New Poverty Norms Adopted by the Rangarajan Committee

The Expert Group under the Chairmanship of Dr C. Rangarajan to Review the Methodology for Measurement of Poverty in the country constituted by the Planning Commission in June 2012 had submitted its report on 30th June 2014.

Criteria Adopted by the Rangarajan Committee

• The new poverty line includes certain normative levels of adequate nourishment, clothing, house rent, conveyance and education, and a behaviorally determined level of other non-food expenses.
• It has computed the average requirements of calories, proteins and fats based on ICMR (Indian Council of Medical Research) norms differentiated by age, gender and activity for all-India rural and urban regions to derive the normative levels of nourishment.
• 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.
• Ragarajan Committee has considered Calorie norm not as a single number but as an average in a band of +/- 10% of these values and with intakes even at the lower end still being adequate enough to not adversely affect health and work.
• 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.
• A food basket that simultaneously meets all the normative requirements of the three nutrients defines the food component of the poverty line basket proposed by the Rangarajan committee. These nutrient norms are met for persons located in the sixth fractile (25-30%) in rural areas and for those in the fourth fractile (15-20%) in urban areas in 2011-12. The average monthly per capita consumption expenditure on food in these fractile classes is Rs 554 in rural areas and Rs 656 in urban areas (NSS 68th Round).
• The median fractile (45-50%) values of clothing expenses, rent, conveyance and education expenses are treated as the normative requirements of the basic non-food expenses of clothing, housing, mobility and education of a poverty line basket. This works out to Rs 141 per capita per month in rural areas and Rs 407 in urban areas. The observed expenses of all other non-food expenses of the fractile classes that meet the nutrition requirements are considered as part of the poverty line basket. This works out to Rs 277 per capita per month in rural areas and Rs 344 in urban areas.
• The new poverty line thus works 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.
• Compared to the poverty lines based on the methodology of the Expert Group (Tendulkar), the poverty lines estimated by the Expert Group (Rangarajan) are 19% and 41% higher in rural and urban areas, respectively.
• The Ragarajan Committee has used 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 Tendulkar Expert Group and the URP, which was used by earlier estimations. 67% of the increase in the rural poverty line and 28% of the increase in the urban poverty line is because of the shift from MRP to MMRP.
• The Rangarajan Committee has estimated 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 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 Rangarajan committee has recommended 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.
• For the Food–group, the expert group has recommended that the current practice of relying on the unit values derivable from the NSSO Consumer Expenditure Surveys should continue till such time a new CPI of CSO with a weighting diagram based on the 2011-12 pattern of consumption becomes available. In respect of non-food-items, the price indices available in the exiting CSO Consumer Price Indices can be used in the construction of requisite Fisher indices. Once the new series of Consumer Price Index numbers (with 2011-12 as the base year) become available, it may be used if the extent of change in the structure of consumption at that point in time relative to the 2011-12 structure of consumption is not very different.