Poverty Ratio of India declined to 21.9 percent in 2011-12: PCI Poverty Estimates Report

Poverty Ratio in India declined to 21.9 percent in 2011-12 from 37.2 percent measured in 2004-05 on the basis of the increase in per capita consumption. The Planning Commission of India on 23 July 2013 released its report on the Poverty Estimates for 2011-12. The report was based on the Large Sample Surveys on Household Consumer Expenditure conducted by the National Sample Survey Office (NSSO) of the Ministry of Statistics and Programme Implementation.

The National Poverty Line estimated for rural areas during 2011-12 was 816 rupees per capita per month, whereas, for urban areas it was recorded at 1000 rupees per capita per month. Thus, for a family of five, the all India poverty line in terms of consumption expenditure would amount to about 4080 rupees per month in rural areas and 5000 rupees per month in urban areas. These poverty lines would vary from State to State because of inter-state price differentials.

Poverty Estimates 2011-12
1.    The all India poverty ratio is obtained as state-population weighted average poverty ratio, and the all India poverty line is the per capita per month expenditure that corresponds to the all India poverty ratio.
2.    The NSSO tabulates expenditure of about 1.20 lakh households. Since these households have different number of members, the NSSO for purpose of comparison divided the household expenditure by the number of members to arrive at per capita consumption expenditure per month. This is called Monthly Per Capita Consumption Expenditure (MPCE) and is computed on the basis of three different concepts: 
a)    Uniform Reference Period (URP)
b)    Mixed Reference Period (MRP)
c)    Modified Mixed Reference Period (MMRP). 
3.    The national level poverty ratio based on comparable methodology (Tendulkar Method) for 1993-94, 2004-05 and 2011-12 estimated from Large Sample Survey of Household Consumer Expenditure data of 50th, 61st and 68th round respectively are given in the image.
4.    The percentage of persons below the Poverty Line in 2011-12 has been estimated as 25.7 percent in rural areas, 13.7 percent in urban areas and 21.9 percent for the country as a whole. The respective ratios for the rural and urban areas were 41.8 percent and 25.7 percent and 37.2 percent for the country as a whole in 2004-05. It was 50.1 percent in rural areas, 31.8 percent in urban areas and 45.3 percent for the country as a whole in 1993-94. In 2011-12, India had 270 million persons below the Tendulkar Poverty Line as compared to 407 million in 2004-05, that is a reduction of 137 million persons over the seven year period.
5.    The decline in poverty flows from the increase in real per capita consumption. The per annum increase in real MPCE for each of the ten deciles. The clear inferences are
a)    The real MPCE increased by much more in the second period (2004-05 to 2011-12) as compared to the first (1993-94 to 2004-05)
b)    That the increase was fairly well distributed across all deciles of the population
c)    The distribution was particularly equitable in rural areas

The ratio is based on the methodology that was suggested by the Suresh Tendulkar Committee that suggests the factors in money spent on health and education besides calorie intake to fix a poverty line. As per Tendulkar Methodology, the poverty line has been expressed in terms of MPCE based on Mixed Reference Period. 

Since several representations were made suggesting that the Tendulkar Poverty Line was too low, the Planning Commission, in June 2012, constituted an Expert Group under the Chairmanship of Dr. C. Rangarajan to once again review the methodology for the measurement of poverty. The report on the recommendation on poverty line made by Tendulkar Committee from the Rangarajan committee is likely to be submitted by mid 2014.