ECONOMY: PRELIMS BOOSTER SERIES 2025 - 26

Under the Guidance of M K YADAV SIR & TEAM

3 POVERTY
MOST REPEATED THEMES IN UPPSC CSE PRELIMS
• Types and Categories of Poverty (absolute, relative, subjective)
• Poverty Measurement, Related committees, Poverty Line,
• Multidimensional Poverty Index (MPI) - developed by, Publications and related reports, Indicators and
tools, Dimensions: Health, Education, Living Standard
• Authors and Thinkers on Poverty
• Methods of Estimating Poverty
FURTHER EXPECTED THEMES IN UPPSC CSE PRELIMS
• Poverty Estimation: efforts, ways and methods, Related committees,
• Poverty Trends, Schemes, link with nutrition
• Multidimensional Poverty Index (MPI) – Recent trends, Country and sate rankings, components of MPI
by NITI Aayog.
• Causes of poverty, Poverty & Climate Change Interlinkages
• Gender and Poverty, Feminization of Poverty
• Urban vs Rural Poverty

3.1 POVERTY ESTIMATION

3.1.1 PRE-INDEPENDENCE EFFORTS
• Dadabhai Naoroji’S book, “Poverty and Unbritish Rule in India” made the earliest estimation of poverty
line (₹16 to ₹35 per capita per year).
- It was based on the cost of a subsistence or minimum basic diet (rice or flour, dal, mutton,
vegetables, ghee, vegetable oil, and salt).
• National Planning Committee’s (1938) poverty line (ranging from ₹15 to ₹20 per capita per month) was
also based on a minimum standard of living perspective in which nutritional requirements were implicit.
- The Committee was set up by Subhash Chandra Bose under the chairmanship of Jawaharlal Nehru
for the purpose of drawing up an economic plan with the fundamental aim to ensure an adequate
standard of living for the masses.
• The Bombay Plan (1944) had suggested a poverty line of ₹75 per capita per year.
3.1.2 POST-INDEPENDENCE EFFORTS
• Planning Commission Expert Group (1962): formulated the separate poverty lines for rural and urban
areas (₹20 and ₹25 per capita per year respectively).
• VM Dandekar and N Rath (1971): made the first systematic assessment of poverty in India, based on
National Sample Survey (NSS) data.
- They derived the poverty line from the expenditure that was adequate to provide 2250 calories
per day in both rural and urban areas
• Alagh Committee (1979): the task force by planning commission under the chairmanship of YK Alagh
estimated the poverty line for rural and urban areas on the basis of nutritional requirements and related
consumption expenditure.
• Lakdawala Committee (1993): gave suggestions based on the assumption that the basket of goods and
services used to calculate Consumer Price Index-Industrial Workers (CPI-IW) and Consumer Price
Index- Agricultural Labourers (CPI-AL) reflect the consumption patterns of the poor
- Consumption expenditure should be calculated based on calorie consumption as earlier.
- State specific poverty lines should be constructed and these should be updated using the CPI-IW
in urban areas and CPI-AL in rural areas.

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 ECONOMY: PRELIMS BOOSTER SERIES 2025 - 26
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- Discontinuation of scaling of poverty estimates based on National Accounts Statistics.

• Tendulkar Committee (2009): constituted to review methodology for poverty estimation. It recommended:
- Shift from Calorie Consumption based Poverty Estimation: It based its calculations on the
consumption of the items like cereal, pulses, milk, edible oil, non-vegetarian items, vegetables,
fresh fruits, dry fruits, sugar, salt & spices, other food, intoxicants, fuel, clothing, footwear,
education, medical (non-institutional and institutional), entertainment, personal & toilet goods.
- Uniform Poverty line Basket: Unlike Alagh committee it computed new poverty lines for rural and
urban areas of each state based on the uniform poverty line:
✓ ₹446.68 per capita per month in rural areas
✓ ₹578.80 per capita per month in urban areas
- Incorporation of private expenditure on health and education while estimating poverty.
- Price Adjustment Procedure: a new method of updating poverty lines, by adjusting for changes in
prices and patterns of consumption (to correct spatial and temporal issues with price adjustment),
using the consumption basket of people close to the poverty line.
- Mixed Reference Period based estimates, as opposed to Uniform Reference Period based
estimates that were used in earlier methods for estimating poverty.
- Tendulkar committee computed poverty lines for 2004-05 at a level that was equivalent, in
Purchasing Power Parity (PPP) terms to Rs 33 per day.
• Rangarajan Committee: was set up in the backdrop of national outrage over the Planning Commission’s
suggested poverty line of ₹22 a day for rural areas. It recommended
- Methodology: is based on an independent survey of households by Center for Monitoring Indian
Economy (CMIE).
- Normative and Behavioural level: Poverty line should be based on Ideal and desirable level of
nutrition (Normative) and What people use or consume as per general behaviour (behavioural).
- Nutritional Requirement: For normative levels of adequate nutrition – average requirements of
calories, proteins and fats based on Indian Council of Medical Research (ICMR) norms
1. Calories: 2090 kcal in urban areas and 2155 Kcal in rural areas.
2. Protein: For rural areas 48 gm and for urban areas 50 gm.
3. Fat: For urban areas 28 gm and for rural areas 26 gm.
- Poverty Threshold: Persons spending below ₹47 a day in cities & ₹32 in villages be considered poor.
- Modified Mixed Reference Period (MMRP): Instead of Mixed reference Period (MRP) it
recommended MMRP in which reference periods for different items were taken as:
1. 365-days for clothing, footwear, education, institutional medical care, and durable goods.
2. 7-days for edible oil, egg, fish and meat, vegetables, fruits, spices, beverages, refreshments,
processed food, pan, tobacco and intoxicants
3. 30-days for the remaining food items, fuel and light, miscellaneous goods and services
including non-institutional medical; rents and taxes.
3.1.3 PRESENT POVERTY ESTIMATION
• Poverty Line: It is defined as the minimum expenditure required to cover basic needs like food, clothing,
shelter, and healthcare.
• Poverty is measured by comparing a household's income or consumption expenditure to this poverty
line threshold and households whose income or consumption expenditure falls below the poverty line
are classified as BPL (Below the Poverty Line)
• Methodology: poverty line is determined by NITI Aayog, based on data from National Sample Survey
Organization (NSSO). NSSO conducts household surveys to collect data on consumption expenditure.
• Poverty Estimation: The number of people below the poverty line is calculated as a proportion of the
total population, also known as the poverty ratio or headcount ratio.
• BPL Census: The Ministry of Rural Development conducts a BPL census to identify and target BPL
households for government schemes.

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3.2 TYPES OF POVERTY

Aspect Absolute Poverty Relative Poverty Subjective Poverty
According to UN World Summit
for Economic Development it is
A household is poor if its Poverty based on an
based on deprivation of basic
Definition income is lower than the individual's own perception
human needs like food, water,
median income in a country. of whether they are poor.
sanitation, health, shelter,
education, and information.
Basic needs irrespective of Inequality or disparity in
Psychological and social
Key Focus others' income and also based income/ consumption
perception of poverty.
on access to social services compared to calculated average
Poverty Based on monetary value of a Certain percent of population No fixed threshold; based on
Threshold basket of essential goods below median income is always individual self-assessment
Basis required for survival. considered poor. and perceived social status.
Used in qualitative research,
Used by World Bank and Primarily used by developed
Scope social assessments, and well-
developing countries like India. countries.
being surveys.
Subjective and variable,
Nature of Fixed threshold, constant over Dynamic threshold, changes
based on personal or
Threshold time and across geographies. with income distribution.
community expectations.
Depends on actual access to Depends on comparison to May or may not be directly
Income
services and income needed to average societal income linked to income; more
Consideration
fulfil minimum living standards. levels. about felt deprivation.
Ignores absolute living
Ignores variations in cost of Highly individualistic, lacks
standards, assumes relative
Criticism living and internal deprivation standardization, and difficult
income is sole determinant of
within countries. to use for policy formulation.
well-being.
A) Cultural Poverty
• The term refers to a concept popularized by anthropologist Oscar Lewis, which suggests that poverty is
perpetuated by the values, habits and norms of people who experience it preventing individuals from taking
advantage of economic opportunities, creating a cycle of poverty across generations.
• According to Lewis, the culture of poverty is characterized by:
1. A strong sense of fatalism, acceptance of poverty as a chronic condition that will unlikely change.
2. Little use of banks, more reliance on informal credit sources.
3. Frequent interpersonal violence.
4. Lower levels of participation in community organizations and voluntary associations
B) Poverty Rate/ Poverty Incidence/Headcount Ratio: It is the share or percentage of population living below the
poverty line. It measures 'how many are poor?'
C) Intensity of poverty: It measures how bad the poverty is for those who are poor or the distance from the
poverty line. Thus it measures' How much poor are the poor?'
3.3 MULTIDIMENSIONAL POVERTY
• United Nations Development Programme (UNDP) has identified two categories of poverty
- Income poverty arises due to a lack of necessities of material well-being, and
- Human poverty is the denial of opportunity for living a decent standard of life.
• Multidimensional poverty is a comprehensive way to understand poverty beyond just income or
monetary measures and include Human poverty also.
• It recognizes that poverty involves multiple overlapping deprivations, such as poor health, lack of
education, inadequate living standards, and limited access to basic services.

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• Sustainable Development Goal (SDG) 1: Ending poverty in all its forms everywhere, entails viewing
poverty not solely in relation to income and consumption, but as relating to other multiple capabilities.
Measurement of Multidimensional poverty
• Global: Most widely used tool to measure multidimensional poverty is the Multidimensional Poverty
Index (MPI), developed in 2010 by the Oxford Poverty & Human Development Initiative (OPHI) and
the United Nations Development Programme (UNDP).
- Methodology: dual-cutoff approach of the Alkire-Foster (AF) methodology - To identify the poor,
the AF method counts the overlapping or simultaneous deprivations that a person or household
experiences in different indicators of poverty.
- 2024 Global MPI report findings: about 1.1 billion people out of 6.3 billion live in acute
multidimensional poverty.
- Common deprivations include: inadequate housing, sanitation, electricity, cooking fuel, nutrition,
and school attendance.
- Trend: Poverty tends to be higher in conflict-affected areas, where poverty reduction efforts are
often reversed or slowed.
• National MPI (NMPI): NITI Aayog is the nodal agency for MPI, and it retains the 10 original indicators of
the global MPI model and adds two indicators, viz., Maternal Health and Bank Account, in line with
India’s national priorities.
- It is a contribution towards measuring progress for target 1.2 of Sustainable Development Goals.
- Methodology: dual-cutoff approach of the Alkire-Foster (AF) methodology – the one used in the
Global MPI.
- NMPI value is arrived at by multiplying the headcount ratio (H) and the intensity of poverty (A).
✓ Headcount ratio (H): It indicates proportion of multidimensionally poor in the population.
✓ Intensity of poverty (A): It indicates average proportion of deprivations which is experienced
by multidimensionally poor individuals.
- NITI Aayog uses National Family Health Survey (NFHS) to measure the NMPI.
- The latest NMPI, ‘National Multidimensional poverty: A Progress Review -2023’ is based on the
data of NFHS 4 and 5.
Global MPI Indicators National MPI Indicators

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Multidimensional Poverty Vs Traditional Poverty

Traditional Poverty Multidimensional Poverty
Multiple deprivations (health, education,
Main Focus Income/consumption
living standards)
Indicators Single (income/consumption) Multiple (e.g., 10 in MPI)
Poverty Line One monetary threshold Thresholds for each indicator
Identification of Poor Income below poverty line Deprived in multiple indicators
Policy Guidance Income support, economic growth Integrated, sector-specific interventions

Recent findings of NITI Aayog’s Discussion Paper ‘Multidimensional Poverty in India since 2005-06’
• Significant Decline in Poverty: India's Multidimensional Poverty Index (MPI) headcount ratio decreased
from 29.17% in 2013-14 to 11.28% in 2022-23, marking a reduction of 17.89% points.
• Population Uplifted: Approximately 24.82 crore (248.2 million) people moved out of multidimensional
poverty during this period
• State-wise Progress:
- Uttar Pradesh: 5.94 crore individuals escaped poverty.
- Bihar: 3.77 crore individuals.
- Madhya Pradesh: 2.30 crore individuals.
- Rajasthan: 1.87 crore individuals.
• Improvement Across Indicators: All 12 MPI indicators—encompassing health, education, and standard
of living—showed significant improvements throughout the study period.
• Accelerated Reduction Rate: The annual rate of decline in poverty headcount ratio was 10.66% between
2015-16 and 2019-21, compared to 7.69% between 2005-06 and 2015-16.
• SDG Alignment: India is on track to achieve Sustainable Development Goal (SDG) Target 1.2, which aims
to reduce multidimensional poverty by at least half by 2030, well ahead of the deadline.

Reduction in multidimensional poverty is attributed to various government schemes and programs:

• Nutrition and Health: Poshan Abhiyaan, Anemia Mukt Bharat.
• Food Security: National Food Security Act, Pradhan Mantri Garib Kalyan Anna Yojana.
• Maternal and Child Health: Various maternal health programs.
• Clean Energy & Sanitation: Pradhan Mantri Ujjwala Yojana, Swachh Bharat Mission, Jal Jeevan Mission.
• Housing and Electricity: Pradhan Mantri Awas Yojana, Saubhagya Scheme.
• Financial Inclusion: Pradhan Mantri Jan Dhan Yojana.

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3.4 STATUS OF POVERTY IN UTTAR PRADESH

• According to NITI Aayog India registered a significant decline in multidimensional poverty in India
from 29.17% in 2013-14 to 11.28% in 2022-23 i.e. a reduction of 17.89% points.
• Uttar Pradesh registered the largest decline in the number of poor with 5.94 crore people escaping
multidimensional poverty during the last 9 years.
• From 37.68% in 2015-16, number of multi-dimensional poor in in UP came down to 22.95% in 2019-21
and in 2022-23, this figure reduced to 17.40%.
3.4.1 REGIONAL DISPARITIES AND SPATIAL INEQUALITIES
A) The East-West Divide: UP’s poverty landscape is sharply bifurcated:
Region Districts (Poverty Rate) Key Characteristics Economic Observation
- Bahraich (62%) - Fragmented landholdings High poverty due to agrarian
Eastern
- Balrampur (58%) - Low irrigation coverage distress and lack of non-farm
UP
- Shravasti (56%) - Weak infrastructure employment opportunities
- Proximity to Delhi Lower poverty due to better
Western - Gautam Buddh Nagar (8%)
- Higher industrialization infrastructure, services sector,
UP - Ghaziabad (9%)
- Better educational access and job opportunities
This east-west gradient correlates with the services-to-manufacturing GDP ratio, which is 2.5× higher in
western districts, fostering job creation and wage growth.)
B) Urban-Rural Disparities
Area Type Regions/Districts Contributing factors Underlying Causes
(Poverty Rate)
- Stronger governance, diversified
Urban (Low - Lucknow (<10%) - Better infrastructure
economy, better access to
Poverty) - Kanpur (<10%) - Broader service sector
services
Urban (High - Varanasi (22%) - Informal labour dominance - High population pressure, weak
Poverty) - Prayagraj (19%) - Inadequate housing & urban planning urban employment security
- Bundelkhand & - Seasonal migration- Dependence - Agrarian distress, lack of
Rural (High
Purvanchal (entire on daily wage labour (>60%)- Income industrial jobs, vulnerability to
Poverty)
regions) volatility climate & economic shocks

UPPSC PREVIOUS YEAR QUESTIONS (PYQs)

Q1. Who publishes Global Multidimensional Q3. Who authored the book "The Challenge of
Poverty Index (MPI) report? (2024) World Poverty"? (2023)
1. World Bank & International Monetary Fund (a) Adam Smith (b) Gunnar Myrdal
2. Oxford Poverty & World Health Organisation (c) Amartya Sen (d) Jean Dreze
3. Oxford Poverty & Human Development Initiative Q4. Which of the following is not a type of poverty?
4. United Nations Development Programme. (2023)
Select correct answer from the codes given below: (a) Absolute poverty (b) Relative poverty
(a) 2 and 4 (b) Only 4 (c) Subjective poverty (d) Functional poverty
(c) 1 and 4 (d) 3 and 4
Q5. United Nations Development Programme
Q2. What is the theme of the International Day for (UNDP) has identified following categories of
the Eradication of Poverty for 2022-23? (2023) poverty. which one is correct? (2022)
(a) "Acting together to empower children, their (a) Income poverty
families and communities to end poverty." (b) Human poverty
(b) "Dignity for all in practice." (c) Both (a) and (b)
(c) "Accelerating global actions for a world (d) None of the above
without poverty."
(d) "Coming together to end poverty & discrimination."

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Q6. Given below statements, one is labelled as Development Report replaced it with
Assertion (A) and the other Reason (R). (2022) Multidimensional Poverty Index (MPI) in? (2020)
Assertion (A): During the 20th century, poverty (a) 1999 (b) 2005
and poor people have become the subject of (c) 2010 (d) 2015
our concern and duty.
Q12. Multidimensional poverty index includes: (2019)
Reason (R): Strategically there was lack of
i. Health
targeted actions due to which this issue got
ii. Education
momentum.
iii. Living Standard
Select answer from the code given below Code
Select correct answer from the codes given below
(a) (A) is false but (R) is true
(a) Only i is correct
(b) (A) is false but (R) is false
(b) Only ii and iii are correct
(c) Both (A) and (R) are true and (R) is not the
(c) Only i and ii are correct
correct explanation of (A)
(d) i. ii and iii are correct
(d) Both (A) and (R) are true and (R) is the
correct explanation of (A) Q13. National Social Assistance Programme does
not include the following scheme for Below
Q7. 'Poverty is regarded as a social problem' which
Poverty Line households (2019)
was outcome of survey research on poverty in
(a) National Family Benefit Scheme
London. Who was Scholar of this research? (2022)
(b) Annapurna
(a) Sir Henary Maine (b) Henary George
(c) Mahila Kisan Sashaktikaran Pariyojna
(c) Kingsley Davis (d) Charles Booth
(d) All of the above
Q8. Which of following Committees recommended a
Q14. Which of the following fixes the poverty line
poverty line based on nutritional requirements
in India? (2018)
exclusively? (2020)
(a) Central Council of Ministers
(a) Alagh Committee
(b) Lok Sabha
(b) Lakdawala Committee
(c) Rajya Sabha
(c) Tendulkar Committee
(d) Planning Commission (Now Niti Ayog)
(d) Rangarajan Committee
Q15. Who determines the methodology for
Q9. Idea of 'Cultural Poverty' was given by (2020) measurement of poverty in India? (2016)
(a) Oscar Lewis (b) Gunnar Myrdal (a) Planning Commission
(c) Aashish Bose (d) Amartya Sen (b) NITI Aayog
Q10. Which of the following methods has/have (c) Reserve Bank of India
been used to estimate poverty in India? (2020) (d) Ministry of Rural Development
1. Head Count Ratio Q16. Which committee recommended the
2. Calorie intake poverty line based on the monthly per capita
3. Household Consumption Expenditure consumption expenditure? (2016)
4. Per Capita Income (a) Tendulkar Committee
Select correct answer from the codes given below: (b) Rangarajan Committee
(a) 2 and 3 (b) 1, 2 & 3 only (c) Lakdawala Committee
(c) 3 only (d) 1, 2, 3 & 4 (d) Alagh Committee

Q11. Human Development Report 1997 introduced

concept of Human Poverty Index (HPI) but Human

ANSWERS
1. (d) 2. (b) 3. (b) 4. (d) 5. (c) 6. (c) 7. (d) 8. (a)
9. (a) 10. (b) 11. (c) 12. (d) 13. (c) 14. (d) 15. (a) 16. (c)

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