Worked example 9 — Two poverty lines for one year: Tendulkar against Rangarajan

Two expert groups measured poverty in India for the same year, 2011-12, using the same survey, and produced ratios of 21.9 per cent and 29.5 per cent — a difference of 94 million people. Neither was wrong. Understanding why they differ is the whole topic, and it is the only way to answer the standing examination question about which line to use.

A poverty line in India is a level of consumption expenditure, not of income. The National Sample Survey Office conducts Large Sample Surveys on Household Consumer Expenditure, normally five-yearly, tabulating the expenditure of about 1.20 lakh households. Because households differ in size, household expenditure is divided by the number of members to give Monthly Per Capita Consumption Expenditure (MPCE). A person is poor if their MPCE falls below the line.

The measuring rod itself has three settings, and this is where half the difference comes from:

• Uniform Reference Period (URP) — used by the earliest estimations;
• Mixed Reference Period (MRP) — used by the Tendulkar Committee;
• Modified Mixed Reference Period (MMRP) — used by the Rangarajan Expert Group, which considered it more precise.

Why 2011-12. The last quinquennial survey in the older series was the NSS 66th round of 2009-10; but since 2009-10 was not a normal year because of a severe drought, the NSSO repeated the large scale survey in 2011-12, the NSS 68th round. That is why every poverty debate turns on that one year.

Constituted in December 2005 by the Planning Commission, under Professor Suresh D. Tendulkar, to review the methodology for estimation of poverty. Reported December 2009, computing poverty lines and ratios for 2004-05 and, on identical methodology for comparison, for 1993-94.

Three methodological choices decide its answer:

1. It used implicit prices derived from quantity and value data collected in the consumer expenditure surveys.
2. It decided not to anchor the poverty line to the official calorie norms that had been used in all poverty estimation since 1979, because it found a poor correlation between food consumed and nutrition outcomes.
3. It used the all-India urban poverty line basket as the single reference from which to derive State-level rural and urban poverty.

The lines, 2011-12: Rs. 816 per capita per month in rural areas and Rs. 1,000 in urban areas. For a family of five, about Rs. 4,080 per month rural and Rs. 5,000 urban. These vary from State to State because of inter-State price differentials.

The ratios, on MRP:

| Year | Rural % | Urban % | All-India % | Poor, rural (mn) | Poor, urban (mn) | Poor, total (mn) | |---|---|---|---|---|---|---| | 1993–94 | 50.1 | 31.8 | 45.3 | 328.6 | 74.5 | 403.7 | | 2004–05 | 41.8 | 25.7 | 37.2 | 326.3 | 80.8 | 407.1 | | 2011–12 | 25.7 | 13.7 | 21.9 | 216.5 | 52.8 | 269.3 |

Reading one: the ratio fell while the number did not. Between 1993-94 and 2004-05 the all-India ratio fell from 45.3 to 37.2 per cent — but the total number of poor rose from 403.7 to 407.1 million, and the urban number rose from 74.5 to 80.8 million. Population growth absorbed the improvement entirely.

Work it as arithmetic and the point becomes unanswerable. A falling percentage of a growing population can be a rising absolute number, and it was. That is why the population chapter records that because of India's rapid population growth rate, the relative reduction of poverty has not translated into a proportionate reduction in the absolute number of the poor.

Reading two: the pace changed. The average decline was 0.74 percentage points a year over the eleven years to 2004-05, and 2.18 points a year over the seven years to 2011-12 — so the rate of decline in the poverty ratio during the most recent seven-year period was about three times that experienced in the eleven-year period. Over those seven years 137 million persons came above the line.

Check the arithmetic yourself, because an examiner may ask you to: 45.3 − 37.2 = 8.1 points over 11 years = 0.74 a year. 37.2 − 21.9 = 15.3 points over 7 years = 2.19 a year. The published 2.18 and this 2.19 differ only by rounding; quote the published figure.

Constituted June 2012 by the Planning Commission under Dr C. Rangarajan, because several representations had been made suggesting that the Tendulkar poverty line was too low. Submitted its report on 30 June 2014.

It rebuilt the line rather than updating it, and four changes matter.

(a) Two baskets, not one. It reverted to the practice of having separate all-India rural and urban poverty basket lines and deriving State-level rural and urban estimates from these.

(b) Nutrition came back. The food component was derived by reference to the simultaneous satisfaction of all three nutrient norms. On Indian Council of Medical Research norms differentiated by age, gender and activity, the energy requirement works out to 2,155 kcal per person per day rural and 2,090 kcal urban, the calorie norm being treated not as a single number but as an average in a band of plus or minus 10 per cent. Protein and fat requirements are 48 g and 28 g per capita per day rural, and 50 g and 26 g urban.

(c) The non-food component became normative too. The poverty line should be based on certain normative levels of adequate nourishment, clothing, house rent, conveyance and education, and a behaviourally determined level of other non-food expenses.

(d) MMRP replaced MRP.

The line, built up from its components for 2011-12:

| Component | Rural (Rs.) | Urban (Rs.) | |---|---|---| | Food | 554 | 656 | | Normative non-food basics — clothing, housing, mobility, education | 141 | 407 | | Other non-food expenses | 277 | 344 | | Total MPCE poverty line | 972 | 1,407 |

Add the columns: 554 + 141 + 277 = 972, and 656 + 407 + 344 = 1,407. The published lines are exactly the sum of the three components, which is a useful check and a good thing to show in an answer. For a family of five that is Rs. 4,860 and Rs. 7,035 a month.

The ratios: 30.9 per cent of the rural population and 26.4 per cent of the urban were below the line in 2011-12, an all-India ratio of 29.5 per cent — 260.5 million rural and 102.5 million urban, 363 million in all. The ratio had fallen from 39.6 to 30.9 per cent rural and from 35.1 to 26.4 per cent urban since 2009-10 — a uniform decline of 8.7 percentage points — lifting 91.6 million individuals out of poverty over the two years.

| | Tendulkar | Rangarajan | Difference | |---|---|---|---| | Rural line (Rs. MPCE) | 816 | 972 | +156, i.e. 19 per cent higher | | Urban line (Rs. MPCE) | 1,000 | 1,407 | +407, i.e. 41 per cent higher | | Rural ratio | 25.7 | 30.9 | +5.2 points | | Urban ratio | 13.7 | 26.4 | +12.7 points | | All-India ratio | 21.9 | 29.5 | +7.6 points | | Persons below the line | 269.3 mn | 363 mn | +94 million |

Now decompose the increase in the line, which is the part most students miss. Much of it is not a change of philosophy but a change of measuring rod: 67 per cent of the increase in the rural line and 28 per cent of the increase in the urban line comes simply from the shift from MRP to MMRP.

Apply those proportions:

• Rural: of the Rs. 156 increase, about Rs. 105 is the recall-period switch and only about Rs. 51 is the new normative basket.
• Urban: of the Rs. 407 increase, about Rs. 114 is the recall-period switch and about Rs. 293 is the new basket.

So the two lines differ for different reasons in the two sectors: in rural India mostly because the survey question changed, in urban India mostly because the standard changed. That is a genuinely sophisticated point and it is available from the sourced percentages alone.

Both are worth remembering as arguments in their own right.

1. Public expenditure on social services has increased substantially, and those expenses are not captured by design in the consumer expenditure surveys — so a line derived from those surveys is lower than the services actually consumed by poor households.
2. An independent check using an entirely different criterion — treating a household as poor if it is unable to save, on CMIE survey data — yielded results remarkably close to the NSSO-based line.

Three current measures answer three different questions:

| Measure | Definition | India | |---|---|---| | World Bank International Poverty Line | The minimum amount of money a person needs per day to afford basic necessities such as food, clothing and shelter; raised in June 2025 from USD 2.15 to USD 3.00 a day, adjusted for purchasing power to 2021 prices | 5.3 per cent extreme poverty and 23.9 per cent lower-middle-income poverty, 2022-23, on the Household Consumption Expenditure Survey of August 2022 to July 2023 | | Multidimensional poverty | Non-monetary poverty, considering education, health and living conditions rather than expenditure alone | NITI Aayog MPI 55.3 per cent (2005-06) → 14.96 per cent (2019-21) → estimated 11.28 per cent (2022-23); World Bank Multidimensional Poverty Measure 15.5 per cent (2022-23) | | Tendulkar line carried forward | Researchers applying the Tendulkar committee line to later surveys | 21.9 per cent (2011-12) → 4.7 per cent (2022-23) → 2.3 per cent (2023-24) |

So 2.3, 5.3, 11.28, 15.5 and 23.9 per cent are all defensible figures for roughly the same period, because each answers a different question. An answer that gives one number without saying which line it belongs to has not understood the topic.

The rule to carry into the examination hall: always name the line with the number.

Poverty lines are legal instruments as much as statistical ones. Eligibility for subsidised foodgrain, for housing, for reservation in certain welfare schemes and for free legal aid is determined by a threshold traceable to this machinery — which means that a change in methodology, made by an expert group and accepted administratively, changes who has a legal entitlement.

That is why the choice between Tendulkar and Rangarajan was politically contested and not merely technical. A line 19 and 41 per cent higher would have brought 94 million more people within reach of statutory benefits, without a single amendment to any statute.

Whether the Rangarajan report was ever officially adopted is not stated here. The report is described only as submitted on 30 June 2014. Do not add an adoption claim, and do not assert which line is currently used for any statutory eligibility.

1. Poverty is measured by MPCE from NSSO surveys, on three recall concepts — URP, MRP, MMRP; 2011-12 is the year because 2009-10 was a drought year.
2. Tendulkar (2005, reported December 2009): no calorie anchor, one urban basket, MRP → lines Rs. 816 / 1,000, ratios 25.7 / 13.7 / 21.9, 269.3 million poor.
3. Rangarajan (June 2012, reported 30 June 2014): two baskets, all three nutrient norms (2,155 / 2,090 kcal, ±10 per cent; protein 48/50 g, fat 28/26 g), normative non-food, MMRP → lines Rs. 972 / 1,407, ratios 30.9 / 26.4 / 29.5, 363 million poor.
4. The Rangarajan lines are 19 per cent (rural) and 41 per cent (urban) higher, of which 67 per cent (rural) and 28 per cent (urban) is the MRP → MMRP switch alone. The gap is 94 million people.
5. Current measures: World Bank IPL at USD 3.00 a day (June 2025) → 5.3 / 23.9 per cent; NITI MPI 11.28 per cent; Tendulkar-line researcher estimates 4.7 → 2.3 per cent. Name the line with the number.