The World Bank has defined the absolute poverty line as the percentage of the population of a country living on less than $1.90 a day (PPP) at constant prices at 2011 price levels. It can be measured either in absolute terms or in relative terms. In 1962, the Planning Commission constituted a working group to estimate poverty nationally, and it formulated separate poverty lines for rural and urban areas of Rs 20 and Rs 25 per capita per year, respectively. This early estimate was followed by the following Committees in India:

• VM Dandekar and N Rath: They made the first systematic assessment of poverty in India in 1971, based on National Sample Survey (NSS) data from 1960-61.
  • They suggested minimum calorie consumption norms i.e., 2250 calories per day in both rural and urban areas.
• Alagh Committee (1979): Chaired by YK Alagh, this Committee, set up by the Planning Commission, constructed a poverty line for rural and urban areas on the basis of nutritional requirements.
• Lakdawala Committee (1993): According to the Committee, consumption expenditure should be calculated based on calorie consumption as earlier. Further, state specific poverty lines and should be updated using CPI-IW in urban areas and CPI-AL in rural areas.
• Tendulkar Committee (2009): The Planning Commission appointed Committee, chaired by Suresh Tendulkar, recommended major changes in poverty estimation, such as:
  • Using mixed reference period (MRP)-based estimates, as opposed to earlier uniform reference period (URP).
  • A uniform poverty line basket (PLB) across rural and urban India.
  • A change in the price adjustment procedure.
  • Incorporation of private expenditure on health and education while estimating poverty.
  • Based on these recommendations, poverty line was pegged at Rs 446.68 per capita per month in rural areas and Rs 578.80 per capita per month in urban areas in 2004-05.
• Rangarajan Committee (2012): Constituted by the Planning Commission, the Committee took an estimation based on an independent large survey of households by the Centre for Monitoring Indian Economy (CMIE). Recommendations were based on households’ inability to save, normative as well as behavioural levels, and ICMR norms related to calories, protein, and fat.
  • According to the report of the Committee, the new poverty line was set at Rs. 32 in rural areas and Rs. 47 in urban areas. The earlier poverty line figure was Rs. 27 for rural India and Rs. 33 for urban India.
• Hashim Committee (2012): To capture residential, social, and occupational vulnerabilities, the Committee, in its report, recommended a three-stage identification process to identify the families living below the poverty line in urban areas which include automatic exclusion, automatic inclusion and scoring index of the remaining urban families in this order.

Currently, poverty estimation in India is carried out by NITI Aayog’s task force through the calculation of poverty line based on the data captured by the National Sample Survey Office under the Ministry of Statistics and Programme Implementation (MOSPI). Based on this, in 2011-12, the poverty line was defined for rural areas as consumption worth Rs 816 per person a month and for urban areas it was Rs 1,000 per person per month. Thus, the government uses Monthly Per Capita Expenditure (MPCE) as a proxy for income of households to identify the poor.