APPENDIX 6

A NOTE ON POVERTY ESTIMATION

The official estimates of the poverty line are based on calorie norm of 2400 per capita per day for rural areas and 2100 per capita per day for urban areas. The poverty line for the base year 1973-74 has been taken as the per capita expenditure level of which these calorie norms have been met, on an average, for the country as a whole, as per the National Sample Survey (NSS) household consumption expenditure survey for the corresponding year.

In order to arrive at the estimates of the number of poor, Planning Commission has been making adjustments in the NSS data on distribution of households by consumption expenditure levels. Such an adjustment has been felt to be necessary because the aggregate private household consumption expenditure as estimated from the NSS data is different from the aggregate private expenditure estimated in the National Accounts Statistics (NAS). Based on this methodology estimates of poverty have been made at national and state levels for the years 1972-73, 1977-78, 1983-84 and 1987-88.

In September 1989 in order to look into the methodology for estimation of poverty at National and State level and also to go into the question of redefining the poverty line, if necessary, the Planning Commission constituted an Expert Group on Estimation of Proportion and Number of Poor under the Chairmanship of Prof.D.K. Lakadwala. The Expert Group submitted its report in July, 1993.

The Expert Group has recommended (i)for giving up adjustment of the NSS data on the basis of the estimates of Private Consumption given in the NAS (ii) State specific poverty lines as against an All-India poverty line for rural and urban areas and (iii) use of the State Specific cost of living indices for up-dating the poverty line separately for rural and urban areas.

The full Planning Commission under the Chairmanship of the Prime Minister has decided to accept the Expert Group methodology for estimating poverty. However, whereas the Expert Group had recommended taking a simple average of the weighted commodity indices of “Consumer Price Index for Industrial Workers” and Consumer Price Index for Urban Non-Manual Employees” for estimating and updating urban poverty line, in a slight simplification of this method, the Planning Commission has decided to use only the “Consumer Price Index for Industrial Workers” for estimating and up-dating the urban poverty line.

The population of India has grown steadily during the period 1951-91. In absolute terms the population of India has increased by million during the decade 1981-91. This addition is almost equal to the population added during the three decades 1931-41, 1941-51, 1951-61. The percent decadal growth rate (exponential ) indicates a increase from 2.20 during the decade 1961-71 to 2.22 during the decade 1971-81. However, the growth rate has declined to 2.14 during the decade 1981-91.

In most of the states growth rate has declined during the decade 1981-91. However of the six most populous states of the country namely, Uttar Pradesh, Bihar, Maharashtra, West Bengal, Andhra Pradesh, and Madhya Pradesh accounting 59.75 percent of country’s population, the last four states have registered an increase in growth rates.