Where the Line Is Drawn

In 1962 a working group of the Planning Commission put a figure on the minimum a person needed. It was ₹20 a month in rural areas and ₹25 in urban areas, at 1960-61 prices, with no variation between states.¹

The figure came with an assumption attached, and the assumption is the more interesting half. The working group left health and education out of the calculation, on the ground that the state would provide both. India's first poverty line was therefore not a statement about what it costs to live. It was a statement about what it costs to live given everything the state had undertaken to supply, and it would move if that undertaking changed.

Everything that followed is a series of arguments about which parts of the first sentence to keep.

Calories as an anchor

The first systematic estimate came from outside government. V.M. Dandekar and N. Rath published Poverty in India in the Economic and Political Weekly in January 1971, working from the National Sample Survey of 1960-61. Their move was to fix a nutritional standard, 2,250 calories per person per day for rural and urban households alike, and then read off from the survey the level of total expenditure at which households were in fact obtaining it.

That second step deserves attention, because it recurs in every subsequent exercise and it is not a technical detail. Nobody was proposing to buy a household 2,250 calories and nothing else. The method looks at what people who reach the calorie standard actually spend in total, including on things that are not food, and calls that sum the line. The line is therefore built out of the observed behaviour of a reference group, and moving the reference group moves the line without anyone changing their view about nutrition.

By that standard, roughly half of rural India was below the line at the start of the 1960s.²

In 1979 a task force under Y.K. Alagh made the approach official, and official poverty counting in India begins with it. The task force raised the rural norm to 2,400 calories and set the urban norm at 2,100, on the reasoning that rural work is more physically demanding and rural transport less mechanised. Applying those norms to the twenty-eighth round of the National Sample Survey, it found the calorie requirements met at total expenditure of ₹49.09 per capita per month in rural areas and ₹56.64 in urban, at 1973-74 prices.³

The line that stopped being recalculated

The expert group chaired by D.T. Lakdawala reported in 1993 and made one improvement and one large omission.

The improvement was state-specific lines, updated using the consumer price index for agricultural labourers in rural areas and for industrial workers in urban areas, which took account of the fact that prices had diverged sharply across states since 1973-74.

The omission was that the basket itself was never re-derived. The Alagh lines were carried forward by price indices for three decades. This sounds like a conservative choice and is in fact a radical one, because a poverty line derived from a calorie norm and then indexed to prices only continues to deliver that norm if the relative prices of the things poor households buy all move together. They did not. Food prices, fuel, rent, transport and medical costs moved at different rates, and household spending patterns changed underneath the fixed basket. By the mid-2000s the expenditure level called the poverty line no longer corresponded to 2,400 calories in rural areas at all. It was named after a nutritional standard it had ceased to purchase.

The 1993-94 estimate under this method put 36 per cent of the population below the line. The 2004-05 estimate put it at about 27.5 per cent.⁴

Tendulkar, and the argument in the open

The expert group chaired by Suresh Tendulkar reported in 2009 and did the thing that had been avoided for thirty years. It cut the line loose from calories.

The reasoning was that the relationship between expenditure and calorie intake had broken down: households at the same real expenditure were consuming fewer calories than they had in the 1970s, and were spending on health, transport, schooling and fuel instead. Anchoring the line to a calorie count therefore meant anchoring it to a pattern of consumption that no longer existed.

The premise was well established by then. Angus Deaton and Jean Drèze, writing in the Economic and Political Weekly in 2009, documented the puzzle in detail: calorie intake had declined across most of the distribution over two decades in which real expenditure rose, and the decline was visible among the poor as well as the rich.⁷ Whatever explains that, and the candidates include lighter physical work, better epidemiological conditions and shifting relative prices, it means a fixed calorie figure cannot be treated as a stable proxy for adequacy.

In its place, Tendulkar took the all-India urban poverty line basket implied by the Lakdawala method for 2004-05, treated that bundle as the reference standard, priced it for each state and for rural and urban areas separately, and included private spending on health and education in the basket for the first time.

The lines that emerged were ₹446.68 per capita per month in rural areas and ₹578.80 in urban, at 2004-05 prices. The headcount for 2004-05 went from about 27.5 per cent under Lakdawala to 37.2 per cent under Tendulkar.⁵

Nothing had changed for any household. Ten per cent of India's population, some 100 million people, moved from one side of the line to the other because an expert group changed the reference bundle.

Applied to the 2011-12 survey, the Tendulkar lines came to ₹816 rural and ₹1,000 urban per capita per month, and the headcount to 21.9 per cent. Converted to a daily figure for the newspapers, that was ₹27 and ₹33 a day, and the resulting argument was less about method than about dignity. The Planning Commission's own deputy chairman, Montek Singh Ahluwalia, said in 2013 that he was willing to agree the line was a bit low.

Rangarajan, and a lower standard producing a higher line

An expert group under C. Rangarajan was appointed in June 2012 and reported in June 2014. It went back to separate rural and urban baskets, restored a nutritional anchor, and widened it: alongside calories it set norms for protein at 48 grams rural and 50 grams urban per person per day, and for fat at 28 and 26 grams.

It also lowered the calorie norm. The rural requirement came down from 2,400 to 2,155 calories, and the urban from 2,100 to 2,090, on the reasoning that the age structure of the population and the physical demands of work had both changed since 1979. The gap between rural and urban norms, which had been 300 calories, became 65.

The lines that came out of this were ₹972 rural and ₹1,407 urban for 2011-12, well above Tendulkar's ₹816 and ₹1,000, and the headcount was 29.5 per cent against 21.9.⁶ That is roughly 93 million additional people counted as poor.

The two facts sit together and are worth holding side by side. Rangarajan demanded fewer calories of a household than Alagh had, and drew a higher line. The explanation is entirely in the non-food component. Where the earlier method derived non-food spending from the same low fractile that met the calorie norm, Rangarajan took observed spending on essential non-food items, rent, conveyance, education, clothing, by households in the median fractile, which came to ₹141 per capita per month in rural areas and ₹407 in urban. A nutritional standard was relaxed and a social standard was raised, and the second effect was larger.

That is what a poverty line is: a nutritional norm, a reference population whose behaviour converts the norm into money, and a price index to carry it forward. Each of the three is a judgement. The calorie figure is the one that gets argued about in public because it looks like biology, and it is the one that matters least.

One more thing the line conceals is worth stating, because the public argument has never been about it. A headcount ratio counts people below a threshold and says nothing about how far below they are. A household at ₹800 a month and a household at ₹200 a month were both simply poor under the 2011-12 Tendulkar line, and a policy that lifted the first across the line while leaving the second untouched would have improved the headline number more than one that doubled the income of the poorest. The poverty gap and the squared gap, which do capture depth, exist and are computed in the literature, and neither has ever been the number a minister quotes.

What happened to the numbers

The Rangarajan report was submitted in June 2014, weeks after the government that commissioned it had lost office. The successor government neither adopted nor formally rejected it. The Planning Commission was dissolved the following year. India's last official poverty estimate remains the Tendulkar figure of 21.9 per cent for 2011-12, a number produced by a methodology whose own authors' successors had recommended replacing, applied to a survey now fourteen years old.

Two consumption surveys have been conducted since, for 2022-23 and 2023-24, and neither has had a poverty line applied to it. The instrument for measuring the distribution has been restored. The instrument for cutting it has not.

Meanwhile the line's other job has quietly ended. A poverty line does double duty in India: it measures, and it also decides who is entitled to subsidised food, housing and insurance. That second function has largely detached from it. The National Food Security Act, 2013 covers up to 75 per cent of the rural population and 50 per cent of the urban, which is a political decision about coverage, not a headcount derived from any line. Beneficiary identification runs off the Socio-Economic and Caste Census of 2011 and its deprivation criteria. The poverty line survives mainly as a statement about how the country is doing.

The assumption of 1962

Which brings the argument back to where it started. The working group of 1962 excluded health and education because the state was going to provide them. Tendulkar put private spending on health and education into the basket in 2009, and had to, because by then households were paying for both.

Read as a sequence, the poverty line has been recording, in the only language it has, the retreat of the state from things it once expected to supply. Every time the line rises because a new committee has added a category of private expenditure to the minimum bundle, what has been measured is not that living has become more expensive in general. It is that a cost has moved from the public account to the household one.

There is no committee currently drawing a line, and no line currently being applied to the two surveys that exist. The next number, when it comes, will encode a fresh set of assumptions about what the state supplies, and those assumptions will be the substance of it.

1. Planning Commission working group, 1962; lines of ₹20 rural and ₹25 urban per capita per month at 1960-61 prices, excluding health and education on the assumption of state provision. ↩
2. V.M. Dandekar and N. Rath, 'Poverty in India', Economic and Political Weekly, January 1971; calorie norm of 2,250 per person per day for both sectors, applied to the 1960-61 National Sample Survey. ↩
3. Task Force on Projections of Minimum Needs and Effective Consumption Demand, chaired by Y.K. Alagh, 1979; norms of 2,400 kcal rural and 2,100 urban, lines of ₹49.09 and ₹56.64 per capita per month at 1973-74 prices, using the 28th round of the National Sample Survey. ↩
4. Expert Group chaired by D.T. Lakdawala, 1993; state-specific lines updated by CPI-AL and CPI-IW. Headcount of 36 per cent in 1993-94 and about 27.5 per cent in 2004-05. ↩
5. Expert Group to Review the Methodology for Estimation of Poverty, chaired by Suresh Tendulkar, 2009; lines of ₹446.68 and ₹578.80 at 2004-05 prices, headcount 37.2 per cent for 2004-05, 29.8 per cent for 2009-10, and 21.9 per cent for 2011-12 (rural 25.7, urban 13.7) at lines of ₹816 and ₹1,000. ↩
6. Expert Group to Review the Methodology for Measurement of Poverty, chaired by C. Rangarajan, June 2014; nutrient norms of 2,155 kcal rural and 2,090 urban with protein and fat norms; lines of ₹972 and ₹1,407 for 2011-12; headcount 29.5 per cent for 2011-12 and 38.2 per cent for 2009-10. Non-food components of ₹141 rural and ₹407 urban per capita per month for essential items, derived from the median fractile. ↩
7. Angus Deaton and Jean Drèze, 'Food and Nutrition in India: Facts and Interpretations', Economic and Political Weekly, 2009. ↩