India looks at other ways of measuring poverty, says PM’s Economic Advisor

Bibek Debroy, chairman of the PM's Economic Advisory Council, suggests India needs new poverty measurement metrics beyond the Tendulkar Committee findings. He emphasizes the complexity of measuring poverty and inequality, calling for updated approaches to reflect current economic realities.

A move in the offing is that India plans to update poverty estimation after a decade of the Tendulkar Committee's suggestion. This was said by Bibek Debroy, the chairman of Economic Advisory Council to the Prime Minister (EAC-PM) while addressing a data user conference recently.

Delivering a keynote address at the Ministry of Statistics and Programme Implementation’s (MoSPI) event on the Household Consumption Expenditure Survey (HCES), Debroy underlined the importance of the fresh poverty line estimates. He further pointed out that although the Rangarajan committee report was never accepted, furthermore, the MPI does not actually specify a poverty line.

The question that needs to be asked is, should we now have a new poverty line to which this data can be applied? asked Debroy adding that poverty indicators are not only about inequality but other factors as well.

This comes at a time when there are other discussions on poverty measures in India. The last official poverty line was set up by the Tendulkar Committee in the year 2009; it depicted that poverty ratio in rural areas has been 41%. 8% and an urban rate of 25. 7% for 2004-05.

Debroy also talked about the methodological issues in inequality measurement and stated that disaggregate data at state levels in terms of Gini may be more informative than aggregate level data. He warned against thinking that inequality measures are predictive indicators pointing out that inequality is inevitable in the process of economic development.

Data from the NSO that were obtained recently show that consumption inequality has reduced over the past years, where the Gini coefficient for rural areas was estimated to be 0. 283 in 2011-12 to 0 which may be due to early completion of projects and lack of new projects as shown in the following table. From the above table, it can be seen that it was 266 in 2022-23 and from 0. 363 to 0. 314 in urban areas.

However, Niti Aayog CEO BVR Subrahmanyam has said that according to HCES report, probably less than 5% of Indian population would be below poverty line. According to the Niti Aayog’s Multidimensional Poverty Index it estimated that 248 million Indians have come out of multidimensional poverty between 2013-14 and 2022-23.

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Thus, while India continues to struggle with these diverse and interconnected socio-economic challenges, Debroy’s proposal for new poverty estimates indicates a probable change in how the country approaches and quantifies poverty in the future years.