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India is likely to switch to a new method of estimating poverty, which includes total expenditure required by families on clothes, housing, health, education and conveyance apart from adequate food, which was until now the sole criterion for determining poverty.
Planning Commission member Abhjit Sen said this gives a more realistic picture of the poverty level as the earlier estimates were based only on the food calorie intake of a person.
Sen said the new method uses the lifestyle of the urban housheholds as a benchmark for the rural families as well since they also need to spend on health, education, clothes, transport and housing.
Estimates, for the year 2003- 04, using the new method show that a whopping 41.8 per cent of the country's rural population live below the poverty line based on the wider criteria.
According to the earlier estimate for the year, based only on the food intake criterion, 28.3 per cent of the rural population lived below the poverty line.
The new methodology to arrive at the new estimates has been introduced by an expert group headed by Professor
Suresh Tendulkar, former chairman of the Prime Minister's advisory council. The expert group has recommended that the new method be adopted for arriving at fresh estimates of poverty keeping in mind that the rural poor need more than food alone to sustain a decent livelihood.
The new method for calculating urban poverty also show a higher estimate of 27.5 per cent for the population below the poverty line but this is much closer to the 25.7 per cent estimated using the old method. The all- India headcount according to the new method is that 37.5 per cent of the country's population is below the poverty line compared to 27.5 per cent earlier.
Planning Commission member Mihir Shah who has done extensive studies on rural India is also in favour of adopting the new method. He said the methodology provides a more accurate picture of the ground realities and will help policy makers to draw up better plans to tackle it.
The expert group which submitted its report to Planning Commission deputy chairman Montek Singh Ahluwalia on Tuesday has also pointed out that its report does not imply that the proportion of poor people in the country has not declined over the years. THE report points out that if the 1993- 94 poverty levels in the country are estimated using the new method it runs out to be 50.1 per cent in rural areas, 31.8 per cent in urban areas and 45.3 per cent in the country as a whole as compared to the 1993- 94 official estimates of 37.2 per cent rural, 32.6 per cent urban and 36.0 per cent combined.
" Even though the suggested new methodology gives a higher estimate of rural headcount
ratio at the all- India level for 2004- 05, the extent of poverty reduction in comparable percentage point decline between 1993- 94 and 2004- 05 is not different from that inferred using the old methodology," the report points out.
Sen said the expert group has recommended a threshold level of Rs 460 per head per month to define poverty which works out to Rs 2,300 per family.
For urban households the threshold level has been fixed at Rs 3,000 per family or Rs 590 per month per person. The new methodology will be discussed in the planning commission which may make some changes to improve it and then it will be for the government to take the final call on the issue, Sen added.