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Poverty Line

There are many ways to find out the poverty line. One way is to figure out the monetary value (per capita expenditure) of the minimum calorie intake which was estimated as 2400 calories(rural) and 2100 calories(urban) for a person. In 1999-2000, based on this, the poverty line was defined as a monthly consumption worth Rs.328 and Rs.454 per person in the rural and urban sectors respectively. The government used Monthly Per Capita Expenditure (MPCE) as a proxy to determine the poor households it was not a very satisfactory mechanism.

This mechanism helps to collectively identify the poor as a group, but as scholars point out, it does not help us distinguish between the absolutely poor and poor. Despite the fact that MPCE takes into account the expenditure on food and select items, the basis of the mechanism remains a big question.

Many other factors are also associated with poverty apart from income and assets. The lack of basic education, healthcare, drinking water and sanitation are also attributes which are connected with poverty. The poverty line does not take into account such social factors which perpetuate poverty and make it wide spread. The purpose of poverty eradication schemes should be not only to ensure the attainment of standard income levels but should also be to ensure access to education, sanitation, healthcare, sanitation, general well being and to ensure knowledgeable participation of everyone in the society.

The government claims that the reforms of 1990s have resulted in the reduction in the poverty levels economists are skeptical about the government's claims. Economists point out that the methodology used by the governments to claim the reduction of poverty and the estimators used to prove that the number of poor have indeed gone less are not above doubt.

Since the official estimations of poverty have a lot of limitations, individual economists have developed tools of their own to estimate poverty. For example, Nobel Laureate Amartya Sen has developed an index known as Sen Index. Similarly there are other tools like Poverty Gap Index and Squared Poverty Gap.

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