Economics

There are two approaches by which the number of poor is estimated :
(1) Expenditure Method (2) Income Method
1. Expenditure Method :
(A) Under expenditure method first of all the minimum nutritional food requirement for survival is estimated.
(B) The food value is converted to calories.
(C) The caloric value of food is then converted to money value i.e. rupees.
(D) A minimum amount of money which is required for purchasing cloth and other necessities is added to the money value of food.
(E) The total equivalent amount is considered as poverty line.
(F) All those families which spent less than the poverty line families.
2. Income Method :
A person is considered poor if his or her income or consumption level falls. Below as given minimum level necessary to fulfill basic needs. Each country uses an imaginary line that is considered appropriate for its existing level of development and its accepted minimum social norms.
(A) This method is used by the government while distributing food through Public Distribution System at the local level.
(B) Under this a poverty line is fixed by the government. For example for the year 1999-2000 it was fixed at Rs. 328 per capita per north for rural areas and Rs. 454 per capita per month for Urban areas.
(C) All the families whose total income in a month is less than the poverty line fixed by the government are considered Below Poverty Line (BPL).
Poverty Estimates : It is the line which indicates the level of purchasing power required to satisfy the minimum need of person. In other words it represents the capacity to satisfy the minimum level of human needs.
The line divides the population in two groups, one of those who have this purchasing power or more is known as Above Poverty Line and other group of those people who do not have this much of purchasing power is known as Below the Poverty Line.
The number of persons living below the poverty line in 2001-02 was 26.02 crore. Among them 19.32 crore are living in rural area and 6.7 crore in urban areas. In 1973-74 about 55 % of India’s population was living below poverty line. 1999-2000, this has come down to 26 %. This means only about a quarter of the population in India is now living below poverty line.