Poverty: concepts, measurement and persistence

The first principle

Poverty is the inability to reach a minimum standard of living, but what counts as "minimum" changes with the question we ask. If we ask about food and money, we draw a poverty line; if we ask whether people can live a decent life, we look at health, schooling and housing as well. Poverty persists not because one thing is missing but because many deprivations reinforce each other, so a programme that fixes only one of them leaves the trap intact.

The core

Three ways of seeing poverty

• Absolute poverty means being unable to afford a fixed basket of essentials, and it is measured by a poverty line on income or consumption. Relative poverty means being far below what others in the same society have, so it is really a measure of inequality.
• Multidimensional poverty follows Amartya Sen's capability approach: a person is poor if she is deprived in several basic functionings at once. The Multidimensional Poverty Index (MPI) of the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative uses health, education and living standards; NITI Aayog's national version has 12 indicators, adding maternal health and bank accounts.

How India has drawn the line

• The Alagh task force (1979) set a calorie norm of 2,400 kilocalories in rural and 2,100 in urban areas, and the Lakdawala expert group (1993) built state specific lines on it, updated by price indices.
• The Tendulkar expert group (2009) moved away from calories to a basket that included spending on health and education, and estimated poverty at 21.9 per cent in 2011 to 2012. The Rangarajan expert group (2014) raised the line and put poverty at 29.5 per cent for the same year; the government never formally adopted it, and no official line has been fixed since.
• In June 2025 the World Bank revised the international extreme poverty line from 2.15 dollars to 3 dollars a day at 2021 purchasing power parity. Using the Household Consumption Expenditure Survey (HCES) 2022 to 2023, it estimated India's extreme poverty at about 5.3 per cent, down from about 27.1 per cent in 2011 to 2012.

Multidimensional poverty

• NITI Aayog's National MPI Progress Review (2023) found that the share of multidimensionally poor people fell from 24.85 per cent in 2015 to 2016 to 14.96 per cent in 2019 to 2021, so that about 13.5 crore people left poverty. Its January 2024 discussion paper estimated a fall from 29.17 per cent in 2013 to 2014 to 11.28 per cent in 2022 to 2023, with about 24.8 crore people escaping.
• The biggest gains came from cooking fuel, sanitation, bank accounts and housing, while nutrition, the indicator with the highest deprivation, improved slowly.

Dimensions

The vicious cycle of poverty

• Ragnar Nurkse summed it up as "a country is poor because it is poor". Low income means low savings and no assets, which means poor food, health and schooling, which keeps productivity low, so the next income is low again. The same loop operates inside a household, which is why poverty passes from one generation to the next.

Why poverty persists despite many programmes

• Leakages and targeting errors. Ration lists built on old surveys exclude genuine poor (exclusion errors) and include the better off (inclusion errors). The Shanta Kumar committee (2015) estimated that about 46 per cent of Public Distribution System grain leaked.
• Informal work. About nine in ten workers are informal, without contracts or social security, so a single illness or lost season pushes them back below the line.
• Health shocks. High out of pocket spending on health, about 39 per cent of total health spending in the National Health Accounts 2021 to 2022, drives millions into poverty each year.
• Asset poverty. The poor own little land, and the land they own is small and rain fed, so growth in farming barely lifts them.
• Social exclusion. Scheduled Castes and Scheduled Tribes are overrepresented among the poor because of caste, isolation and land loss, and women within poor households are poorer still.
• Regional concentration. Bihar, Jharkhand, Uttar Pradesh, Madhya Pradesh and Meghalaya hold most of the multidimensionally poor, where governance and infrastructure are weakest.
• Programmes that treat symptoms. Many schemes transfer income without building assets or skills, so families stay dependent rather than graduate out.

In practice

The main anti poverty programmes and their logic

• Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005, Ministry of Rural Development: a legal right to 100 days of wage work for each rural household, which acts as insurance against drought and distress and builds rural assets.
• National Food Security Act (NFSA), 2013, Ministry of Consumer Affairs, Food and Public Distribution: subsidised grain for up to 75 per cent of rural and 50 per cent of urban people, which protects nutrition.
• Deendayal Antyodaya Yojana National Rural Livelihoods Mission (DAY NRLM), launched as Aajeevika in 2011, Ministry of Rural Development: organises poor women into self help groups for credit and livelihoods, which builds assets and voice.
• Pradhan Mantri Awas Yojana (2015, rural version 2016), Ministries of Housing and Urban Affairs and of Rural Development: a pucca house, which is the poor household's main asset.
• JAM trinity and Direct Benefit Transfer (DBT): Jan Dhan accounts, Aadhaar and mobile phones send money straight to beneficiaries, which cuts leakage and ghost beneficiaries.

Did COVID 19 widen class inequality?

• The lockdown hit the poor hardest. Urban unemployment rose to about 20.8 per cent in April to June 2020 (PLFS), millions of migrant workers walked home without wages, and children without smartphones lost most of a year of schooling while richer children studied online. Formal firms and asset holders recovered fast while informal workers and small enterprises recovered slowly, a pattern economists called a K shaped recovery.
• The counter evidence matters too. The Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), from April 2020, gave free grain to about 80 crore people, MGNREGA work demand reached a record in 2020 to 2021, and cash went to women's Jan Dhan accounts. These cushions prevented hunger on a large scale, and since January 2024 free grain under NFSA has been extended for five years. The fair conclusion is that the pandemic widened gaps in income, learning and wealth, while safety nets limited the damage at the very bottom.

Environment and the needs of the poor

• Protection can clash with livelihoods in the short run. Bans on sand mining, construction curbs under the Graded Response Action Plan in Delhi and mining limits in the Aravallis cut daily wages; relocation from tiger reserves displaces forest dwellers; and the coal transition threatens the jobs and royalties of districts in Jharkhand, Chhattisgarh and Odisha. About 27.5 crore people depend partly on forests for their livelihoods.
• In the long run, the two converge. The poor suffer most from pollution, heat, floods and degraded land, and green work such as watershed works under MGNREGA, solar pumps under PM KUSUM, and community forest management under the Forest Rights Act, 2006 gives them income. Pradhan Mantri Ujjwala Yojana (2016) shows the convergence: clean cooking fuel cut indoor smoke and women's drudgery at once.
• The answer is a just transition, in which workers and communities are retrained, compensated and given a share in the new green economy, and in which conservation is done with local communities, as in joint forest management, rather than against them.

Issues and way forward

• No official poverty line since 2014. Without a current line, targeting relies on old lists; a fresh line based on HCES 2022 to 2023, together with the MPI, would give a fuller picture.
• Outdated beneficiary lists. The Socio Economic and Caste Census (2011) is old; dynamic registries updated through local verification would reduce exclusion.
• Graduation, not dependence. The NITI Aayog and DAY NRLM experience suggests combining transfers with skills, credit and assets, as in the "graduation approach" pioneered by BRAC in Bangladesh.
• Health insurance. Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (2018) must reach the poor in practice, with stronger primary health care to cut out of pocket costs.
• Social security for informal workers. The e Shram portal and the Code on Social Security, 2020 need to deliver real pensions and insurance.

Common confusions

• Poverty line and MPI. The line counts money; the MPI counts deprivations. A family can be above the line yet deprived of sanitation or schooling.
• Poverty and inequality. Poverty can fall while inequality rises, as when everyone gains but the rich gain more.
• Tendulkar and Rangarajan figures. Both relate to 2011 to 2012; the difference comes from a different, higher line, not from different data.
• Extreme poverty and poverty. The World Bank's 3 dollar line measures extreme poverty; a higher line of 4.20 dollars is used for lower middle income countries like India.

For the exam

• Keyword bank: absolute poverty, relative poverty, capability approach, MPI, Tendulkar line, Rangarajan line, vicious cycle, inclusion and exclusion errors, out of pocket spending, K shaped recovery, PMGKAY, JAM trinity, graduation approach, just transition.
• Previous year questions: Practise the previous year questions on this topic →
• Use in an answer:
  • Introduction (data): NITI Aayog estimates that about 24.8 crore Indians escaped multidimensional poverty between 2013 to 2014 and 2022 to 2023, yet one Indian in nine is still multidimensionally poor.
  • Introduction (scholar): Amartya Sen defined poverty as the deprivation of basic capabilities, not merely low income, which explains why rising incomes have not ended malnutrition in India.
  • Conclusion: Poverty in India persists because deprivations reinforce each other, so programmes must work together to raise income, assets, health and voice at the same time.
  • Conclusion: Environmental protection and poverty reduction need not conflict if the transition is just, with the poor as partners and beneficiaries of conservation rather than its victims.