Question

Explain the two approaches to estimate poverty

Answer 1

A common method used to measure poverty is based on the income or consumption levels. A person is considered poor if his or her income or consumption level falls below a given “minimum level” necessary to fulfill basic needs. While determining the poverty line in India, a minimum level of food requirement, clothing, footwear, fuel and light, educational and medical requirement etc. are determined for subsistence. These physical quantities are multiplied by their prices in rupees. The resent formula for food requirement while estimating the poverty line is based on the desired calorie requirement.

As per 2000 figures; a family of five which is earning less than Rs. 1,640 per month is considered to be living below the poverty line. This figure is Rs. 2,270 per month for the urban area.The expected calorie intake has been fixed at 2400 calories per person in rural areas and 2100 calories in urban areas. A person consuming less than this amount is considered to be living below the poverty line.



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Answer 2

Poverty lines apply to the determined minimum wages needed to satisfy the basic requirements of life.

There are two common methods to estimate the poverty line. They are:

Income method: As per administration guidelines if the salary of an individual is under the prescribed levels which are 40500 to 49000 in pastoral areas and 51500 to 60000 in metropolitan cities then the person is deemed to be poor.

Consumption method: The administration has also established a limit for calorie consumption, if a person is incapable to consume the required level due to economic limitations the person is acknowledged to be poor.