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The Poor: How are they Identified?

If India has to overcome the challenge of poverty, we have to find viable strategies to tackle the causes of poverty and design scheme in order to help the poor grow out of the situation. If the government has to implement the schemes, they have to first identify the poor and ensure that they are the real beneficiaries of the schemes. A scale to measure poverty has to be developed.

In British India, Dadabhai Naoroji was the first to introduce the concept of poverty line. He had arrived at the jail cost of living by using the menu of a prison and the prevailing prices. Since only adults live in a jail but even children live as poor in a society, he assumed that one third of the population consisted of children out of which half consumed very little and the other half consumed half an adult's diet.

He arrived at the factor of 3/4th s using the following calculation:
(1/6)(Nil) + (1/6)(Half) + (2/3)(Full) = (3/4)(Full)

The weighted average of the consumption of the three segments results in the average poverty line which is ? of the adult jail cost of living.

In independent India quite a few attempts have been made to arrive at a method to identify the poor. Following are some of the attempts made:
  • In 1962, the Planning Commission formed a Study Group to study and identify the poor.
  • A body called 'Task Force on Projections of Minimum Needs and Effective Consumption Demand' was formed in 1979.
  • An expert group to identify the poor was formed in 1989.
  •  Many individual economists have also attempted to arrive at a mechanism to identify the poor.
In order to define poverty, we categorize people as the poor and the non-poor. The poor can be subdivided as absolutely poor, very poor and poor. The non-poor can be subdivided as the middle class, upper middleclass, the rich, the very rich and the absolutely rich. The poverty line divides the poor and the non-poor. It is a continuum from the absolutely poor to the absolutely rich.

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