insufficient capacity and
opportunity to better one's life.
 In India, 21.9% of the population lives below the national poverty line in 2011.
 In 2018, almost 8% of the world’s workers and their families lived on less than
US$1.90 per person per day (international poverty line).

Types of Poverty

There are two main classifications of poverty:

 Absolute Poverty: A condition where household income is below a necessary level

to maintain basic living standards (food, shelter, housing). This condition makes it
possible to compare between different countries and also over time.

o It was first introduced in 1990, the “dollar a day” poverty line measured
absolute poverty by the standards of the world's poorest countries. In October
2015, the World Bank reset it to $1.90 a day.
 Relative Poverty: It is defined from the social perspective that is living standard
compared to the economic standards of population living in surroundings. Hence it is a
measure of income inequality.

o Usually, relative poverty is measured as the percentage of the population

with income less than some fixed proportion of median income.

Poverty Estimation in India

 Poverty estimation in India is carried out by NITI Aayog’s task force through the
calculation of poverty line based on the data captured by the National Sample Survey
Office under the Ministry of Statistics and Programme Implementation (MOSPI).
 Poverty line estimation in India is based on the consumption expenditure and not
on the income levels.
 Poverty is measured based on consumer expenditure surveys of the National Sample
Survey Organisation. A poor household is defined as one with an expenditure level
below a specific poverty line.
 The incidence of poverty is measured by the poverty ratio, which is the ratio of the
number of poor to the total population expressed as a percentage. It is also known
as head-count ratio.
 Alagh Committee (1979) determined a poverty line based on a minimum daily
requirement of 2400 and 2100 calories for an adult in Rural and Urban area
respectively.
 Subsequently different committees; Lakdawala Committee (1993), Tendulkar
Committee (2009), Rangarajan committee (2012) did the poverty estimation.
 As per the Rangarajan committee report (2014), the poverty line is estimated as
Monthly Per Capita Expenditure of Rs. 1407 in urban areas and Rs. 972 in rural
areas.

Poverty Line

The old formula for estimating the poverty line is based on the desired calorie requirement.
Food items such as cereals, pulses, vegetables, milk, oil, sugar etc. together provide these
needed calories. The calorie needs vary depending on age, sex and the type of work that a
person does. The accepted average calorie requirement in India is 2400 calories per person
per day in rural areas and 2100 calories per person per day in urban areas. Since people living
in rural areas engage themselves in more physical work, calorie requirements in rural areas
are considered to be higher than urban areas. On the basis of these calculations, for the year
2000, the poverty line for a person was fixed at Rs 328 per month for the rural areas and Rs
454 for the urban areas. In this way in the year 2000, a family of five members living in rural
areas and earning less than about Rs 1,640 per month will be below the poverty line.

Various Approaches of Poverty.

Basic Needs approach

Basic needs are defined as minimum quantities of such things as food, clothing, shelter, water and
sanitation, access to basic education and health services and security to prevent ill health,
undernourishment, or unemployment. It is based on a broader understanding of well-being and
includes access to different goods and services and related achievements, such as adequate nutrition,
life expectancy, mortality, etc. Despite a common poverty line used across countries to compare
poverty rates, it was always recognised that what is required to satisfy basic needs will vary greatly
across different countries. Countries, therefore, often use several national poverty lines based on the
cost of basic needs (CBN) approach – including a lower poverty line which monetises the minimum
calories required to maintain life and an upper poverty line which also includes a basic basket of
goods and services deemed necessary for a healthy life, including basic costs for clothing, shelter and
accessing education and health.
Capabilities approach

Capabilities approach Income and basic needs approaches look at ‘inputs’ rather than ‘outcomes’.
Knowing the level of a household’s income does not tell us anything about the well-being of this
household. The capabilities approach, based on work by Sen and Nussbaum, describes poverty as a
“denial of choices and opportunities for living a tolerable life”. It comprises three core elements:
functioning, capability and freedom. Functioning refers to the various things a person achieves to do
or be, such as being well-nourished and having a decent shelter. It also includes more sophisticated
things such as participation in community life and self-respect. It differs from having commodities
(i.e. having a bicycle), but focuses on abilities to make use of commodities (i.e. being able to ride a
bicycle to go to the market).

Capability refers to the set of valuable functioning a person is able to effectively access. Freedom,
finally, refers to the ability of a person to choose and prioritise different combinations of functioning.
The capabilities approach provides a framework for analysing poverty, which prioritises capabilities
(ends) over resources (means) and adopts a broad focus on the constraints that may restrict human
lives. It focuses on deprivation in capabilities, which is to a large degree the result of lack of
opportunities, i.e. society’s actions denying people with access to the means to develop or maintain
essential human capabilities. And it focuses on the positive – the kind of life we want people be able
to achieve rather than the negative – the lack of material resources that prevents people from
achieving it (Lister, 2004).

One problem related to the capabilities approach is the lack of a fixed or universally defined set of
capabilities. Not only are capabilities difficult to define, the capabilities approach is also hard to
operationalise, because it is difficult to compare capabilities across different people and because there
is no agreement how to weigh different capabilities. Thirdly, the informational requirements for
assessing capabilities can be extremely high (Clark, 2005).

Multidimensional Poverty Index (MPI)

The Oxford Poverty and Human Development Initiative (OPHI) have developed an international
measure of poverty – the Multidimensional Poverty Index or MPI for the United Nations
Development Programme’s Human Development Report. The index goes beyond the traditional focus
on income to reflect the multiple deprivations that a poor person faces with respect to education,
health and living standard. It draws heavily on the capabilities framework as a: “[…] process of
enlarging people’s choices. The most critical of these wide-ranging choices are to live a long and
healthy life, to be educated and to have access to resources needed for a decent standard of living.
Additional choices include political freedom, guaranteed human rights and personal self-respect.”

MPI is in no sense a comprehensive measure of human development – it lacks important dimensions

such as rights and political voice – but it is a simple tool that is able to popularize the concept of
human development as an improved understanding of well-being and that it is an alternative to GDP
per capita as a way to measure levels of development for comparison across countries and time.

Participatory approach

The participatory approach defining poverty is not a specific way of conceptualising poverty, but a
means of determining who should do the conceptualisation. It advocates that poverty and deprivation
should not be defined by outsiders – as the above described approaches all do – but by people
themselves through a participatory Poverty Assessment (PPA) process. It was strongly advocated by
Chambers, who criticised current approaches to defining poverty as universal, reductionist,
standardized and stable, whereas the realities of poor people are local, complex, diverse and dynamic.
When poor people themselves are asked to describe dimensions of poverty, many aspects are
mentioned that define ill-being: social inferiority, isolation, physical weakness, vulnerability, seasonal
deprivation, powerlessness or humiliation.