Following the furore over the Planning Commission’s poverty calculation for 2009-10 (NSS 66th round) using the Tendulkar methodology — the poverty line was perceived to be too low — an expert group under C. Rangarajan was set up to review the issue. The Rangarajan committee’s findings are now in — a household of five that spent less than Rs 4,860 per month in rural areas or Rs 7,035 in urban areas in 2011-12 now falls below the poverty line (BPL). The corresponding figures for the Tendulkar line are Rs 4,080 and Rs 5,000. But there has been a replay of the old outrage, underpinned by an inadequate understanding of poverty lines. The important thing about a poverty line is that it is a standard to facilitate comparison across time and states. It is more an analytical tool used to see how many people fall below a particular consumption threshold in order to gauge the progress of a society, and less a statement about what is adequate for survival.
In 2004-05, when Suresh Tendulkar set his much-maligned poverty line at $1 (PPP) per person per day, this was the internationally accepted best practice. In contrast, the Rangarajan line combines absolute and relative standards — the food expenditure threshold was arrived at using medical norms, while the line for some categories of spending like education was set at the observed median fractile level. Even though the count of the number of BPL individuals in 2011-12 has increased by 93 million (29.5 per cent of the population versus 21.9 under the earlier methodology), the important thing is that between 2009-10 and 2011-12, both methodologies show a drastic decline in the BPL count.
