Poverty line

Also called: Below poverty line, BPL · Topic: Poverty and Inequality: Measurement and Policy · NCERT: Class 11, Ch 4 "Human Capital Formation in India"; Class 11, Ch 8 "Comparative Development Experiences of India and its Neighbours"

Meaning

The poverty line is the minimum amount a person must spend each month to meet basic needs such as food, clothing and shelter. Anyone who spends less than this is counted as poor, or BPL (Below Poverty Line).

India draws this line in terms of MPCE (Monthly Per Capita Consumption Expenditure), which is what a household spends in a month divided by the number of people in it. It does not use income. The line tells the government how many people are poor, and so how widely welfare schemes must reach.

Formula: Head Count Ratio (HCR) = (Number of people below the poverty line ÷ Total population) × 100

Explanation

How the line is built and used

• Absolute vs relative poverty:
• Absolute poverty means living below a fixed minimum standard. India uses this method.

• Relative poverty means being poor compared with others in the same society, for example earning below half of the median income.

• Who sets it: in India, expert groups set the line. No law fixes it.

• Head Count Ratio (HCR): the share of people below the line.
• Worked example: a district has 50 lakh people. Of these, 11 lakh spend less than the line.

• HCR = (11 ÷ 50) × 100 = 22%.

• Updating the line for prices:

• New line = Old line × (Price index in new year ÷ Price index in base year)
• Example: the rural line is ₹49.09 and the price index rises from 100 to 250. The new line is 49.09 × 2.5 = ₹122.7.
• The line keeps up with inflation, but it still buys the same old basket of goods.

Early estimates (before Independence to 1971)

• Dadabhai Naoroji, Poverty and Un-British Rule in India (1901):
• He worked out the cost of a basic "jail diet" (the food given to prisoners): ₹16–35 per head per year at 1867-68 prices.
• Per capita income was only about ₹20 a year.

• This showed that most Indians could not afford even what prisoners ate. He used it to argue that colonial rule was making India poor.

• National Planning Committee (1938): set up by the Congress under Nehru. It raised the idea of a national minimum standard of living.

• Bombay Plan (1944): written by leading industrialists. It put the minimum at about ₹75 per head per year.
• Planning Commission Working Group (1962): ₹20 rural and ₹25 urban per capita per month at 1960-61 prices. This was the first official line after Independence.
• Dandekar-Rath (1971): used a norm of 2,250 kcal per person per day, giving ₹15 rural and ₹22.5 urban per month at 1960-61 prices. It was the first systematic estimate built on NSS (National Sample Survey) data.

The calorie-norm era (1979–2009)

• Alagh Task Force (1979) created the calorie-based poverty line. This is the monthly spending at which a person can buy enough food for a minimum number of calories a day.
• Norms: 2,400 kcal rural and 2,100 kcal urban. The rural norm is higher because rural work involves more heavy manual labour.
• Lines: ₹49.09 rural and ₹56.64 urban per month at 1973-74 prices (NSS 28th round).

• Weakness: later lines were only updated for prices. The basket stayed frozen at 1973-74, even though what people bought kept changing.

• Lakdawala Expert Group (1993):

• Kept the Alagh basket but made the lines state-specific, so each state got its own rural and urban line.
• Updated rural lines with CPI-AL (Consumer Price Index for Agricultural Labourers) and urban lines with CPI-IW (Consumer Price Index for Industrial Workers).

• Used NSS survey spending as it was. It did not scale it up to match national-accounts consumption, as earlier practice had done.

• The "calorie puzzle" (Deaton-Drèze):

• Real spending per head (spending after removing inflation) rose, but average calorie intake fell.
• Likely reasons: less heavy manual work, better health (less energy lost to illness) and a more varied diet (more milk, fruit and protein, and fewer cheap cereals).
• Result: a person eating fewer calories is not always poorer. So a line tied only to calories measures poverty wrongly.

Tendulkar (2009) and Rangarajan (2014)

• Tendulkar Expert Group (2009):
• Dropped the calorie anchor. It used one all-India urban poverty line basket (PLB), anchored to Lakdawala's 2004-05 urban poverty rate of 25.7%.
• Used MRP (Mixed Recall Period), which asks about spending over two different periods:
  • a 365-day recall for things bought rarely: clothing, footwear, durable goods, education and hospital care;
  • a 30-day recall for everything else.
• Explicitly counted spending on health and education.
• Took price differences between states, and between rural and urban areas, from NSS unit values (the price per unit that households reported paying).

• 2011-12 lines: ₹816 rural and ₹1,000 urban per person per month, or about ₹27 and ₹33 a day [4].

• The "₹32 a day" row (2011):

• The Planning Commission's affidavit in the Supreme Court implied an urban line of about ₹32 a day.

• Many people felt this was far too low to live on. The public anger led to the Rangarajan group.

• Rangarajan Expert Group (2014):

• Went back to a normative food basket, which is based on what people should eat: 2,155 kcal rural and 2,090 kcal urban, plus protein and fat norms for the first time.
• Added essential non-food spending on clothing, rent, education and conveyance (transport), as seen in the median fractile. This is the middle group of households when all households are ranked by spending.
• Used MMRP (Modified Mixed Recall Period) data [2]. MMRP uses a shorter recall period for items bought often, such as some foods, so that their spending is not under-reported.
• 2011-12 lines: ₹972 rural and ₹1,407 urban per person per month [2]. That is about ₹32 and ₹47 a day.
• For a family of five: ₹4,860 rural and ₹7,035 urban per month [2].
• The lines are 19% higher (rural) and 41% higher (urban) than Tendulkar's [2].
• Switching to MMRP alone explains about 67% of the rural rise and 28% of the urban rise [2].

In India

• Who measures it: expert groups of the Planning Commission, now NITI Aayog. They use NSS household consumption surveys. No law fixes the line.
• Tendulkar HCR trend:

Year	HCR (Tendulkar)
2004-05	37.2%
2009-10	29.8%
2011-12	21.9% (rural 25.7, urban 13.7; about 27 crore poor) [4]

• Speed of decline: poverty fell by 2.18 percentage points a year between 2004-05 and 2011-12. That was about three times the pace of the 11 years from 1993-94 to 2004-05 [4].
• Rangarajan HCR 2011-12: 29.5% (rural 30.9, urban 26.4), or 36.3 crore poor. This line was never formally adopted.
• No official line since 2011-12:
• The NITI Aayog Task Force on Elimination of Poverty (2016), chaired by Arvind Panagariya, did not recommend a line [3].

• So India has had no official poverty line or estimate since 2011-12.

• Latest international figure: using HCES (Household Consumption Expenditure Survey) 2022-23, India's extreme poverty was 5.25% at the World Bank's $3.00/day line and 2.35% at the older $2.15 line [8]. HCES 2022-23 collected data only on MMRP [8].

• NCERT error: Class 11, Comparative Development Experiences of India and its Neighbours, Table 8.5 gives India's BPL share as 21.9% for "2019-21". In fact, 21.9% is the Tendulkar estimate for 2011-12 [4]. Do not quote it as a recent figure.

Don't confuse with

• Multidimensional Poverty Index (MPI): it counts people who lack several basic things at once in health, education and standard of living [6]. It is not a money threshold. NITI Aayog's figure of 11.28% (2022-23), down from 29.17% (2013-14) [5], is not a poverty-line HCR.
• Head Count Ratio (HCR): the poverty line is the threshold (in ₹ of MPCE). The HCR is the share of people below it (in %).
• International Poverty Line (World Bank): a single global line of $3.00/day at 2021 PPP from June 2025, up from $2.15 [7]. PPP (Purchasing Power Parity) is an exchange rate that equalises what money can buy in different countries. India's national lines are set in rupees of MPCE by Indian expert groups and differ by rural and urban area.
• Relative poverty: measured against others in the same society, such as below half the median income. India's line measures absolute poverty against a fixed minimum.

Prelims Hooks

• Dandekar-Rath (1971) made the first systematic poverty estimate using NSS data, with a norm of 2,250 kcal. Naoroji's much earlier "jail diet" estimate (1901 book, 1867-68 prices) was not based on NSS data.
• Alagh (1979): 2,400 kcal rural / 2,100 kcal urban, giving lines of ₹49.09 / ₹56.64 at 1973-74 prices. Lakdawala (1993) made lines state-specific and updated them with CPI-AL (rural) and CPI-IW (urban).
• Tendulkar (2009): dropped the calorie norm and used MRP. 2011-12 lines were ₹816 / ₹1,000, with HCR 21.9% [4].
• Rangarajan (2014): 2,155 / 2,090 kcal plus protein and fat norms, using MMRP. Lines were ₹972 / ₹1,407, with HCR 29.5% (36.3 crore). It was never adopted [2].
• Trap: India's last official poverty estimate is for 2011-12. The 2016 NITI Task Force (Panagariya) set no new line [3]. The 11.28% figure is the National MPI (NITI Aayog), not a poverty-line HCR [5].
• World Bank International Poverty Line: $3.00/day (2021 PPP) from June 2025. This is the median of 23 national lines of low-income countries [7]. India's rate was 5.25% (2022-23) [8].

Mains Points

• Calories vs a wider basket:
• The calorie puzzle shows that calories alone give the wrong picture of poverty.
• Tendulkar added health and education spending. Rangarajan went back to food norms but added protein and fat.

• Any new line must balance nutrition, non-food essentials and price differences between regions.

• A 14-year data gap (since 2011-12):

• With no official line, targeting depends on proxies. The Socio-Economic Caste Census (SECC) is used for NFSA and PMAY coverage.

• HCES 2022-23 now gives a base for a new line. A new line would make targeting more accurate and help track progress on SDG 1 [8].

• The method changes the count, so both measures are needed:

• The switch from MRP to MMRP alone raises the line and changes the poverty rate [2][8]. So estimates made with different methods must not be compared directly, and the choice of method is political as well as technical.
• The MPI shows gains from better access to basic services (from 29.17% to 11.28%) [5]. But it cannot show whether spending is enough, or how badly price shocks hurt people. So India needs both a money-based line and the MPI.

Related concepts

• Calorie-based poverty line

Read more

• India's poverty line: from Naoroji to Rangarajan