Rangarajan Poverty Line

Economists from the Reserve Bank of India (RBI) have recently updated India’s poverty estimates using the Household Consumption Expenditure Survey (HCES) 2022–23, applying the Rangarajan Committee (2014) framework — India’s last official benchmark for poverty measurement.
This update provides a fresh picture of poverty reduction and inequality across Indian states.

C. Rangarajan Committee on Poverty Estimation

  • Constitution: Formed in 2012 by the Planning Commission, chaired by Dr. C. Rangarajan, former Governor of the RBI.
  • Purpose: To create a more comprehensive and realistic measure of poverty that included basic needs beyond just food.
  • Report Submitted: June 2014, marking a shift from calorie-based to expenditure-based poverty assessment.

Key Features of the Rangarajan Committee Approach

  • Broader Definition of Poverty:
    • Included expenses on food, clothing, housing, education, and healthcare.
    • Moved beyond the earlier calorie-intake method used by the Tendulkar Committee (2009).
  • Poverty Line (2011–12):
    • Rural: ₹972 per person per month (~₹32/day)
    • Urban: ₹1,407 per person per month (~₹47/day)
  • Methodology:
    • Based on Monthly Per Capita Expenditure (MPCE) using Modified Mixed Reference Period (MMRP) data.
    • Created separate consumption baskets for rural and urban areas.
    • Adjusted for state-wise price variations.
  • Findings (2011–12):
    • 29.5% of India’s population lived below the poverty line.

RBI’s 2025 Update (DEPR Study)

  • RBI’s Department of Economic & Policy Research (DEPR) used new HCES 2022–23 data covering 20 states.
  • Continued the Rangarajan methodology with updated price and consumption data.
  • New Index: Developed a Poverty Line Basket (PLB) Index, considered more accurate than the Consumer Price Index (CPI).
  • Food Share in PLB:
    • Rural: 57% (vs 54% in CPI)
    • Urban: 47% (vs 36% in CPI)

Major Findings (RBI Study)

  • Sharp Poverty Reduction:
    • Rural Odisha: 47.8% → 8.6%
    • Urban Bihar: 50.8% → 9.1%
  • Lowest Poverty: Himachal Pradesh (0.4% rural), Tamil Nadu (1.9% urban)
  • Highest Poverty: Chhattisgarh (25.1% rural, 13.3% urban)

Significance

  • Confirms a broad-based fall in poverty across most Indian states.
  • Highlights persistent regional disparities requiring targeted welfare policies.
  • Strengthens the argument for a new official poverty line reflecting modern consumption patterns and updated living costs.

This topic is available in detail on our main website.

👉 Read Daily Current Affairs – 22nd October 2025

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