Poverty Measurement in India

Poverty measurement in India means deciding who counts as poor and how many such people there are. For most of India's history after Independence, this was done with a poverty line: a fixed amount of money a person needs each month to meet basic needs. Anyone whose spending fell below this line was counted as poor. Over time, many expert committees changed how this line was drawn, and today India also uses non-money measures like the Multidimensional Poverty Index.

Why does it matter?

The number of poor people is not just a statistic. It decides who gets help. The government uses poverty estimates to decide how much subsidised grain to send to each state, which families get housing or cooking gas, and how much money goes to welfare schemes. If the line is set too low, many needy families are left out. If it is set too high, scarce money is spread too thin. So every change in the method sparks a big debate.

Why does India measure spending, not income?

In India, most people work in farming or small informal jobs, and their income changes from season to season. It is hard to get honest, exact income figures from them. But people can tell a surveyor what they spent on food, clothes and other things in the last month. So India measures consumption expenditure (what a household spends) through large surveys, earlier by the National Sample Survey Office (NSSO), now under the Ministry of Statistics and Programme Implementation (MoSPI).

Where did it come from? The journey of the poverty line

• Dadabhai Naoroji (19th century): In his book Poverty and Un-British Rule in India, he estimated the cost of a basic jail-diet type of living at about Rs 16 to Rs 35 per person per year at 1867-68 prices. This is often called the first estimate of a poverty line in India.
• Working Group of the Planning Commission (1962): Set a national poverty line of about Rs 20 per person per month in rural areas and Rs 25 in urban areas, at 1960-61 prices.
• V.M. Dandekar and N. Rath (1971): Linked poverty to food. They said the poverty line should be the spending needed to get 2,250 calories a day.
• Y.K. Alagh Task Force (1979): Fixed the calorie norm at 2,400 calories per person per day in rural areas and 2,100 in urban areas. Rural people do more physical work, so they need more energy. The line was the money needed to buy this food, plus a small amount for other needs.
• D.T. Lakdawala Expert Group (1993): Kept the calorie base but made separate poverty lines for each state, since prices differ across states. It updated rural lines using the Consumer Price Index for Agricultural Labourers (CPI-AL) and urban lines using the Consumer Price Index for Industrial Workers (CPI-IW). The Planning Commission adopted it in 1997.
• Suresh Tendulkar Expert Group (2009): Moved away from calories alone. It used a basket of goods that included spending on health and education. It used a uniform price basis for rural and urban areas. Poverty by this method was 37.2% in 2004-05 and 21.9% in 2011-12. The 2011-12 line was about Rs 816 per person per month in rural areas (about Rs 27 a day) and Rs 1,000 in urban areas (about Rs 33 a day). These low daily figures led to a big public debate.
• C. Rangarajan Expert Group (2014): Raised the line to about Rs 972 per month in rural areas (about Rs 32 a day) and Rs 1,407 in urban areas (about Rs 47 a day) at 2011-12 prices. By this method, poverty in 2011-12 was 29.5%. The government did not formally adopt it.
• NITI Aayog Task Force on Elimination of Poverty (2016): Headed by Arvind Panagariya, it could not agree on a single line and suggested a separate expert group. So 2011-12 remains the last year with an official poverty estimate.

How does the poverty line method work?

1. A survey team visits lakhs of households and records what they spent on food and non-food items.
2. This gives the Monthly Per Capita Consumption Expenditure (MPCE): total household spending in a month divided by the number of members.
3. Experts decide the poverty line: the MPCE needed for a basic basket of goods.
4. Everyone whose MPCE is below the line is counted as poor. The share of such people is the poverty headcount ratio.

The way the survey asks questions also matters. If you ask, "What did you spend on clothes in the last 30 days?", many people will say zero. If you ask about the last 365 days, you get a truer number. So surveys use different recall periods, such as the Uniform Reference Period (URP), Mixed Reference Period (MRP) and Modified Mixed Reference Period (MMRP). The same household can look poorer or richer depending on which recall period is used.

The newest consumption data

The 2017-18 consumption survey was not released because the government said it had data quality problems. Fresh surveys, called the Household Consumption Expenditure Survey (HCES), were done in 2022-23 and 2023-24.

• 2022-23: average MPCE about Rs 3,773 (rural) and Rs 6,459 (urban).
• 2023-24: average MPCE about Rs 4,122 (rural) and Rs 6,996 (urban), without counting free items from welfare schemes. Counting free items, the figures are Rs 4,247 and Rs 7,078.
• The gap between urban and rural spending fell from 84% in 2011-12 to 70% in 2023-24.

International poverty lines

The World Bank sets a global line for extreme poverty. In June 2025, it raised this line from $2.15 a day (2017 prices) to $3.00 a day at 2021 purchasing power parity (PPP). Using the new HCES data, the World Bank estimated that India's extreme poverty fell from 27.1% in 2011-12 to 5.3% in 2022-23, which means about 344 million people in 2011-12 and about 75 million in 2022-23.

From money to many dimensions

Many experts said that money alone misses things like health, schooling and housing. So India now also uses the Multidimensional Poverty Index (MPI). NITI Aayog's National MPI counts deprivation in 12 indicators, while the UNDP-Oxford Global MPI uses 10. Both use NFHS data rather than spending surveys.

Commonly confused concepts

• Tendulkar vs Rangarajan: Tendulkar (2009) gave 21.9% poor in 2011-12 with lines of about Rs 27 (rural) and Rs 33 (urban) a day. Rangarajan (2014) gave 29.5% with lines of about Rs 32 and Rs 47 a day. Rangarajan's basket was more generous, so it counted more people as poor.
• Alagh vs Lakdawala: Both used calories. Alagh (1979) set one national line based on 2,400/2,100 calories. Lakdawala (1993) kept calories but made state-wise lines.
• Absolute vs relative poverty: Absolute poverty means a person cannot meet a fixed minimum need, like a set amount of food (India's lines are absolute). Relative poverty means a person is poor compared to others in the same society, for example earning less than half the average income. Rich countries often use relative measures.
• Poverty vs inequality: Poverty asks how many people are below a minimum. Inequality asks how evenly income or wealth is shared, often measured by the Gini coefficient (0 = everyone has the same, 1 = one person has everything). Poverty can fall even while inequality rises.
• Consumption poverty vs multidimensional poverty: Consumption poverty looks at spending below a money line. Multidimensional poverty looks at lacking basic things like food, schooling and safe water.

Issues, criticism and the way forward

• No official line since 2011-12: India has had no official poverty line for over a decade. Welfare lists rely on other tools like the Socio-Economic and Caste Census (SECC) 2011 and state ration lists, which are themselves old.
• Lines seen as too low: Many critics say Rs 27 or Rs 32 a day was far too little to live with dignity. Supporters said the line marks only the bare minimum, not a good life.
• Data gaps and changes in method: The 2017-18 survey was not released, and the 2022-23 HCES changed the questionnaire. So comparing old and new numbers is tricky. Some economists say part of the fall in poverty comes from the change in method.
• Free benefits: Many families now get free grain, gas and other help. Whether to count these as spending changes the poverty numbers.
• Way forward: Experts suggest setting a fresh official poverty line using the new HCES data, holding consumption surveys at regular intervals, and using both money-based and multidimensional measures together, so that both low spending and missing basic services are caught.

Concepts to Know

• Poverty line: The minimum amount of money a person needs each month to meet basic needs. People spending less are counted as poor.
• Headcount ratio: The share of the population that is below the poverty line, written as a percentage.
• MPCE (Monthly Per Capita Consumption Expenditure): The total amount a household spends in a month, divided by the number of people in it.
• Calorie norm: The amount of food energy a person is assumed to need each day. Early poverty lines were the money needed to buy this much food.
• Consumer Price Index (CPI-AL, CPI-IW): Numbers that track how prices change for farm labourers (CPI-AL) and industrial workers (CPI-IW). They were used to update poverty lines as prices rose.
• Recall period: The time span a survey asks about, such as the last 30 days or the last 365 days.
• Planning Commission: The body that made India's Five-Year Plans and estimated poverty. It was replaced by NITI Aayog on 1 January 2015.