Take your issues to Avinash Kumar.

Thanks for that paper.

I did some searches as well, and this thing came up:

It turns out that Poverty Lines for States are set by the Planning Commission and not by the States.

The Planning Commission has been estimating the incidence of poverty at national and state level using the methodology contained in the report of the Expert Group on Estimation of Proportion and Number of Poor (Lakdawala Committee) and applying it to consumption expenditure data from the large sample surveys on consumer expenditure, conducted periodically by the National Sample Survey Organisation (NSSO).

The article has data pertaining to 1999-2000, and the historical data can be seen at:

I don’t think Mr. Vij was interested in fact-finding at all.

But I don’t want to question his motives, because that is the politically incorrect thing to do these days, so I’ll just put a big question mark on his competence and journalistic integrity.

You right about PPP, of course, for official calculation of poverty rates by international orgs. But that’s not what these newly minted economists use to get their muddled point across.

The dollar a day line is adjusted for purchasing power parity when it is compiled. It means that the person’s spending power in local currency is the same as the spending power of a person who earns US$1 in the US. I don’t think it captures current exchange rates though.

That’s another problem with the measure: the PPP bit gets lost in the popular debate. I’m not sure what the PPP adjusted rate in India is, but it’s certainly not as high as Rs40 per US. It’s probably closer to Rs15/dollar.

You should read this paper by Banerjee and Dufflo. It starts off this way:

In what turned out to be a rhetorical master-move, the 1990 World Development Report from the World Bank defined the “extremely poor” people of the world as those who are currently living on no more than $1 per day per person, measured at the 1985 purchasing power parity (PPP) exchange rate.¹ Even though there have always been poverty lines indeed one dollar per day was chosen in part because of its proximity to the poverty lines used by many poor countries²this particular one has come to dominate the conversations about poverty in a particularly stark way.

² For example, the “All India Rural” poverty line used by the Indian Planning Commission was Rs 328 per person per month, or $32 in PPP dollars in 1999/2000. [Banerjee & Dufflo/ MIT]

BTW, can someone throw some light on this “internationally accepted” figure of $1/day? How was it arrived at? It looks good in print.. but what does it mean?

Poverty is about lack of purchasing power. But the power to purchase what? Obviously, the basic necessities of life. So I can understand if one were to criticize the Government of India (and/or the State Governments) for the ridiculously low figure of Rs. 10/day or so. But having another equally arbitrary figure of Rs. 44 (oops.. 42 now.. oops 40 now.. oops 38 now) doesn’t make much sense to me.

Sriram, with the falling dollar, rupee can actually buy more, if one wanted to use international standard.

Also, official measure of inflation are different for villages and cities. Economies of the two lives are simply different.