Rangarajan Committee on Poverty Estimation

Introduction 

The Expert Group under the Chairmanship of Dr. C. Rangarajan on Poverty estimation in the country constituted by the Planning Commission in June 2012. 

Term of Reference 

• To Review the Methodology for Measurement of Poverty in the country. 

• To examine whether the poverty line should be fixed solely in terms of a consumption basket or whether other criteria. 

• To examine the issue of divergence between the consumption estimates based on the NSSO methodology and those emerging from the National Accounts aggregates. 

• To recommend how the estimates, as evolved above, should be linked to eligibility and entitlements for schemes and programmes under the Government of India. 

Recommendations 

• Reverts to the practice of having separate all-India rural and urban poverty basket lines and deriving state-level rural and urban estimates from these unlike Tendulkar committee which used the all-India urban poverty line basket as the reference to derive state-level rural and urban poverty.

 • The Expert Group (Rangarajan) uses the Modified Mixed Recall Period consumption expenditure data of the NSSO as these are considered to be more precise compared to the MRP, which was used by the Expert Group (Tendulkar) and the URP, which was used by earlier estimations. 

• The Expert Group (Rangarajan) computed the average requirements of calories, proteins and fats based on ICMR norms differentiated by age, gender and activity for all-India rural and urban regions to derive the normative levels of nourishment.

• The methods also include on certain normative levels of adequate nourishment, clothing, house rent, conveyance, education and also behavioral determination of non-food expenses. 

• Accordingly, the energy requirement works out to 2,155 kcal per person per day in rural areas and 2,090 kcal per person per day in urban areas. 

• The protein and fat requirements have been estimated on the same lines as for energy. These requirements are 48 gms and 28 gms per capita per day, respectively, in rural areas; and 50 gms and 26 gms per capita per day in urban areas. 

• The Expert Group estimates that the 30.9% of the rural population and 26.4% of the urban population was below the poverty line in 2011-12. The all-India ratio was 29.5%. In rural India, 260.5 million individuals were below poverty and in urban India 102.5 million were under poverty. Totally, 363 million were below poverty in 2011-12. 

• The new poverty line work out to monthly per capita consumption expenditure of Rs. 972 in rural areas and Rs. 1,407 in urban areas in 2011-12. For a family of five, this translates into a monthly consumption expenditure of Rs. 4,860 in rural areas and Rs. 7,035 in urban areas. 

• The poverty ratio has declined from 39.6% in 2009-10 to 30.9% in 2011-12 in rural India and from 35.1% to 26.4% in urban India. The decline was thus a uniform 8.7 percentage points over the two years. The all-India poverty ratio fell from 38.2% to 29.5%. Totally, 91.6 million individuals were lifted out of poverty during this period.

• The Expert Group (Rangarajan) recommends the updation of the poverty line in the future using the Fisher Index. The weighting diagram for this effort can be drawn from the NSSO’s Consumer Expenditure survey.