Economics · Governance

Poverty Indicators in India and the U.S.A – A Comparative Analysis


Poverty is, and has always been, as ubiquitous as the very air we breathe. It does not matter if you are in the malnourished swamps of Bihar or the arid regions of Texas: poverty would be prevalent in some way, shape or form. It is extremely difficult to combat: like the many-headed Hydra, every time you cut off one of its heads, a new, more terrible one grows in its place. India, for example, is one of the poorest countries in the world. In 2010, the World Bank reported that 32.7% of all people in India fall below the international poverty line of US$ 1.25 per day (PPP). What makes it worse is that there is no definite way to measure it, which makes fighting it even more difficult.

In contrast, poverty in the United States has been measured in absolute terms since the 1960s. The economy food plan (the least costly of four nutritionally adequate food plans designed by the Department of Agriculture) was at the very basis of this definition of poverty.[1] It was found that a family of three or more spent one-third of their money on food. Thus, poverty thresholds were set at three times the cost. This, as is very evident, is rather arbitrary, sweeping and generalizing. This measure has seen its fair share of controversy. As early as 1968, there were reports from different departments questioning the premises on which this method was basing itself.

Back home in India, the poverty line in 1978 was originally based on income/food requirements. It was calculated that the calorie standard for a typical individual in rural areas was 2400 calorie and was 2100 calorie in urban areas. Then the cost of the grains that fulfil this normative standard was calculated. This cost was the poverty line.

A different measure for measuring poverty in India is The Socio Economic Survey conducted during 2002, based on 13 Socio economic indicators indicating the quality of life and by score based ranking for all households.

None of these measures are perfect. A New York Daily News Article, on November 6, 2013 reported that one in six Americans live in poverty[2]; that is much higher than the official rate of poverty. The poverty figures are more alarming than they appear because even though the U.S.A still remains the richest country in the world, there is a child poverty crisis which is impacting the education sector.[3][4] Nearly half of all U.S. public school students live in poverty. Back home in India, It was reported in India Today that, according to the Tendulkar Committee’s methodology for 2012-2013, 21.9% of India’s population, or 27 crore Indians, live in poverty.[5] There is, thus, a tendency of these measures to understate poverty. Hidden or invisible poverty is the most dangerous of them all: it lives in the background, impoverishing millions of lives every day while escaping measures to be caught and eliminated.

 Another issue in these measures is the use of households. The U.S.A system uses a metric of a 3-member household; the Indian system, a five-member household. An adult-equivalent approach would be more effective, for obvious reasons. The size of a household is quite arbitrary; it varies according to socio-economic factors from place to place and region to region.

It is quite clear that the original Indian Poverty Line was extremely flawed in its basic premise itself. Calculating the minimum calories required by each person and calculating the income equivalent of that is a deeply arbitrary method and fails to appreciate the nuances of poverty. It is of no wonder that it has often been called the “Starvation Line”. A better measurement would be to calculate how much a household prefers to spend on food items.

While the American measure is a step above from the 1978 Indian Poverty Line mechanism, it is still flawed because the fraction allotted is arbitrary. There was no empirical evidence of the veracity of the one-third percentages. However, one positive factor in this system of measurement is that it is adjusted for factors such as family size, sex of the family head, number of children under 18 years old, and farm or non-farm residence.

The Tendulkar Committee and other subsequent plans in the 21st century to measure poverty have been huge improvements. The attempts to use various social and living conditions as indices of poverty and get a weighed score do away with the overly simplistic nature of the original plan. Furthermore, it shifts to a reliance on the consumer dimension for calculating poverty. This combines the attempt to have a single indicator with the attractions of disaggregation. It also does attempt to allow for substitution between different basic needs. However, a shortcoming of it is that the choice is not in the hands of the public; they do not get to decide which basic need they prefer. It thus makes for a very paternalistic understanding of poverty; where the state decides what is required and what is desired by those affected by poverty to come out of their doldrums. The affected have no agency in the matter.

As we can see, Both the Indian and American calculations of poverty are far from perfect. They suffer from a lot of defects, and are unable to pierce the veil deep enough, so to speak. However, it must be said that the indicators used by the present Indian version, despite being hugely maligned and heavily criticized by the media, seems to be more suited, inclusive and holistic.

Nevertheless, there are shortcomings which are not found in the American system: including the composition of families; checking whether they are single-parent families; having a consideration for children and for families headed by women are a few of them. These are small but basic considerations which our system would do well to emulate. It can never be said whether it will be enough to combat poverty; unfortunately, over millennia of human history, we have never been able to do that. However, it does potentially give us more potent, more lethal tools to battle it, and evens the playing field for those affected the most by it.

About the Author

imageMehul Kumar

Outspoken and endangered, Mehul is a law abiding maverick. Currently stationed at NALSAR as an apprentice, he hopes to create his magnum opus in the field of wrestling or law at least.







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