NEWS

• Nearly 15 years ago, the C. Rangarajan Committee (2014) was set up by the Planning Commission to review India’s poverty measurement methodology.
• It defined poverty based on monthly per capita expenditure (MPCE):
  • ₹972 (rural) and ₹1,407 (urban).
• This implied anyone spending more than ₹32/day (rural) or ₹47/day (urban) was not poor.
• Result: 29.5% of India’s population classified as poor in 2011-12.

HIGHLIGHTS

Recent Update (RBI Paper, 2025)

• RBI’s Department of Economic & Policy Research updated the Rangarajan line using the Household Consumption Expenditure Survey (HCES) 2022-23.
• Major Findings:
  • Biggest decline: Odisha & Bihar – poverty fell by ~40 percentage points (2011-12 to 2022-23).
  • Least decline: Kerala & Himachal Pradesh.
  • Lowest rural poverty: Himachal Pradesh (0.4%)
  • Highest rural poverty: Chhattisgarh (25.1%)
  • Lowest urban poverty: Tamil Nadu (1.9%)
  • Highest urban poverty: Chhattisgarh (13.3%)

 Methodological Note

• RBI economists did not use CPI inflation to update the poverty line, as CPI and Rangarajan Poverty Line Basket (PLB) differ in composition.
• Instead, they created a new price index aligned with PLB weights (food: 57% rural, 47% urban).

Poverty Measurement in India

• Committees:
  • Alagh (1979) – calorie-based poverty line.
  • Lakdawala (1993) – state-specific price indices.
  • Tendulkar (2009) – uniform poverty line using NSS data.
  • Rangarajan (2014) – broader consumption basket.
• Headcount Ratio: % of population below poverty line.
• CPI: Measures change in price level of a basket of goods and services.

 Shift to Multidimensional Poverty

• India now emphasizes Multidimensional Poverty Index (MPI) — based on health, education, and standard of living (12 indicators).
• Poverty is no longer seen merely as income deprivation but as lack of access to basic human development needs.