What is the 'poverty line' used to measure?
- AOption (a)
The average income of a country
- BOption (b)
The number of people who are rich
- COption (c)
The minimum income level considered necessary for a basic standard of living
- DOption (d)
The national debt
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Correct answer
The minimum income level considered necessary for a basic standard of living
Why this answer is correct
The correct answer is The minimum income level considered necessary for a basic standard of living.
Key Points
- The poverty line is a monetary threshold used by governments and international organizations to identify individuals or households whose income or consumption expenditure falls below the amount required to satisfy basic necessities like food, clothing, and shelter.
- It serves as a benchmark to measure absolute poverty, ensuring that the population above this line can afford a minimum nutritional intake and essential non-food requirements.
- In India, the calculation is often linked to calorie requirements; traditionally, it is set at 2,400 calories per day in rural areas and 2,100 calories in urban areas, reflecting the higher physical labor performed in villages.
- The Headcount Ratio (HCR) is the percentage of the population living below this line, providing a snapshot of the prevalence of poverty within a geopolitical boundary.
- Determining this line allows for the effective implementation of Targeted Public Distribution Systems (TPDS) and other social safety nets.
Additional Information
- Methodological Evolution in India:
- Dadabhai Naoroji: The first to conceptualize the poverty line in India through his book 'Poverty and Un-British Rule in India' using a 'jail cost of living' approach.
- Expert Groups: Various committees like the Alagh Committee (1979), Lakdawala Committee (1993), Tendulkar Committee (2009), and Rangarajan Committee (2014) have revised the methodology to include health and education expenses.
- Global Standards:
- The World Bank defines the International Poverty Line, currently set at $2.15 per person per day (based on 2017 Purchasing Power Parity), to monitor extreme poverty globally.
- Conceptual Clarifications:
- Average Income: Also known as Per Capita Income, this measures the mean income of a nation and does not account for income inequality or subsistence needs.
- National Debt: Refers to the total public debt or liabilities incurred by a central government, which is a macroeconomic indicator unrelated to individual welfare thresholds$.