India can consider a new poverty line, says Bibek Debroy

With the results of the first round of Household Consumer Expenditure Survey (HCES) 2022-23 now available, India should consider working on a new estimate for poverty line, said Bibek Debroy, Chairman, Economic Advisory Council to the Prime Minister.

“We still do not have an official poverty line after Tendulkar [Committee] and the multidimensional poverty index is not quite a poverty line. Should we now have a new poverty line in which this data can be used,” he noted at a Data Users Conference on the household consumer expenditure survey on Wednesday.
In the past, the erstwhile Planning Commission periodically estimated poverty lines and poverty ratios for each of the years for which the HCES was conducted.

The last HCES for which results are available pertain to 2011-12. In December, 2005, the Planning Commission constituted an Expert Group under the Chairmanship of Suresh Tendulkar to review the methodology for estimation of poverty. The Tendulkar Committee submitted its report in December 2009 and computed poverty lines and poverty ratios for 2004-05. 

Later, a committee led by C. Rangarajan was set up to review the methodology for the poverty line as there were concerns that the Tendulkar poverty line was too low. However, the Planning Commission later updated the poverty estimates for 2011-12 as per the methodology recommended by the Tendulkar Committee.

Meanwhile, the NITI Aayog had recently released the multidimensional poverty index, according to which 250 million people moved out of poverty between 2015 and 2024.

Addressing the conference, Debroy also noted that while improvements in the HCES 2022-23 methodology are desirable but make any particular survey non-comparable with the other one. He also asked whether it is a good thing that the Gini coefficient has declined. “As the economy grows and prospers, inequality tends to widen a little bit,” he said. The results of the consumption expenditure survey reveal that inequality in India has declined over the past decade.