Previous Year Question
In a given year in India, official poverty lines are higher in some States than in others because
poverty rates vary from State to State
price levels vary from State to State
Gross State Product varies from State to State
quality of public distribution varies from State to State
Correct Answer: B
Detailed Solution
The poverty line represents the minimum Monthly Per Capita Consumption Expenditure—MPCE considered necessary to obtain a prescribed set of essential goods and services.
The cost of the same basket of goods and services is not uniform across Indian States. Prices of food, clothing, housing, fuel, transportation, education and healthcare differ across States. Consequently, different monetary amounts are required in different States to attain an equivalent real level of consumption.
Under the Tendulkar Committee methodology, State-specific rural and urban poverty lines were derived by taking account of relevant price indices. Price information drawn from CPI-AL for rural areas and CPI-IW for urban areas was used in the estimation process. A State where the prescribed consumption basket is relatively expensive will therefore have a relatively higher poverty line in monetary terms.
For 2011-12, the Planning Commission’s all-India poverty lines were approximately:
Rural areas—₹816 per person per month, or about ₹27.20 per day.
Urban areas—₹1,000 per person per month, or about ₹33.33 per day.
These were all-India figures. State-specific poverty lines could be higher or lower because of differences in price levels.
Examination of the options:
Option (a): The poverty rate measures the proportion of people below the poverty line. It is an outcome calculated using the poverty line, not the reason for different poverty-line thresholds.
Option (b): The cost of an equivalent consumption basket varies across States. This is the correct reason.
Option (c): GSDP affects a State’s general economic condition but is not the direct basis for fixing its official poverty line.
Option (d): The quality of the Public Distribution System may affect household food security and actual expenditure, but it does not explain the official monetary difference between State poverty lines.