ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Rangarajan's Measure of Poverty

We now have a new official measure of poverty, but does it tell us anything more?

We now have yet another methodology for measurement of poverty with the Report of the Rangarajan Expert Group. Set up in response to popular criticism of the Tendulkar methodology of poverty measurement which was adopted by the Planning Commission only in 2011, Rangarajan’s brief was to arrive at normative poverty lines more widely acceptable than Tendulkar’s.

The main criticism of the Tendulkar methodology was that its poverty lines had no explicit normative content and were based on the level of urban poverty as obtained from the earlier ­Lakdawala methodology. In fact, while maintaining continuity with Lakdawala, Tendulkar had explicitly delinked consumption poverty from calorie norms and focused on proper treatment of price differentials over space and time. This led to significant upward revision of estimates of rural poverty that were attributed to faulty price adjustments in the past and corrected many cases where the Lakdawala method unrealistically measured a state to have much less rural poverty than urban. But, discontinuing the calorie anchor went against an established view. And, more significantly, there was general anger that too many who deserve public support would still remain excluded, especially in urban areas, if the Planning Commission used Tendulkar estimates to continue its caps on the numbers of people entitled to various government benefits. Rangarajan has addressed these concerns by not only suggesting a calorie-plus norm that increases poverty numbers beyond Tendulkar but by also endorsing the view that poverty estimates should not be used to cap entitlement to government benefits.

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