Poverty is as misunderstood as any subject can be. At one level, it could mean no food, no clothes, bad health, and recognized inadequacy of shelters, amenities, and services. But at another level, it becomes so elusive and slippery that it slides through the slick fingers of all the manipulators of figures and wielders of statistics. In the words of Nelson Mandela, “Abject poverty is demeaning, it is an insult on the dignity of those who suffer it. In the end it demeans us all.”
Eradication of poverty is an ethical, social, political and economic imperative of mankind. The World Development Report 2000/2001 mentioned that the voices of poor people bear eloquent testimony to the meaning of poverty. The report is based on the Voices of the Poor study that captured realities faced by more than 60,000 poor people living in 60 countries. The silhouette of poverty depicted in the report appears thus: “To be poor is to be hungry, to lack shelter and clothes, to be sick and not cared for, to be illiterate and not schooled. But for the poor people, living in poverty is more than this. Poor people are particularly vulnerable to adverse events outside their control. They are often treated badly by the institutions of state and society and excluded from voice and power in those institutions.”
The Nobel prize-winning economist and philosopher Amartya Sen articulated the “Capability Approach” to shape the evaluation of poverty and well-being. All these forms of deprivations mentioned herein restrict what Sen calls the “capabilities that a person has, that is, the substantive freedoms he or she enjoys to lead the kind of life he or she values”. In 1998, the Royal Swedish Academy of Sciences awarded Sen the Nobel Prize for Economics” for having restored an ethical dimension to the discussion of vital economic problems.” Prof. Sen had delved beyond mathematical theory and juxtaposed economics with an innovative social vision that was more real and more human. Years of hard work had helped him bring to light many facets of poverty.
According to Sen, as human beings are diverse, we cannot draw a poverty line (PL) and then apply it across the board to everyone in the same way without taking into account personal characteristics and circumstances. There are geographical, biological and social factors that impact upon the income of individuals. Moreover, the poor are generally deprived of several elements, such as education, access to lands, health and longevity, justice, family and community support, credit and other productive assets and social and economic opportunities. Being poor does not mean living below the imaginary Poverty Line drawn by the authorities. Other social factors are also associated with poverty.
According to Sen: “There are systematic disparities in the freedoms that men and women enjoy in different societies and these disparities are often not reducible to differences in income and resources.” There are many other areas ~ gender disparities, such as the division of labour in the household, the extent of education received and the freedom that the members of the same household are permitted to enjoy. How people must look in order to be accepted in society ~ the clothes they wear and their physical traits ~ limits their economic options, a phenomenon Sen refers to as “social shame”. If poverty is calculated based on income level, the existence of pockets of poverty in rich countries among middle-income people could hardly be explained.
Sen recommends that poverty analysis should focus on an individual’s potential to function rather than the results the individual obtains from functioning. He expanded the understanding of poverty beyond simple income and defined it as “capability deprivation,” or the lack of freedoms to achieve a person’s chosen functioning, such as being healthy or educated. For ascertaining multiple faces of poverty Sen has focused on capability, emphasized on looking beyond income and identification of sources of deprivation and introduced entitlement approaches. Highlighting the various dimensions, Sen pronounced that poverty could classified into four different categories:
1. Absolute Poverty: This is the most basic form, defined as lacking income to afford essential items like food, clothing, and shelter.
2. Relative Poverty: This occurs when a person is poor in comparison to the living standards of the majority in society, and it can lead to the deprivation of the absolute capability to participate in community life.
3. Capability Deprivation: The term, coined by Sen, views poverty as a fundamental lack of basic capabilities,” which are the freedom to achieve certain essential functioning (e.g., being healthy, being educated, and having a long life).
4. Multidimensional Poverty: This approach, inspired by Sen, recognizes that poverty is not just about income but includes various deprivations such as lack of education, health, and access to resources. Indeed, there are many definitions, as well as intense debates, about the exact numbers of the poor, where they live, and how their numbers and economic condition are changing over time. In his bestselling 2005 book, Jeffery Sachs, the then adviser to the United Nations, had pointed out that generally there are three types of useful definitions of poverty:
(1) Absolute (or extreme) poverty which is synonymous with destitution and occurs when people cannot meet basic needs for survival (unlike other two types of poverty, extreme poverty is seen only in developing countries);
(2) Moderate poverty that generally refers to the condition of life in which basic needs are met, but just barely; and
(3) Relative poverty that occurs when people get deprived of enjoying a certain minimum level of living standards as determined by a government. This type of poverty is seen proliferating almost everywhere. Measuring poverty is important because it helps governments, organizations, and communities understand the extent, causes and consequences of poverty, so that they can take effective actions. Poverty is a complex phenomenon. It is not like height or atmospheric pressure that could be measured accurately.
Objective measurement of poverty is dependent on data of income and expenditure which are, fearfully, susceptible to errors of reporting, recording, aggression, and interpretation at the hand of agencies with political interests. Notwithstanding, since the pre-independence period, there is a thriving industry churning out poverty estimates within India’s academic circles of both pre- and post-independence periods. The conventional approach to measuring poverty specifies a cut-off “Poverty Line (PL)”, defined as the level of income below which people are diagnosed as poor. Dadabhai Naorooji, in his seminal work entitled “Poverty and the UN-British Rule in India” made one of the earliest estimates of poverty in India and formulated a poverty line known as Dadabhai Naoroji’s Poverty Line (1867) based on the minimum subsistence requirements.
The National Planning Committee (1938) formed by Subhas Chandra Bose recommended a minimum standard of living. And in 1944, the Bombay Plan suggested a poverty line of Rs. 75 per capita per year. In the post-independence period, the Working Group of the Planning Commission, in its first official attempt (1962), defined poverty in terms of consumption expenditure. The Working Group recommended a minimum monthly consumption expenditure of Rs. 20 per capita, based on 1960-61 prices. The Dandekar and Rath Committee (1971) led by V M Dandekar and N Rath was the first to assess poverty systematically utilizing National Sample Survey data. One of its key findings was that the poverty line should be defined on the basis of expenditure incurred for ensuring a daily intake of 2250 Calories per individual in both rural and urban areas. But afterwards PL has quietly been transformed from a non-controversial, statistical benchmark to a controversial instrument for real-life social divisions.
It is officially used for targeting “Below the Poverty Line (BPL)” households for distribution of social benefits. The official PLs were based entirely on the recommendations of the Lakdawala Committee of 1993. The committee continued using calorie-based poverty estimation and developed statespecific PLs, discounting the practice of scaling poverty estimates using National Accounts Statistics. The Tendulkar Committee shifted from a calorie-based estimation to a broader consumption basket, including health and education expenses. It introduced Uniform poverty lines for both rural and urban areas, using NRP-based estimates. The Rangarajan Committee (2014) used large household surveys and set poverty thresholds at Rs. 32 per day (rural) and Rs.47 per day (urban) on normative nutritional and behavior standards. In 2010, the UNDP, Oxford Poverty and Human Development Initiative introduced the Multidimensional Poverty Index (MPI).
India has adopted MPI to capture non-income-based poverty dimension such as education, health, and standards of living. India boasts a rapidly growing economy and has also registered a significant decline in multidimensional poverty from 29.17 per cent in 2013-14 to 11.28 per cent in 2022-23 i.e. a reduction of 17.89 percentage points. Even a 2025 World Bank report states that India had made significant progress with sharp decline in the extreme poverty rate. But a 2024 UN report indicated India has the highest numbers of people living in poverty. The stark paradox reminds us of a famous statement of the former Prime Minister of India Manmohan Singh, “India is a rich country inhabited by the poor.”
(The writer is a retired IAS officer)