The New Poverty Line: A Methodology Deeply Flawed

This note discusses the Report of the Expert Group to Review the Methodology for Estimation of Poverty. The Report recommends the use of the existing official urban poverty line as the poverty line for rural and urban India. While the main reasons cited for this choice are those of convenience (statistical consistency over time) and ‘general acceptability’, the new poverty line, it is claimed, also provides for minimum nutritional, health, and educational outcomes. These justifications do not stand up to scrutiny. In respect of nutrition, the new poverty line is based on lower calorie norms than used in earlier estimates, and these norms refer to the minimum intake for persons engaged in light activity. In relation to education and health, the fact that expenditure at the poverty line on education and health equals the median expenditure does not ensure adequate outcomes in terms of education and health.