The release of the fact sheet of the Household Consumption Expenditure Survey for 2022-23 (HCES) by the National Sample Survey Office (NSSO) led to estimations of poverty and inequality trends by many researchers. Some of these studies also discussed comparability of data and measurement issues.

Overview of Data and Estimates

• Some argue that without unit-level data, fact sheet estimates remain provisional but still provide insights into poverty and inequality trends.
• Estimated poverty ratios showed a significant decline from 29.5% in 2011-12 to 10% in 2022-23 (Rangarajan Committee) and from 21.9% to 3% (Tendulkar Committee), indicating a substantial reduction.
• Inequality, as measured by the Gini coefficient, declined between 2011-12 and 2022-23, particularly in urban areas.

Rate of Decline and Comparison

• The rate of poverty decline slowed between 2011-12 and 2022-23 compared to the previous period (2004-05 to 2011-12).
• Inequality reduction was notable in urban regions, contributing to the overall decline in income disparity.

Impact of Reference Periods on Estimates

• The NSSO’s varying reference or recall periods for data collection led to different estimates of consumption expenditure (URP, MRP, MMRP).
• Experts suggest that the Modified Mixed Reference Period (MMRP) yields estimates closer to the true value but poses challenges in comparability with earlier years.

Methodological Changes and Comparability

• Methodological changes, including increased item coverage and multiple visits, improved estimates but raised comparability concerns over different timeframes.
• The use of MMRP by the Rangarajan Committee for 2009-10 and 2011-12 allows comparability with 2022-23 estimates, but long-term comparisons face challenges due to evolving methodologies.

Conclusion on Trends

• The analysis underscores a significant decline in poverty and inequality, with urban areas experiencing notable improvements.
• Methodological changes and reference period variations highlight the complexities in estimating poverty and inequality trends over time, necessitating cautious interpretation and long-term comparability considerations.

Measurement Issues in Poverty Analysis

• Challenges in Poverty Line Definition
  • Mohanan and Kundu argue that the Tendulkar Committee found calorie norm-based poverty lines outdated.
  • The Tendulkar Committee indirectly used calorie norms from the Lakdawala Committee’s urban poverty line, converted from URP to MRP consumption.
• New Consumption Basket
  • The Rangarajan Group emphasized a poverty basket addressing adequate nourishment and essential non-food expenditure levels.
  • They developed a fresh poverty basket instead of updating an old one with new prices, aiming for a more comprehensive approach.
• Consideration of Public Expenditure
  • Poverty lines are based on private consumption, excluding public expenditure.
  • The HCES 2022-23 tried imputing values for public expenditure items received freely or at low prices, but this captured only a small portion of total public expenditure, underestimating household well-being.