Poverty & Inclusive Growth: Measuring poverty

The national MPI uses the National Family Health Survey (NFHS), rounds 4 (2015- 16) and 5 (2019-21), conducted for the Ministry of Health and Family Welfare with the International Institute for Population Sciences, Mumbai, as the nodal agency. NFHS collects household-level data on nutrition, mortality, schooling, housing, sanitation, cooking fuel, assets and bank accounts, which is exactly what a non-monetary index needs. Consumption surveys are used for monetary poverty, not for the MPI.

The head-count ratio (HCR) is the number of persons below the poverty line divided by the total population; it measures the incidence of poverty. India's official poverty ratios (for example 21.9 per cent for 2011-12 by the Tendulkar method) are head-count ratios. The average shortfall from the line is the poverty gap, and the income share of the bottom 40 per cent is a measure of inequality or shared prosperity, not of poverty incidence.

Statements 1, 2 and 3 are correct. The Rangarajan lines of ₹972 (rural) and ₹1,407 (urban) per capita per month equal about ₹32 and ₹47 a day. The group counted about 36.3 crore poor in 2011-12, against about 27 crore by the Tendulkar method, and estimated a fall in the poverty ratio from 38.2 per cent (2009-10) to 29.5 per cent (2011-12). Statement 4 is wrong: its basket combined a nutrient-based food component with non-food expenditure, partly normative (clothing, rent, conveyance, education) and partly at observed levels.

Statements 1, 2 and 4 are correct. The 2011-12 estimates put poverty at 21.9 per cent, with lines of ₹816 (rural) and ₹1,000 (urban) per capita per month, roughly ₹27 and ₹33 a day. Chhattisgarh (about 39.9 per cent) had the highest ratio among States. Statement 3 is wrong: rural poverty (25.7 per cent) was almost double urban poverty (13.7 per cent), even though the urban line was higher in rupees.

Statements 1 and 2 are correct. The head-count ratio only counts who is below the line, so a poor person becoming poorer leaves it unchanged. The poverty gap index adds up the shortfalls of the poor from the line (non-poor count as zero) and expresses them as a share of the line, so it captures the depth of poverty. Statement 3 is wrong: the squared poverty gap index squares each shortfall, so it gives more weight to the poorest and rises when inequality among the poor rises; it measures the severity of poverty.

Pairs 1, 2 and 3 are correct. Ragnar Nurkse described the vicious circle in which low income leads to low saving, low investment and again low income. Amartya Sen explained famines through the collapse of entitlements, and Peter Townsend defined poverty as relative deprivation. Pair 4 is wrong: 'Poverty and Un-British Rule in India' (1901) was written by Dadabhai Naoroji, who also made one of the earliest estimates of a subsistence-based poverty line for India.

All three are correct. The Foster-Greer-Thorbecke (FGT) measure averages the normalised shortfall of each poor person raised to the power alpha: with alpha = 0 every poor person counts as one (head-count ratio), with alpha = 1 it becomes the poverty gap index, and with alpha = 2 the squared poverty gap. The Sen index (1976) was the first to build in a distributional element: it combines the head-count ratio, the income-gap ratio and the Gini coefficient of income among the poor.

The poverty gap index sums the shortfalls of the poor from the line and divides by (population × poverty line). The shortfalls are ₹40 and ₹20, a total of ₹60; the denominator is 10 × ₹100 = ₹1,000; so the index is 0.06. The head-count ratio is 2/10 = 0.20, and the average shortfall of the poor as a share of the line (the income-gap ratio) is 30/100 = 0.30. In fact, poverty gap index = head-count ratio × income-gap ratio = 0.20 × 0.30 = 0.06.

The 12th Five-Year Plan (2012–17) had the theme "Faster, More Inclusive and Sustainable Growth" (d). Options (b) and (c) use some of the same words but miss "faster", and (a) is closer in spirit to earlier plans. The 11th Plan (2007–12) was "Towards Faster and More Inclusive Growth", so the 12th simply added sustainability.

The 12th was India's last Five-Year Plan. NITI Aayog replaced the Planning Commission in January 2015 and moved to vision and strategy documents instead. Notice how plan themes trace India's changing priorities: from heavy industry in the 2nd Plan to inclusion and sustainability later.

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All three are correct (d). Inclusive growth, the theme of the 11th Five-Year Plan (2007–12), means growth whose gains reach the poor and excluded. Self-Help Groups give women and the poor credit, savings and income (1). MSMEs create jobs on a large scale and spread industry beyond big cities (2). The Right to Education Act, 2009 builds the skills that let people share in growth (3). So options (a), (b) and (c) leave out real tools.

Notice the present versions: DAY-NRLM links about 10 crore women to SHGs, the Udyam portal registers MSMEs, and the NEP 2020 builds on the RTE. The 12th Plan's theme was 'faster, more inclusive and sustainable growth'. Trap: inclusive growth is about broad access, so all three fit.

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