Poverty & Inequality Measures

📊 Overview

Measuring poverty and inequality is foundational to India's welfare policy and a recurring economy topic across UPSC, APPSC, TSPSC and EPFO. India has used several different methodologies over time, moving gradually from a narrow calorie/expenditure-based approach towards multidimensional measures of deprivation.

🍴 Expert Committees on Poverty Estimation

Working Group (1962): First official attempt, setting separate rural/urban minimum consumption expenditure norms.
Alagh Committee (1979): Defined the poverty line based on a minimum calorie intake — 2400 kcal/day (rural), 2100 kcal/day (urban) — converted into expenditure terms.
Lakdawala Committee (1993): Retained the calorie norm but introduced state-specific poverty lines using state-level price indices, delinking IEC-1973 methodology's other components.
Tendulkar Committee (2009): Moved away from calorie-based measures to a poverty line based on actual spending patterns on food, education, health and other essentials; uniform methodology across rural/urban.
Rangarajan Committee (2014): Reviewed the Tendulkar methodology, proposed a higher poverty line but its recommendations were not officially adopted for policy use, and India has not notified an official poverty line since.

🌐 Multidimensional Poverty Index (MPI)

Rather than relying on income/consumption alone, the MPI — developed by the Oxford Poverty and Human Development Initiative (OPHI) and UNDP, and adapted for India by NITI Aayog — measures deprivation across three dimensions (health, education, standard of living) using 12 indicators (nutrition, child/adolescent mortality, maternal health, years of schooling, school attendance, cooking fuel, sanitation, drinking water, electricity, housing, assets, and bank account). NITI Aayog's National MPI reports have shown a significant decline in multidimensional poverty in India over the last decade.

📈 Measuring Inequality

Gini Coefficient: A statistical measure (0 to 1) of income/wealth distribution, where 0 represents perfect equality and 1 represents perfect inequality; commonly visualised via the Lorenz Curve.
Palma Ratio: Ratio of income share of the top 10% to the bottom 40% of the population.
World Inequality Report: Published periodically, using tax and survey data to track top income/wealth shares globally, including India.

📋 Data Sources

Poverty and inequality estimation in India draws on periodic large-scale surveys, notably the Household Consumption Expenditure Survey (HCES) conducted by the National Sample Survey Office (NSSO)/National Statistical Office (NSO), and the National Family Health Survey (NFHS) for health/nutrition indicators feeding into the MPI.

🎯 Exam Angle

Prelims frequently tests which committee introduced which methodology and the components of the MPI. Mains rewards a critical discussion of measurement choices — why India has not notified an official poverty line since Tendulkar, and the debate between income-based versus multidimensional approaches to defining poverty.