Poverty

B.P. Vani
ISEC, Bangalore
 Income Poverty
• Poverty is multidimensional
• Deprivation in income, illiteracy, malnutrition,
mortality, morbidity, access to water and
sanitation, vulnerability to economic shocks etc..
• Since measurement in many cases are
difficult and Income deprivation in most
cases, not always, linked with other forms of
deprivation here the concentration is only on
Income Poverty.
 Need for Poverty Estimate
• Poverty estimates are important ingredient to
design, monitor and implement appropriate
anti-poverty policies.
- Poverty by regions, socio-economic groups
etc..
- Determinants of poverty

• Precise estimates of poverty neither easy nor

universally acceptable. Yet, can act as a
broad and reasonably policy guide.
 Early works on Poverty
• An early empirical work was by Dadabhai
Naoroji in 1901.
• Estimated an income level “necessary for the
bare wants of a human being, to keep him in
ordinary good health and decency”.
Estimated cost of food, clothing, hut, oil for
lamp, barber and domestic utensils to arrive
at ‘subsistence per head’.
• In the absence of income distribution data,
Naoroji compared computed subsistence
level with per capita production to draw
attention to mass poverty.
 Measurement of Poverty(Main
Ingredients)
• Income Distribution-National sample
Survey

• Threshold level- Poverty line (relative PL

or absolute PL)

• A good measure
History of Poverty line: Working
Group 1962
• Rs. 20/- percapita per month in 1960-61
prices by Perspective Planning Division.
- Magic number
- Doesnot distinguish between Rural and
Urban
- Rs. 18/-per capita per month for Urban
and Rs. 15/- per capita per month for
Rural areas
PL based on Calorie Norm: Y K
Alagh Committee
• Planning Commission(Y K Alagh, 1979)-
Rs. 49.09 per capita per month for Rural
based on 2400 Kcal and Rs. 56.65 for
Urban based on 2100 Kcal in 1973-74.

• Above poverty lines did not include

expenditure on Education and Health as
they are termed as State responsibilities.
 Lakdawala Committee
• Updated Poverty line of Y K Alagh
committee using CPIAL for Rural and
CPIIW and CPINME for Urban Areas and
disaggregating the national poverty line
into state-specific poverty lines
 Problem with the existing PL
• Consumption basket that was observed in
1973-74 is tied down over 3 decades, &
has become outdated.
• Crude price index understated the actual
price rise and understated rural poverty
• Proper representation for education and
health was unavailable
Tendulkars committee(2004-05)
• Adopted the national urban poverty line (the latest available for the
year 2004-05) derived by the Planning Commission using the Expert
Group (Lakdawala) methodology and equated this for the entire
country.

• Move away from calorie anchor (but test for adequacy)

• Uniform Poverty line basket based on hh consumption data for both

Rural & Urban(corrects for outdated PLB)

• Price adjustment from same dataset

• Provision for exp on health and education

 Poverty estimates
Rural Urban

Planning Commission 356.30 (21.8%) 538.60 (21.7%)

(using 1973-74 PL) for
2004-05
Tendulkars methodology 446.68 (41.8%) 578.8 (25.7%)
for 2004-05

Tendulkars methodology 672.80 (33.8%) 859.60 (20.9%)

for 2009-10
 Rangarajans Committee-2012
• Reverts back to calorie norm. 2155 Kcal per person per day in Rural areas
coupled with 48 gms of protein and 28 gms of fat. In urban areas 2090Kcal,
with 50 gms of protein and 26 gms of fat per person per day.
• Food basket was located in 6th fractile(25-30%) in Rural areas and 4th
fractile(15-20%) in urban areas.
• The non-food component is divided into four essential non-food items
i.e.,education, clothing, shelter(rent) and conveyance and other non-food
items. Since it was difficult to set a minimum norm for non food items in
general, observed expenditures on four essential items by hhs located in the
median fractile(45-50 percentile) was treated as normative minimum. With
respect to other non-food items – the observed expenditure of that fractile
class which meets the nutrient norms (25-30 percentile in Rural and 15 th-20
percentile in urban areas) is taken to define poverty line basket.
• Thus 972 in rural areas and Rs. 1407 in urban areas constitute the new
poverty line. The corresponding PLs as per tendulkars methodology were 816
and 1000.
  Poverty Ratio No of poor(in millions)
  Rural Urban Total Rural Urban Total
  Rangarajans estimates      
2009-10 39.6 35.1 38.2 325.9 128.7 454.6
2011-12 30.9 26.4 29.5 260.5 102.5 363

Reduction in
percentage points 8.7 8.7 8.7 65.4 26.2 91.6
  Tendulkars estimate      
2009-10 33.8 20.9 29.8 278.2 76.5 354.7
2011-12 25.7 13.7 21.9 216.7 53.1 269.8

Reduction in
percentage points 8.1 7.2 7.9 61.5 23.4 84.9
 Example
Monthly income of 10 individuals
Sl. No village 1 village 2 village 3
1 250 200 150
2 375 325 275
3 500 450 450
4 625 575 625
5 750 700 750
6 875 875 875
7 1000 1000 1000
8 1125 1125 1125
9 1250 1250 1250
10 1375 1375 1375

Focus Axiom
Monotonicity Axiom
Transfer Axiom
Decomposability Axiom
 Measure
 

1  z  yi 
m
FGT   
n i 1  z 

m
HCR  ,  0
n

 n  ( z z y ),  1
m
PGI  1 i

i 1

 n   z z y  ,  2
m 2

SPG  1 i

i 1

Z - poverty line, m – number of poor, n – total population &

Yi – income/consumption of the individual
 Example continued
HCR PGI SPG

Village1 0.5 0.1875 0.0947

Village2 0.5 0.2188 0.1201

Village3 0.5 0.2188 0.1334

 Percentage of Population Below Poverty Line by States: 2011-12

Sl. No States Rural Urban Total

1 Andhra Pradesh 10.96 5.81 9.2
2 Assam 33.89 20.49 31.98
3 Bihar 34.06 31.23 33.74
4 Chhattisgarh 44.61 24.75 39.93
5 Gujarat 21.54 10.14 16.63
6 Haryana 11.64 10.28 11.16
7 Himachal 8.48 4.33 8.06
8 Jammu & Kashmir 11.54 7.2 10.35
9 Jharkhand 40.84 24.83 36.96
10 Karnataka 24.53 15.25 20.91
11 Kerala 9.14 4.97 7.05
12 Madhya Pradesh 35.74 21 31.65
13 Maharashtra 24.22 9.12 17.35
14 Odisha 35.69 17.29 32.59
15 Punjab 7.66 9.24 8.26
16 Rajasthan 16.05 10.69 14.71
17 Tamil Nadu 15.83 6.54 11.28
18 Uttarakhand 11.62 10.48 11.26
19 Uttar Pradesh 30.4 26.06 29.43
20 West Bengal 22.52 14.66 19.98
21 All India 25.7 13.7 21.92

Source: Press Note on Poverty Estimates, 2011-12, Government of India, Planning

17
Commission, July 2013.
 
 Depth and Severity of Poverty at State Level(2011-12)
  Depth of poverty Severity of poverty
  Rural Urban Total Rank Rural Urban Total Rank
Andhra Pradesh 1.60 0.87 1.36 4 0.38 0.22 0.33 4
Assam 5.79 3.83 5.59 14 1.44 1.00 1.40 14
Bihar 6.24 6.80 6.30 16 1.64 2.14 1.69 17
Chattisgarh 8.99 5.20 8.18 20 2.72 1.92 2.54 20
Gujarat 3.27 1.64 2.61 9 0.80 0.40 0.64 9
Haryana 2.08 1.76 1.98 8 0.52 0.45 0.50 8
Himachal Pradesh 1.03 0.76 1.00 1 0.18 0.21 0.19 1
Jammu & Kashmir 1.91 0.95 1.69 6 0.49 0.20 0.42 6
Jharkhand 6.88 4.85 6.46 18 1.73 1.40 1.66 16
Karnataka 3.26 3.09 3.20 11 0.71 0.88 0.77 10
Kerala 1.59 0.83 1.39 5 0.46 0.25 0.41 5
Madhya Pradesh 8.33 3.86 7.19 19 2.80 1.01 2.35 19
Maharastra 4.65 1.55 3.23 12 1.57 0.41 1.04 13
Orissa 7.01 3.15 6.43 17 2.03 0.85 1.85 18
Punjab 1.18 1.56 1.32 2 0.28 0.40 0.32 3
Rajasthan 3.21 1.56 2.82 10 1.01 0.38 0.86 11
Tamil Nadu 2.47 1.10 1.86 7 0.58 0.34 0.48 7
Uttar Pradesh 5.68 5.29 5.59 15 1.61 1.51 1.59 15
Uttaranchal 1.25 1.55 1.32 3 0.20 0.38 0.25 2
West Bengal 3.70 2.71 3.44 13 0.94 0.71 0.88 12
Total 4.62 2.54 4.03   1.30 0.71 1.13  

18
 Percentage Distribution of Poor by Social Group at State Level, 2011–
12
State/UT % Share of Poor to Total Poor
ST SC OBC Others All State/UT ST SC OBC Others All

Andhra
Pradesh 16.1 25.4 43.2 15.3 100 Maharashtra 28.2 17.5 28.6 25.7 100
Arunachal
Pradesh 65.5 0.5 13.8 20.2 100 Manipur 39.5 4.6 46.1 9.8 100

Assam 15.4 8.5 28.0 48.0 100 Meghalaya 96.0 0.0 0.1 3.9 100
Bihar 2.7 26.8 58.6 11.9 100 Mizoram 87.3 0.0 10.2 2.4 100
Chhattisgarh 42.2 17.7 38.2 1.8 100 Nagaland 94.1 1.5 1.9 2.4 100
Delhi 0.0* 39.6 17.6 42.8 100 Odisha 40.5 26.0 25.9 7.6 100

Goa 0.0* 25.4* 31.7 42.9 100 Puducherry 2.3 25.2 65.4 7.1 100
Gujarat 38.3 7.2 43.8 10.8 100 Punjab 0.3 72.8 13.6 13.3 100
Haryana 0.5* 49.4 33.4 16.7 100 Rajasthan 41.4 24.5 29.6 4.5 100
Himachal
Pradesh 8.3 45.5 6.6 39.7 100 Sikkim 36.4 10.6* 49.3 3.7 100
Jammu and
Kashmir 13.7* 20.5 8.3 57.6 100 Tamil Nadu 2.7 33.8 63.2 0.4 100
Jharkhand 32.9 16.2 41.7 9.3 100 Tripura 62.1 15.0 5.6 17.3 100
8.7 26.2 47.2 18.0
Karnataka (5.8_) (16.7) (53.1) (24.4) 100 Uttar Pradesh 1.0 33.0 57.2 8.8 100
Kerala 6.6* 18.5 58.3 16.6 100 Uttarakhand 4.7 28.2 26.3 40.8 100
Madhya
Pradesh 38.3 21.4 31.0 9.3 100 West Bengal 12.1 28.7 8.2 51.1 100
17.4 25.4 41.4 15.8
All India (8.9) (19.0) (44.1) (28.0) 100
19
 Trends in Incidence of Poverty: Karnataka and All India

Karnataka
Rural Urban Total
  No. of Poor No. of Poor No. of Poor
Year % of poor (million) % of poor (million) % of poor (million)
1993-94 56.6 16.7 34.2 4.1 49.5 20.8
2004-05 37.5 13.5 25.9 5.2 33.4 18.7
2009-10 26.1 9.7 19.6 4.5 23.6 14.2
2011-12 24.5 9.3 15.3 3.7 20.9 13.0
All India
1993-94 50.1 327.7 31.8 74.9 45.3 403.0
2004-05 41.8 325.8 25.7 81.4 37.2 407.2
2009-10 33.8 278.2 20.9 76.5 29.8 354.7
2011-12 25.7 216.7 13.7 53.1 21.9 269.8

Note: Estimates are based on mixed reference period(MRP) of distribution of monthly percapita
consumption expenditure of the National Sample Survey. 20
 
 Types of Ration Card Possessed by Different Groups of Households
 
Type of Ration Card Possessed
  No Card Anthyodaya BPL Other(APL) Total
Rural
Above Poverty Line 10.2 4.7 44.6 15.9 75.5
Below Poverty Line 2.8 1.9 17.4 2.5 24.5
Total - Rural Karnataka 13.0 6.6 62.0 18.5 100.0
Urban
Above Poverty Line 34.7 1.1 24.1 24.8 84.7
Below Poverty Line 1.6 1.7 10.3 1.7 15.3
Total - Urban Karnataka 36.4 2.7 34.3 26.6 100.0
Total (Rural+Urban)
Above Poverty Line 19.1 3.4 37.2 19.2 78.8
Below Poverty Line 2.4 1.8 14.8 2.2 21.2
Total Karnataka State 21.4 5.2 52.0 21.4 100.0

21
 Identifying Poor
• Identification of poor constitutes a critical component
of poverty alleviation since these are the families who
are targeted for central and state assistance for the
income and employment generating anti poverty
programme and also social welfare programme.
• State identifies beneficiaries based on guidance from
Ministry of Rural Development
• Guidance keep changing from one BPL census to
another
• The different BPL census are 1992 census, 1997
census, 2002 census and 2011 census i.e., Saxena
committee.
 BPL Census(1992)
• All households below Rs, 11,000 hh
income per annum are termed poor.

• Problems w.r.t large family and self

declaration

• No of poor were double that of poverty

estimates
 1997 BPL census
• Exclusion criteria
• All households with operating land > 2 hectares,
having pucca house, any member with income>20,000
per annum, having consumer durables like tv, fan
refrigerator, two or three wheelers or hhs posessing
tractor, puller, tillers etc.. Were excluded
• Non excluded hhs consumption from home grown and
market was converted into per capita and compared
with Planning commissions PL and according declared
as poor.
• Exclusion criteria of posessing fan and 2 hectares of
land was criticised
 Fourth BPL census(SECC -2011)
based on Saxena Committee
• To solve these problems committee was
constituted with Prof. Saxena as the
chairperson.
• Committee suggested three criteria
– Automatic Exclusion
– Automatic Inclusion
– Grade the rest of the hhs and identify the
poorest among them
 Automatic Exclusion
• Families who own double the land of the
district average(partially or wholly irrigated)
• Families who own three or four wheeled
motor vehicles
• Families who have atleast one mechanised
farm equipment
• Family with any person salary > 10,000 per
month
• Income tax payer
 Automatic Inclusion
• Designated ‘Primitive Tribal Groups’
• Designated most discriminated SC group i.e.,
Maha Dalits
• Single women headed households
• Households with disabled person as bread winner
• Household headed by a minor
• Destitute households which primarily dependent
on alms
• Homeless households
• Any member of the household is a bonded laborer
 Grading rest of the households
Scoring on the scale of 10
• SC/ST -3; Most backward castes -2 ;
muslims/OBC-1
• Landless ag worker-4; ag laborer-3; casual
worker – 2 and self employed-2
• No adult has studied upto class 5 -1
• Any member has TB, leprosy, disabled,
mental illness or HIV/AIDS-1
• Household headed by an old age person i.e.,
>60 yrs-1
Identification of Urban Poor(Hasim
committee)
• Based on Automatic exclusion, Automatic
inclusion and Scoring Index
• Automatic Exclusion:
1. If the number of rooms is 4 and above
2. Household possess either 4 wheeler or
AC set or computer or laptop with internet
3. household possess any three of the 4
assets i.e., Refrigerator; landline ; washing
machine ; 2 wheeler motor vehicle.
 Urban poor
• Automatically inclusion:
1. Residential Vulnerability: Houseless or
kachaha houses
2. Occupational Vulnerability: no income
from any source; engaged in vulnerable
occupation; all earning members are daily
wagers or irregular wagers
3. Social Vulnerability: child headed hh;
no able bodied person or earning member is
disabled or chronically ill
 Urban poor
• Scoring index is based on
Residential vulnerability(max of 5
marks); social vulnerability (max of 5
marks) and occupational vulnerability(max
of 2 marks).
Multi Dimensional Poverty Index (MPI)
 Dimensions, Indicators, Deprivation threshold and
Weights used in construction of MPI:
Dimension Indicator Deprived if Weight
No household member has 1/6
Years of Schooling completed at least five years of
Education schooling
Any school age child is not 1/6
Child School Attendance
attending school
Any house hold member is 1/6
Nutrition malnourished for whom there is
information
Health
Any child has died in the household 1/6
Child Mortality within the five years prior to the
survey
Household is not having access to 1/18
Electricity
electricity
Household is not having access to 1/18
Safe Drinking Water
safe drinking water
Household is not having access to 1/18
Improved Sanitation
improved sanitation
Standard of living Household having a home with 1/18
Housing Condition
dirt, sand or dung floor
Household is using dirty cooking 1/18
Cooking Fuel
fuel
Household is not having at least 1/18
Assets one asset related to information,
mobility or livelihood
Deprivation in each indicators
 Multidimensional Poverty Index(2012-13):

          Contribution of deprivation in

Head Count Intensity of Living

  Ratio (H) in% Poverty(A) MPI in% Rank (MPI) Education Health Condition
Bagalkot 29.35 0.4288 12.58 24 29.69 36.94 33.37
Bangalore 5.77 0.4164 2.40 1 35.14 43.70 21.15
Bangalore Rural 14.91 0.4128 6.15 12 27.31 37.63 35.06
Belgaum 20.81 0.4235 8.81 19 31.40 37.90 30.70
Bellary 32.42 0.4608 14.94 26 35.74 34.92 29.34
Bidar 28.73 0.4203 12.07 23 26.18 38.43 35.39
Bijapur 30.73 0.4351 13.37 25 26.85 38.10 35.05
Chamarajanagar 18.60 0.4186 7.78 15 29.05 38.46 32.49
Chickmagalur 7.89 0.3922 3.10 3 30.89 37.66 31.45
Chikkaballapura 16.31 0.3959 6.46 13 25.12 39.23 35.65
Chitradurga 20.72 0.4143 8.58 18 22.89 40.47 36.64
Dakshina Kannada 6.43 0.3946 2.54 2 30.28 41.77 27.95
Davanagere 19.52 0.4212 8.22 16 28.20 40.30 31.50
Dharwad 20.63 0.4057 8.37 17 27.13 37.14 35.73
Gadag 26.18 0.4230 11.07 22 29.20 37.75 33.05
Gulbarga 40.96 0.4592 18.81 28 33.97 35.29 30.74
Hassan 13.86 0.3997 5.54 10 24.33 40.75 34.93
Haveri 20.92 0.4256 8.90 20 33.44 33.70 32.86
Kodagu 8.24 0.4077 3.36 4 22.77 32.67 44.57
Kolar 16.53 0.4138 6.84 14 25.35 41.48 33.17
Koppal 36.09 0.4624 16.69 27 33.69 37.09 29.22
Mandya 10.55 0.4118 4.34 7 30.54 37.62 31.84
Mysore 9.83 0.3983 3.91 6 32.62 35.56 31.82
Raichur 41.90 0.4610 19.32 29 33.09 34.26 32.65
Ramanagaram 11.53 0.4135 4.77 9 32.23 35.01 32.76
Shimoga 14.86 0.4007 5.95 11 23.06 39.10 37.84
Tumkur 10.85 0.4140 4.49 8 29.46 38.99 31.54
Udupi 8.67 0.3968 3.44 5 24.50 37.06 38.44
Uttara Kannada 24.93 0.4041 10.08 21 20.15 38.47 41.38
THANK YOU