New Delhi, 22^nd February, 2001

The Planning Commission has been estimating the incidence of poverty at national and state level using the methodology contained in the report of the Expert Group on Estimation of Proportion and Number of Poor (Lakdawala Committee) and applying it to consumption expenditure data from the large sample surveys on consumer expenditure, conducted periodically by the National Sample Survey Organisation (NSSO). Poverty estimates for the years 1973-74, 1977-78, 1983, 1987-88 and 1993-94 made on this basis were released by the Government of India, Press Information Bureau on 11^th March, 1997.

The NSSO has now released the key results of the latest large sample survey data on consumer expenditure (55^th Round), covering the period July, 1999 to June, 2000 (see Report No.454 (55/1.0/2). Two sets of different distributions of consumer expenditure from the 55^th Round have been reported because of experimenting with the method of data collection. In the earlier large scale surveys, the NSSO estimated monthly per capita consumption expenditure on the basis of responses using a 30-day recall period though data were collected for some of the non-food items using reference periods of both 30 days and 365 days from the same household. In the 55^th round, consumption expenditure on clothing, footwear, medical (institutional) and durable goods were collected by using a 365-day recall period. In the case of all other non-food items, the 30-day recall period was used as earlier. The data regarding consumption of food items were collected by using two different reference periods of last 30 days and last 7 days from the same household in that order. The two sets of data so collected were tabulated and the corresponding distributions of persons by monthly per capita consumption expenditure were included in the report, though the data based on 7 days reference period for the food items were collected only for investigating the suitability of the shorter reference period.

Since both consumer expenditure distributions have been published, the Planning Commission has estimated poverty from both distributions reported by the NSSO, using the accepted methodology. State specific poverty lines have been estimated using the original state specific poverty lines identified by the Lakdawala Committee and updating them to 1999-2000 prices using the Consumer Price Index for Agricultural Labourers (CPIAL) for rural households and the Consumer Price Index of Industrial Workers (CPIIW) for urban households. These poverty lines are given in Table 1. The poverty lines have then been used in conjunction with each of the two consumption distributions, to estimate the percentage of people below the poverty line (poverty ratio) for each state. As in the past, separate estimates have been made for rural and urban areas for each state, which are then combined into a state level estimate.

The consumer expenditure data of the 55^th Round on a 30-day recall basis yields a poverty ratio for 1999-2000 of 27.09% in rural areas, 23.62% in urban areas and 26.10% for the country as a whole in 1999-2000 (Table 2). The corresponding figures from the 7-day recall period are 24.02% in rural areas, 21.59% in urban areas and 23.33% for the country as a whole. (Table 3)

Although the 7-day estimates used in Table 3 are being reported in the interest of transparency, it should be noted that the NSS Governing Council has not yet decided to switch from the 30-day basis for food items to the 7-day basis. For the present, the 30-day estimates reported in Table 2 are being used as the appropriate estimate of poverty.

The change in the methodology regarding the measurement of durable consumer goods from a 30-day recall period in earlier large sample surveys to a 365-day recall period in the 55^th Round implies that the 30-day estimate for 1999-2000 in Table-2 may not be fully comparable with the earlier estimate. This fact needs to be kept in mind in assessing trends over time. However, improvement in methodology of collecting data is a continuing exercise.

Table 1: State-Specific Poverty Lines in 1999-2000
(Rs. per capita per month)

• The poverty line(implicit) at all-India level is worked out from the expenditure class-wise distribution of persons and thepoverty ratio at all-India level. The poverty ratio at all-India level isobtained as the weighted average of the state-wise poverty ratio.

Table 2: Number and Percentage of Population Below Poverty Line by States - 1999-2000
(30-day Recall period)

Notes

Table 3: Number and Percentage of Population Below Poverty Line by States - 1999-2000 
(7-day Recall period)