Poverty

Poverty refers to a condition in which an individual or a group lacks sufficient resources to meet basic needs and cannot attain a standard of living that is considered acceptable in a given society.

Basic needs generally include:

• Food and nutrition
• Shelter and clothing
• Healthcare and sanitation
• Education and minimum security

👉 Poverty is therefore not merely low income, but a denial of dignified living.

Types of Poverty

Poverty is not a single, uniform phenomenon. It appears in multiple forms, depending on context, duration, and location.

1. Absolute Poverty

Absolute poverty exists when a person cannot meet the minimum requirements for survival.

Characteristics:

• Lack of food, shelter, and clothing
• Poor nutrition and health
• Absence of sanitation and healthcare

Example:
A homeless family without access to adequate food, clean water, or medical facilities.

👉 This form of poverty is about physical survival.

2. Relative Poverty

Relative poverty is defined in relation to the average standard of living in a society.

Characteristics:

• Income lower than societal average
• Social exclusion
• Inability to participate fully in normal economic and social life

Example:
A family working full-time but living in cramped housing and struggling to meet expenses in an otherwise prosperous city.

👉 Relative poverty highlights inequality and exclusion, even when basic survival is possible.

3. Urban Poverty

Urban poverty is concentrated in cities and towns.

Key features:

• Slums and informal settlements
• Overcrowded housing
• Poor sanitation and unsafe drinking water
• Limited access to education and healthcare

Example:
Slum dwellers in metropolitan cities lacking secure housing and basic civic amenities.

👉 Urban poverty is closely linked to rapid urbanisation and informal employment.

4. Rural Poverty

Rural poverty is concentrated in villages and agricultural regions.

Key features:

• Dependence on low-productivity agriculture
• Limited access to healthcare, education, and transport
• Small and marginal landholdings

Example:
Small farmers unable to afford modern inputs or technology, trapped in low incomes.

👉 Rural poverty reflects structural issues in agriculture and rural infrastructure

5. Intergenerational Poverty

Intergenerational poverty occurs when poverty is transmitted from one generation to the next.

Causes:

• Lack of education
• Poor health and nutrition
• Limited social mobility

Example:
A child born into a family that has remained poor for generations, with minimal chances of upward mobility.

👉 This type of poverty creates a poverty trap, making policy intervention crucial

6. Situational Poverty

Situational poverty is temporary and arises due to sudden life events.

Causes:

• Job loss
• Illness
• Natural disasters
• Economic shocks

Example:
A worker losing employment during an economic downturn and falling temporarily below the poverty line.

👉 Unlike intergenerational poverty, this can be reversed with timely support.

Committees on Poverty in India

(Evolution of Poverty Measurement)

India’s approach to poverty estimation has evolved:

• From calorie-based norms
• To consumption expenditure
• To broader and more realistic living standards

This evolution was guided by expert committees.

Major Poverty Estimation Committees

Aspect	Lakdawala Committee	Tendulkar Committee	Rangarajan Committee
Year	1993	2009	2015
Approach	Calorie-based	Consumption-based	Broader consumption norms
Rural Poverty Line	2400 kcal	₹27/day	₹32/day
Urban Poverty Line	2100 kcal	₹33/day	₹47/day
Items Considered	Food items	Food + Non-food items	Food + Non-food items

Reference Periods

• Lakdawala Committee
  • Uniform Recall Period
  • Expenditure recalled over 30 days
• Tendulkar Committee
  • Mixed Recall Period (MRP)
  • 30 days for most items
  • 365 days for selected non-food items (education, health, clothing, durable goods)
• Rangarajan Committee
  • Modified Mixed Recall Period
  • 30 days + 365 days
  • 7-day recall for frequently consumed items (milk, eggs, etc.)

👉 Each committee tried to make poverty estimation more realistic and humane.

What is the Recall Period?

In poverty estimation, the recall period refers to the time span over which a household is asked to remember (recall) its consumption expenditure while responding to surveys (mainly NSS / NSO consumption expenditure surveys).

In simple terms:

Recall period = “For how many past days/months is a household asked: How much did you spend?”

It directly affects → Reported consumption levels, Poverty line estimation, Number of people counted as poor

Why Recall Period Matters

Human memory is imperfect.

• Short recall → more accurate for daily items
• Long recall → better for infrequent, high-value expenses

Hence, choice of recall period can change poverty estimates, even if income is unchanged.

National Multidimensional Poverty Index (MPI)

Traditional poverty measures focused largely on income or consumption. However, poverty in real life is far more complex.

A household may earn some income but still lack → Education, Health services, Safe housing, Clean water, Financial inclusion

The National Multidimensional Poverty Index (MPI) was developed to capture this multiple and simultaneous deprivations.

Why MPI was Introduced

The National MPI:

• Goes beyond income-based poverty
• Captures quality of life and human capability
• Aligns with SDG Target 1.2, which aims to reduce poverty in all its forms by at least half by 2030

At the global level, MPI is developed by:

• United Nations Development Programme
• Oxford Poverty and Human Development Initiative

In India, the global framework has been adapted by NITI Aayog to reflect national priorities and realities.

What Makes MPI Different?

MPI answers two critical questions simultaneously:

1. How many are poor? → Headcount ratio
2. How poor are the poor? → Intensity of poverty

This dual insight makes MPI far superior to one-dimensional measures.

Methodology: Alkire–Foster (AF) Method

The National MPI follows the Alkire–Foster (AF) methodology, a dual-cutoff counting approach.

Step 1: First Cutoff (Indicator Level)

• Determines whether a household is deprived in each indicator
• Example: No electricity → deprived in electricity indicator

Step 2: Second Cutoff (Poverty Threshold)

• Deprivations are aggregated
• If total deprivation score exceeds 33%, the household is classified as multidimensionally poor

👉 This avoids labelling households as poor based on one single deprivation.

Dimensions and Indicators of National MPI

The National MPI has 3 dimensions, all equally weighted, and 12 indicators.

1. Health (Weight: 1/3)

Indicator	Weight
Nutrition	1/6
Child & Adolescent Mortality	1/12
Maternal Health (India-specific)	1/12

2. Education (Weight: 1/3)

Indicator	Weight
Years of Schooling	1/6
School Attendance	1/6

3. Standard of Living (Weight: 1/3)

Indicator	Weight
Cooking Fuel	1/21
Sanitation	1/21
Drinking Water	1/21
Housing	1/21
Electricity	1/21
Assets	1/21
Bank Account (India-specific)	1/21

👉 Addition of maternal health and bank accounts reflects India’s emphasis on:

• Women’s health
• Financial inclusion

Computing the MPI

Step 1: Deprivation Profile

Each household is assigned a weighted deprivation score based on the 12 indicators.

Step 2: Identification of the Poor

• If deprivation score > 33%
• Household is multidimensionally poor

Step 3: MPI Indices

I. Headcount Ratio (H)

• Proportion of population that is multidimensionally poor
• Measures extent of poverty

II. Intensity of Poverty (A)

• Average share of deprivations faced by the poor
• Measures depth of poverty

Final Formula

MPI = H * A

This single value captures both spread and severity of poverty.

Why National MPI Is a Powerful Policy Tool

1. Targeted Interventions

• Identifies specific deprivations (e.g., sanitation, nutrition)
• Enables focused policy design

2. Monitoring and Evaluation

• Tracks progress over time
• Assesses effectiveness of poverty alleviation schemes

3. Data-Driven Governance

• Useful at national, state, and district levels
• Supports cooperative and competitive federalism

Legal and Institutional Framework Supporting Poverty Reduction

Although MPI is a measurement tool, its effectiveness depends on rights-based laws and welfare mechanisms.

Key Laws Supporting MPI Objectives

1. VB-GRAM G (Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission Gramin)

• New rural employment scheme introduced in 2025 to replace MGNREGA.
• It aims to provide enhanced work guarantees, integrate technology-driven monitoring, and ensure sustainable livelihood opportunities while aligning with modern rural needs

2. National Food Security Act (NFSA), 2013

• Legal entitlement to subsidised food grains
• Covers:
  • 75% of rural population
  • 50% of urban population
• Implemented through TPDS by the Ministry of Consumer Affairs, Food & Public Distribution

3. Right to Education Act (RTE), 2009

• Free and compulsory education (6–14 years)
• Fundamental Right under Article 21-A
• Implemented by the Ministry of Education