Poverty Estimation In India – C Rangarajan and Tendulkar Committee

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Poverty Estimation In India – C Rangarajan and Tendulkar Committee

• Poverty in India is Big issues for Government .
• To Measures Exact numbers of Poor People And Per capita expenditure various methods Had been adopted by Government of India.
•  The official measure of Indian government, before 2005, was based on food security and it was defined from per capita expenditure for a person to consume enough calories and be able to pay for associated essentials to survive.
• Since 2005, Indian government adopted the Tendulkar methodology which moved away from calorie anchor to a basket of goods and used rural, urban and regional minimum expenditure per capita necessary to survive.
• The Planning Commission has been estimating the number of people below the poverty line (BPL) at both the state and national level based on consumer expenditure information collected as part of the National Sample Survey Organization (NSSO) since the Sixth Five Year Plan.
• The latest available data from such surveys is from NSSO conducted in 2004-05.

Government Of India Formed various Committees for Poverty Estimation In India

1. Alagh Committee (1977),
2. Lakdawala Committee (1989)
3. Tendulkar Committee (2005)
4. Saxena committee
5. Hashim Committee
6. C . Rangarajan Committee ( 2012)

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Tendulkar committee report on poverty

In 2005, another expert group to review methodology for poverty estimation, chaired by Suresh Tendulkar, was constituted by the Planning Commission to address the following three shortcomings of the previous methods:

1. consumption patterns were linked to the 1973-74 poverty line baskets (PLBs) of goods and services, whereas there were significant changes in the consumption patterns of the poor since that time, which were not reflected in the poverty estimates;
2. there were issues with the adjustment of prices for inflation, both spatially (across regions) and temporally (across time); and
3. earlier poverty lines assumed that health and education would be provided by the State and formulated poverty lines accordingly

It recommended four major changes: List of Recommended Changes are Given below 

1. A shift away from calorie consumption based poverty estimation;
2. A uniform poverty line basket (PLB) across rural and urban India;
3. A change in the price adjustment procedure to correct spatial and temporal issues with price adjustment; and
4. Incorporation of private expenditure on health and education while estimating poverty.

The Committee recommended using Mixed Reference Period (MRP) based estimates, as opposed to Uniform Reference Period (URP) based estimates that were used in earlier methods for estimating poverty.

It based its calculations on the consumption of the following items: cereal, pulses, milk, edible oil, non-vegetarian items, vegetables, fresh fruits, dry fruits, sugar, salt & spices, other food, intoxicants, fuel, clothing, footwear, education, medical (non-institutional and institutional), entertainment, personal & toilet goods, other goods, other services and durables.

The Committee computed new poverty lines for rural and urban areas of each state. To do this, it used data on value and quantity consumed of the items mentioned above by the population that was classified as poor by the previous urban poverty line.

It concluded that the all India poverty line was Rs 446.68 per capita per month in rural areas and Rs 578.80 per capita per month in urban areas in 2004-05. The following table outlines the manner in which the percentage of population below the poverty line changed after the application of the Tendulkar Committee’s methodology.

Poverty Line Estimation In India . Comparison Given below read and Understand both Methods of Poverty Estimation in India 

• C Rangarajan Committee Was Set up By Planning commission In 2012 And Submitted Report In 2014.
• The Planning commission had set up the five-member expert group under Rangarajan to review the methodology for measurement of poverty.
• The committee was set up in the backdrop of national outrage over the Planning Commission’s suggested poverty line of Rs 22 a day for rural areas.
• The Rangarajan committee estimation is based on an independent large survey of households by Center for Monitoring Indian Economy (CMIE).
• It has also used different methodology wherein a household is considered poor if it is unable to save.
• The methods also include on certain normative levels of adequate nourishment, clothing, house rent, conveyance, education and also behavioral determination of non-food expenses.
• It also considered average requirements of calories, protein and fats based on ICMR norms differentiated by age and gender.
• Based on this methodology, Rangarajan committee estimated the number of poor were 19 per cent higher in rural areas and 41 per cent more in urban areas than what was estimated using Tendulkar committee formula.
• Tendulkar, an economist, had devised the formula to assess poverty line in 2005, which the Planning Commission had used to estimate poverty in 2009-10 and 2011-12.