🗞️ Why in News Olivier Sterck, Associate Professor at the University of Antwerp and the University of Oxford, has proposed a new measure of poverty called “average poverty” — measured in days per dollar (days/$) instead of the traditional dollars per day ($/day). This distribution-sensitive approach eliminates the need for an arbitrary poverty line and captures the severity of poverty across the entire income distribution.
The Problem with the Poverty Line
Two Traditional Methods
- Direct income survey — used in many advanced economies
- Expenditure survey — used as a proxy for income in India (Consumption Expenditure Survey by NSSO)
Key Limitations
| Limitation | Explanation |
|---|---|
| Arbitrary threshold | The poverty line is a binary cut-off — people just above it are excluded from development programmes despite experiencing the same level of deprivation |
| “Deprivation line” critique | India’s poverty line is often so low that it is termed the “starvation line” — a significant population lives just a few rupees above it |
| Snapshot problem | Expenditure surveys capture a household’s spending at the time of survey — not real annual levels |
| Seasonal bias | A survey during the post-harvest season shows higher consumption (more cash, barter); during the monsoon (lean season) it shows lower consumption |
| Single round | Usually only one round of survey is conducted — missing seasonal variation entirely |
The “Average Poverty” Measure — Sterck’s Proposal
The Core Idea
- Measure poverty across the entire income distribution — rather than classifying people as poor or non-poor based on an arbitrary threshold
- Reciprocal logic: If incomes are measured in dollars per day ($/day), poverty is measured in days per dollar (days/$)
- “If person A earns half as much as person B, then A is twice as poor”
Definition
“Average poverty is simply the average time it takes to earn $1 in a given population.”
The Runner Analogy
- A runner’s pace is the reciprocal of speed
- A runner covering 20 km/hr is twice as fast as one covering 10 km/hr
- Similarly, someone earning $1/day takes 1 day per dollar; someone earning $2/day takes 0.5 days per dollar
Why It Is “Distribution-Sensitive”
- A $1 gain for someone at $1/day reduces poverty more than the same $1 gain for someone at $2, $5, $10, or $100/day
- This addresses a major limitation of the headcount ratio and poverty gap — which ignore the severity of poverty
- Anti-poverty measures can be targeted effectively without excluding the population near the poverty line
- Sterck has applied this measure to derive poverty rates for 1995–2025
Critical Evaluation for UPSC Mains
India’s Poverty Measurement Landscape
- Tendulkar Committee (2009): Set poverty line at ₹816/month (rural) and ₹1,000/month (urban) — widely criticised as too low
- Rangarajan Committee (2014): Revised upward to ₹972/month (rural) and ₹1,407/month (urban) — estimated 29.5% poverty (2011–12)
- NSSO Consumption Expenditure Survey (CES):
- 2011–12 CES: last officially accepted survey
- 2017–18 CES: conducted but data junked by the government (leaked data showed rising rural poverty)
- 2022–23 CES: Household Consumption Expenditure Survey (HCES) released in 2024 — showed significant decline in poverty but methodology debates continue
- Multidimensional Poverty Index (MPI): NITI Aayog + UNDP; uses health, education, and living standards indicators — India’s MPI poverty declined from 24.85% (2015–16) to 14.96% (2019–21)
Why Sterck’s Measure Matters for India
- The “near-poor” problem: Millions of Indians live just above the poverty line — excluded from BPL (Below Poverty Line) lists and associated benefits (PDS rations, housing schemes, MGNREGA priority)
- Policy targeting: Programmes like PMAY, NFSA, and MGNREGA use poverty line as eligibility threshold — a continuous measure would improve targeting
- Seasonal income volatility: Agricultural households’ income varies dramatically across seasons — a single consumption survey can misclassify farmers who are poor for 8 months but appear above the line post-harvest
- Urban informal sector: Daily wage earners, gig workers — their income fluctuates daily; a threshold measure captures a snapshot, not reality
Limitations of the New Measure
- Data requirement: Still needs income/expenditure data — the quality of surveys remains the binding constraint
- Practical implementation: Converting existing policy infrastructure (BPL lists, eligibility criteria) to a continuous measure is administratively complex
- Political economy: The poverty line gives a definitive “number” — political claims about poverty reduction depend on this binary (“X crore lifted above poverty line”)
- Does not capture non-income dimensions of poverty (health, education, discrimination) — MPI remains important for this
Poverty Measurement Approaches — Comparison
| Approach | What It Measures | Limitation |
|---|---|---|
| Headcount Ratio | % of population below poverty line | Ignores severity — treats all poor equally |
| Poverty Gap | Average distance from poverty line | Still uses arbitrary threshold |
| Squared Poverty Gap | Gives more weight to the poorest | Complex, still threshold-dependent |
| MPI | Multi-dimensional deprivation | Does not capture income levels |
| Average Poverty (Sterck) | Time to earn $1 (reciprocal of income) | Needs quality income data; hard to operationalise |
UPSC Angle
- Prelims: Tendulkar Committee, Rangarajan Committee, MPI (NITI Aayog), NSSO CES 2011-12, HCES 2022-23, World Bank poverty line ($2.15/day PPP), headcount ratio, poverty gap, BPL
- Mains GS-1: Society — poverty as a social issue, near-poor exclusion, seasonal vulnerability, urban informal sector poverty
- Mains GS-2: Governance — poverty measurement and policy targeting, BPL lists and beneficiary identification, NFSA/PDS/PMAY eligibility, data gaps (junked 2017-18 CES)
- Mains GS-3: Economy — poverty trends in India, consumption expenditure surveys, HCES 2022-23 findings, MPI methodology, new approaches to poverty measurement
- Essay: “The poverty line may count the poor — but it does not measure poverty”
📌 Facts Corner — Knowledgepedia
Olivier Sterck’s “Average Poverty” Measure:
- Affiliation: University of Antwerp and University of Oxford
- Measure: days per dollar (days/$) — reciprocal of income ($/day)
- “Distribution-sensitive” — $1 gain matters more to the poorest
- Eliminates need for arbitrary poverty line
- Applied to 1995–2025 poverty data
India’s Poverty Measurement:
- Tendulkar Committee (2009): ₹816/month (rural), ₹1,000/month (urban)
- Rangarajan Committee (2014): ₹972/month (rural), ₹1,407/month (urban); 29.5% poverty (2011–12)
- NSSO CES 2011–12: last officially accepted consumption survey
- CES 2017–18: data junked by government
- HCES 2022–23: released 2024; showed poverty decline but methodology debates
- MPI (NITI Aayog + UNDP): 24.85% (2015–16) → 14.96% (2019–21)
Global Poverty Lines:
- World Bank extreme poverty line: $2.15/day (PPP, updated 2022)
- Lower-middle income line: $3.65/day
- Upper-middle income line: $6.85/day
- Global extreme poverty: ~8.5% of world population (2024 estimate)
Poverty Measurement Methods:
- Headcount Ratio: % below poverty line (ignores severity)
- Poverty Gap Index: average shortfall from poverty line
- Squared Poverty Gap: gives more weight to the poorest
- MPI: 3 dimensions (health, education, living standards), 10 indicators
- Average Poverty (Sterck): reciprocal of income — no threshold needed
Other Relevant Facts:
- BPL (Below Poverty Line): basis for targeted welfare (PDS, PMAY, etc.)
- NFSA (2013): food security based on poverty identification
- MGNREGA: employment guarantee; poverty line determines priority
- Lakdawala Committee (1993): earlier poverty line methodology (calorie-based)
- Suresh Tendulkar Committee shifted from calorie norm to expenditure-based approach
- SECC 2011 (Socio-Economic Caste Census): used for identifying beneficiaries; data controversies
- Global MPI: published by UNDP and Oxford Poverty and Human Development Initiative (OPHI)
Sources: Down to Earth, University of Antwerp, NITI Aayog, NSSO, World Bank