Economy
Poverty, Unemployment and Inclusive Growth
Measuring Poverty and Inequality
Poverty lines from Naoroji to Tendulkar and Rangarajan, HCES consumption data, NITI Aayog's MPI, the World Bank line, Gini, and Chhattisgarh's numbers.
Prerequisites
- Basic Concepts and National Income — per capita income, real vs nominal values, and why averages hide distribution.
- Economic Planning and NITI Aayog — poverty removal (“Garibi Hatao”) was a declared goal of the Fifth Plan and of every plan after it.
The Hook: Two Families in Janjgir-Champa
Connect
Picture two families in a village of Janjgir-Champa. The first spends a little more than the official poverty line every month, but its children are stunted, it cooks on firewood and nobody in the house finished Class 8. The second spends a little less, but it has a pucca house under PMAY-G, a bank account, an LPG cylinder and a daughter in college.
Which family is “poor”? A consumption poverty line says the second. A multidimensional index would very likely say the first. Both answers are “correct”, because they measure different things. This page explains how India has drawn the line, why the numbers keep changing, and where Chhattisgarh stands.
Why it matters: Prelims asks for committee names, their methods and their headline ratios, and for the indicators in the MPI. Mains asks why poverty estimates are contested and how poverty should be measured. Chhattisgarh’s figures (highest poverty ratio in 2011–12, lowest consumption spending in 2023–24) are ideal for state-angle answers.
Core Concepts
| Term | Meaning |
|---|---|
| Absolute poverty (निरपेक्ष गरीबी) | Inability to afford a fixed minimum basket of goods and services. India’s official measures are absolute |
| Relative poverty (सापेक्ष गरीबी) | Being poor compared with others in the same society (for example, below half the median income). Common in developed countries |
| Poverty line (गरीबी रेखा) | The money value of the minimum basket, expressed in India as monthly per capita consumption expenditure (MPCE) |
| Headcount ratio (HCR) | Share of the population below the poverty line. Simple, but blind to how far below the line people are |
| Poverty gap index | Average shortfall of the poor from the line, as a share of the line. Measures the depth of poverty |
| Squared poverty gap | Gives more weight to the poorest. Measures severity. HCR, gap and squared gap together form the Foster–Greer–Thorbecke (FGT) family |
| Multidimensional poverty | Deprivation in several non-income dimensions at the same time (health, education, living standards) |
Why India uses consumption, not income
Most Indian households are self-employed or informal, so income is hard to record and fluctuates by season. Consumption is smoother and easier to recall in a survey, so India’s poverty lines are drawn on consumption expenditure collected by the National Sample Survey (NSS), now run by the National Statistics Office (NSO) under MoSPI.
How India Drew the Poverty Line: Committee by Committee
flowchart LR
A["Dadabhai Naoroji
Poverty and Un-British
Rule in India"] --> B["Working Group 1962
Rs 20 rural / Rs 25 urban
per capita per month"]
B --> C["Dandekar and Rath 1971
first systematic use
of NSS data"]
C --> D["Alagh Task Force 1979
2400 / 2100 calories"]
D --> E["Lakdawala 1993
state-specific lines"]
E --> F["Tendulkar 2009
basket beyond calories"]
F --> G["Rangarajan 2014
higher line, not adopted"]| Body (year) | Key method | Remember |
|---|---|---|
| Dadabhai Naoroji (Poverty and Un-British Rule in India, 1901) | Estimated the minimum cost of subsistence (a basic diet) per person, in 1867–68 prices | First poverty line idea in India; also the Drain Theory |
| Working Group, Planning Commission (1962) | National minimum consumption | ₹20 rural, ₹25 urban per person per month (1960–61 prices) |
| V.M. Dandekar and N. Rath (1971) | First systematic assessment using NSS consumption data; calorie norm of 2,250 a day | Book Poverty in India |
| Y.K. Alagh Task Force (1979) | Calorie-based line: 2,400 kcal rural, 2,100 kcal urban per person per day | Rural norm is higher because rural work is more physically demanding |
| D.T. Lakdawala Expert Group (1993) | Kept the calorie anchor but made state-specific lines; updated with CPI-AL (rural) and CPI-IW (urban) | Moved from one national line to state lines |
| Suresh D. Tendulkar Expert Group (report 2009) | Abandoned calorie anchoring; a common poverty line basket including health and education spending; urban basket applied to rural areas with price adjustment; MRP data | Poverty for 2004–05 revised to 37.2% |
| C. Rangarajan Expert Group (report 2014) | Separate rural and urban baskets: food (calories, protein, fats) + normative non-food spending | Higher line; not formally adopted by the government |
The two numbers every aspirant must know (2011–12)
| Item | Tendulkar method | Rangarajan method |
|---|---|---|
| Rural poverty line (per person per month) | ₹816 (about ₹27 a day) | ₹972 (about ₹32 a day) |
| Urban poverty line (per person per month) | ₹1,000 (about ₹33 a day) | ₹1,407 (about ₹47 a day) |
| All-India poverty ratio | 21.9% | 29.5% |
| Rural / urban ratio | 25.7% / 13.7% | 30.9% / 26.4% |
| Number of poor | about 27 crore | about 36.3 crore |
2011–12 is the last year with an official poverty estimate. The NSS consumption survey of 2017–18 was not released by the government, citing data-quality concerns. The NITI Aayog Task Force on Elimination of Poverty (2016, chaired by Arvind Panagariya) did not settle on a new line.
Chhattisgarh in the official 2011–12 estimate
Under the Tendulkar method (Planning Commission press note, July 2013), Chhattisgarh had the highest poverty ratio of any state: 39.93%, ahead of Jharkhand (36.96%), Manipur (36.89%), Arunachal Pradesh (34.67%) and Bihar (33.47%). This number still appears in statement-based questions.
The New Consumption Data: HCES 2022–23 and 2023–24
After a gap of more than a decade, MoSPI conducted the Household Consumption Expenditure Survey (HCES) in 2022–23 and 2023–24. It does not announce a poverty line, but analysts use it to estimate poverty.
| Indicator (HCES 2023–24, without imputing free items) | Rural | Urban |
|---|---|---|
| All-India average MPCE | ₹4,122 | ₹6,996 |
| Gini coefficient of consumption | 0.237 (0.266 in 2022–23) | 0.284 (0.314 in 2022–23) |
| Urban–rural MPCE gap | 70% (84% in 2011–12, 71% in 2022–23) | |
| Chhattisgarh’s MPCE | ₹2,739 | ₹4,927 |
Chhattisgarh angle
In HCES 2023–24, Chhattisgarh recorded the lowest average MPCE among the major states, in both rural and urban areas, and one of the widest rural–urban gaps (about 80%). Two cautions for Mains: (1) MPCE is measured before adding the value of free PDS rice and other in-kind transfers, which matter a lot in Chhattisgarh’s near-universal PDS; (2) low consumption sits alongside an industry-heavy GSDP, which points to a gap between where output is produced (mines, steel, power) and where most people work (farms and forests).
Multidimensional Poverty Index (MPI)
Global MPI
- Developed in 2010 by the Oxford Poverty and Human Development Initiative (OPHI) and the UNDP; published with the Human Development Report.
- 3 dimensions, 10 indicators, each dimension weighted one-third:
- Health: nutrition, child mortality
- Education: years of schooling, school attendance
- Standard of living: cooking fuel, sanitation, drinking water, electricity, housing, assets
- A person is multidimensionally poor if deprived in at least one-third (33.33%) of the weighted indicators.
- MPI = H × A, where H is the headcount (share of people who are poor) and A is the intensity (average share of indicators in which the poor are deprived).
- The Global MPI 2023 reported that about 41.5 crore people in India exited multidimensional poverty between 2005–06 and 2019–21.
National MPI (NITI Aayog)
- India’s National MPI keeps the global three dimensions but uses 12 indicators: the global 10 plus maternal health (under health) and bank account (under standard of living).
- Data source: National Family Health Survey (NFHS).
| Release | Headline |
|---|---|
| Baseline report (2021) | Based on NFHS-4 (2015–16) |
| Progress Review (July 2023) | Headcount fell from 24.85% (2015–16) to 14.96% (2019–21); about 13.5 crore people exited |
| Discussion paper (January 2024) | Headcount fell from 29.17% (2013–14) to 11.28% (2022–23); about 24.82 crore exited in nine years. The 2013–14 and 2022–23 values are projections from trends, not direct survey data |
| Chhattisgarh (NFHS-4 to NFHS-5) | Headcount 29.90% (2015–16) → 16.37% (2019–21); MPI value 0.133 → 0.070 |
MPI trap
The 24.82 crore in nine years figure (2013–14 to 2022–23) is partly extrapolated, because there was no NFHS round in those exact years. The 13.5 crore figure (2015–16 to 2019–21) comes directly from NFHS-4 and NFHS-5. Do not mix the two periods in a statement.
The World Bank’s International Poverty Line
- The World Bank measures extreme poverty with an international line in purchasing power parity (PPP) dollars.
- In June 2025, it raised the line from $2.15 a day (2017 PPP) to $3.00 a day (2021 PPP).
- On the new line, India’s extreme poverty fell from 27.1% (2011–12) to 5.3% (2022–23), which the World Bank described as about 26.9 crore people leaving extreme poverty.
- The World Bank also reports higher lines for lower-middle-income countries (now $4.20 a day at 2021 PPP), on which a much larger share of Indians remains poor.
Analysis: Why Poverty Estimates Are Contested (Mains)
- Where to draw the line: a calorie-only line ignores health, education and housing; a richer basket raises the count (Tendulkar 21.9% vs Rangarajan 29.5% for the same year and data).
- Survey changes: the HCES 2022–23 used a new questionnaire (multiple visits, more items), so comparisons with 2011–12 are not like-for-like.
- Free transfers: free PDS grain, school meals and other in-kind benefits raise real consumption but may not show up in recorded spending; the HCES publishes estimates with and without imputing them.
- Price indices and PPP: small changes in deflators or PPP rates move millions across the line.
- Income vs capability: following Amartya Sen, poverty is a lack of capabilities, not just of money. The MPI captures this, but it measures access (a toilet, a bank account) more than quality (learning, health outcomes).
- Targeting uses different lists: schemes rely on the SECC 2011 deprivation data, NFSA coverage ratios and state lists, not on the poverty ratio itself. The BPL count and the poverty ratio are different things.
Inequality: Lorenz Curve and Gini Coefficient
- The Lorenz curve plots the cumulative share of income (or consumption) against the cumulative share of population. The 45° line is perfect equality.
- The Gini coefficient = area between the line of equality and the Lorenz curve ÷ total area under the line of equality. It runs from 0 (perfect equality) to 1 (perfect inequality).
- India’s consumption Gini is low and falling (HCES figures above), but income and wealth inequality, as estimated by researchers using tax and wealth data, is much higher. Consumption Gini understates inequality because the rich save a larger share of income.
- Kuznets curve: Simon Kuznets suggested inequality first rises and then falls as an economy develops (an inverted U).
Memory Tricks
Committees in order: 'All Lucky Toppers Rank'
Alagh (1979) → Lakdawala (1993) → Tendulkar (2009) → Rangarajan (2014).
Alagh = calories, Lakdawala = state lines, Tendulkar = basket with health and education, Rangarajan = higher line with protein and fats.
2011–12 pairs: '816–1000 gives 21.9; 972–1407 gives 29.5'
Tendulkar: ₹816 rural, ₹1,000 urban, 21.9%. Rangarajan: ₹972 rural, ₹1,407 urban, 29.5%. The bigger lines give the bigger ratio.
MPI: 3-10-12 and one-third
3 dimensions, 10 global indicators, 12 national indicators (add maternal health and bank account), poor if deprived in one-third of weighted indicators. MPI = H × A.
Don’t Confuse
| This | vs | That |
|---|---|---|
| Alagh (1979): 2,400 rural / 2,100 urban calories | vs | Dandekar–Rath (1971): 2,250 calories |
| Tendulkar: single basket, health and education added, 21.9% (2011–12) | vs | Rangarajan: separate baskets, protein and fats added, 29.5% (2011–12) |
| Global MPI: 10 indicators, OPHI–UNDP | vs | National MPI: 12 indicators, NITI Aayog |
| Headcount ratio: how many are poor | vs | Poverty gap: how poor the poor are |
| Consumption Gini (HCES): about 0.24 rural, 0.28 urban (2023–24) | vs | Income/wealth inequality: much higher |
| HCES 2023–24: consumption survey, no official line | vs | 2011–12: last official poverty estimate |
Common Mistakes
MCQ traps
- “The Rangarajan Committee’s line is India’s official poverty line.” No. The government did not formally adopt it. The last official estimate (2011–12) used the Tendulkar method.
- “The Tendulkar Committee used a calorie norm of 2,400/2,100.” No. That is Alagh (1979). Tendulkar moved away from calorie anchoring.
- “Lakdawala used CPI-IW for rural areas.” Reversed. CPI-AL for rural, CPI-IW for urban.
- “NITI Aayog’s MPI uses NSS consumption data.” No. It uses NFHS data.
- “Chhattisgarh’s poverty ratio in 2011–12 was second only to Bihar.” No. Chhattisgarh (39.93%) was the highest; Bihar was fifth.
- “The World Bank’s current extreme poverty line is $1.90.” Out of date. $1.90 (2011 PPP) → $2.15 (2017 PPP) → $3.00 (2021 PPP, from June 2025).
Practice
All questions below are original practice questions written in CGPSC style. They are not previous-year questions.
Level 1: Foundation
- The calorie norms of 2,400 (rural) and 2,100 (urban) were recommended by the ______ Task Force in ______.
- National MPI = ______ × ______.
- Under the Tendulkar method, India’s poverty ratio for 2011–12 was ______%, and the state with the highest ratio was ______.
Answers
- Y.K. Alagh Task Force, 1979.
- H (headcount ratio) × A (intensity of deprivation).
- 21.9%; Chhattisgarh (39.93%).
Level 2: Prelims MCQs
Q1. Consider the following statements about the Tendulkar Expert Group on poverty estimation:
- It moved away from the calorie-based poverty line.
- Its poverty line basket included private expenditure on health and education.
- It estimated India’s poverty ratio for 2011–12 at 29.5%.
Which of the statements given above is/are correct?
- (a) 1 only
- (b) 1 and 2 only
- (c) 2 and 3 only
- (d) 1, 2 and 3
Answer and explanation
(b) 1 and 2 only. The Tendulkar group (report 2009) dropped calorie anchoring and used a poverty line basket that included health and education spending. Statement 3 is the trap: 29.5% is the Rangarajan estimate for 2011–12. The Tendulkar estimate for that year was 21.9%.
Q2. Match List I (Committee/Group) with List II (Feature):
| List I | List II |
|---|---|
| A. Alagh Task Force | 1. State-specific poverty lines using CPI-AL and CPI-IW |
| B. Lakdawala Expert Group | 2. Separate food and normative non-food baskets; line not adopted |
| C. Tendulkar Expert Group | 3. Calorie norms of 2,400 and 2,100 |
| D. Rangarajan Expert Group | 4. Common basket with health and education; 2004–05 poverty revised to 37.2% |
- (a) A-3, B-1, C-4, D-2
- (b) A-1, B-3, C-4, D-2
- (c) A-3, B-1, C-2, D-4
- (d) A-3, B-4, C-1, D-2
Answer and explanation
(a) A-3, B-1, C-4, D-2. Alagh (1979) set the calorie norms; Lakdawala (1993) made state-specific lines indexed to CPI-AL and CPI-IW; Tendulkar (2009) widened the basket and revised 2004–05 poverty to 37.2%; Rangarajan (2014) used separate baskets and its higher line was not formally adopted.
Q3. Which one of the following indicators is included in NITI Aayog’s National Multidimensional Poverty Index but not in the Global MPI?
- (a) Cooking fuel
- (b) Child mortality
- (c) Bank account
- (d) Years of schooling
Answer and explanation
(c) Bank account. The National MPI adds two indicators to the global ten: maternal health and bank account. Cooking fuel, child mortality and years of schooling are all part of the Global MPI.
Q4. According to the Household Consumption Expenditure Survey 2023–24, which of the following statements is correct?
- (a) The Gini coefficient of consumption rose in both rural and urban India compared with 2022–23.
- (b) Chhattisgarh had the lowest average MPCE among major states in both rural and urban areas.
- (c) The urban–rural gap in average MPCE widened compared with 2011–12.
- (d) The survey announced a new official poverty line.
Answer and explanation
(b). Chhattisgarh’s MPCE (₹2,739 rural, ₹4,927 urban) was the lowest among major states. The Gini fell (rural 0.266 → 0.237, urban 0.314 → 0.284), the urban–rural gap narrowed (84% in 2011–12 → 70% in 2023–24), and HCES does not set a poverty line.
Q5. The World Bank’s international extreme poverty line, revised in June 2025, is:
- (a) $1.90 a day at 2011 PPP
- (b) $2.15 a day at 2017 PPP
- (c) $3.00 a day at 2021 PPP
- (d) $3.65 a day at 2017 PPP
Answer and explanation
(c) $3.00 a day at 2021 PPP. On this line, the World Bank estimated India’s extreme poverty at 5.3% in 2022–23, down from 27.1% in 2011–12. $3.65 (2017 PPP) was the older line for lower-middle-income countries, not the extreme poverty line.
Level 3: Mains Answer Writing
Q1. (150–200 words) “Poverty in India is better measured in many dimensions than by a single consumption line.” Examine, with reference to Chhattisgarh.
Model answer outline
- Intro: India’s official poverty line (Tendulkar, last estimate 2011–12) is a consumption threshold; the National MPI (NITI Aayog, NFHS data) measures overlapping deprivations.
- Case for MPI:
- Captures health, education and living standards directly (Amartya Sen’s capability approach).
- Shows which deprivation to fix (nutrition, cooking fuel, housing), so it guides convergence of schemes.
- Less sensitive to price indices and PPP revisions.
- Limits of MPI: measures access rather than quality; weights are arbitrary; some values (2013–14, 2022–23) are projections; not suitable alone for targeting cash support.
- Case for keeping a consumption line: income shocks, food insecurity and inflation show up first in consumption; international comparability.
- Chhattisgarh angle: highest poverty ratio in 2011–12 (39.93%); MPI headcount fell from 29.90% to 16.37% (2015–16 to 2019–21); yet the lowest MPCE among major states in HCES 2023–24. The dimensions tell different stories, so both measures are needed.
- Conclusion: use a dashboard: an updated consumption line plus MPI, with district-level data for planning.
Q2. (60 words) Distinguish between the headcount ratio and the poverty gap index.
Model answer outline
- Headcount ratio: share of population below the poverty line; measures incidence; does not change if the poor become poorer.
- Poverty gap index: average shortfall of the poor from the line, as a share of the line; measures depth; shows the resources needed to lift everyone to the line.
- Conclusion: policy needs both, plus the squared gap for the poorest.
Quick Revision Table
| Fact | Detail |
|---|---|
| Naoroji | Poverty and Un-British Rule in India (1901); first poverty line idea |
| Working Group 1962 | ₹20 rural, ₹25 urban per capita per month |
| Dandekar–Rath 1971 | NSS data; 2,250 calories |
| Alagh 1979 | 2,400 rural / 2,100 urban calories |
| Lakdawala 1993 | State-specific lines; CPI-AL rural, CPI-IW urban |
| Tendulkar 2009 | Basket with health and education; 2004–05 = 37.2%; 2011–12 = 21.9% (₹816 / ₹1,000) |
| Rangarajan 2014 | 2011–12 = 29.5% (₹972 / ₹1,407); not adopted |
| Chhattisgarh 2011–12 | 39.93%, highest among states (Tendulkar) |
| HCES 2023–24 | MPCE ₹4,122 rural, ₹6,996 urban; Gini 0.237 / 0.284; CG lowest (₹2,739 / ₹4,927) |
| Global MPI | OPHI + UNDP, 2010; 3 dimensions, 10 indicators; MPI = H × A |
| National MPI | NITI Aayog; 12 indicators; 24.85% → 14.96% (2015–16 to 2019–21) |
| CG MPI headcount | 29.90% → 16.37% (2015–16 to 2019–21) |
| World Bank line | $3.00 a day (2021 PPP) from June 2025; India 27.1% → 5.3% (2011–12 to 2022–23) |
Key Takeaways
Key Takeaways
- India’s official poverty line is consumption-based; the last official estimate is 2011–12 (Tendulkar, 21.9%).
- Each committee changed the basket: calories (Alagh), state prices (Lakdawala), health and education (Tendulkar), protein, fats and normative non-food (Rangarajan).
- The MPI (OPHI–UNDP globally, NITI Aayog nationally) counts overlapping deprivations; India’s MPI headcount fell sharply between NFHS-4 and NFHS-5.
- Chhattisgarh had the highest poverty ratio in 2011–12 and the lowest MPCE among major states in 2023–24, even as its MPI headcount nearly halved.
- Consumption Gini is low and falling, but income and wealth inequality is much higher. Quote both in Mains.
What’s Next
- Unemployment: Types, Measurement and Trends — the labour-market side of poverty
- Poverty Alleviation and Employment Programmes — what India has done about it
- Population and Census — the demographic base behind the state figures
- Economy, Budget and State Schemes — GSDP and the state’s welfare model
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