Rangarajan Committee (2014) – Indian Economy Notes

The C Rangarajan Committee was formed to Review the Poverty Measurement Methodology presented its report to Union Planning Minister Rao Inderjit Singh. The report dismissedthe Tendulkar Committee's estimate of India's poverty rate. According to the report, this figure was substantially higher in 2011-2012, at 29.5 percent of the population, implying that three out of ten Indians were poor. In this article, we will study about Rangrajan Committee, which is important for UPSC Examination.

Rangarajan Committee – Objectives

• Review international poverty estimation methods and determine whether a specific method for empirical poverty estimation in India can be established based on them.
• To make recommendations on how these poverty estimates can be linked to eligibility and entitlements under the various government of India initiatives.
• to propose an alternative method for estimating poverty levels and to investigate whether poverty lines should be fixed solely in terms of a consumption basket or whether other criteria are also relevant;
• to investigate the divergence between consumption estimates based on NSSO methodology and those derived from National Accounts aggregates.

Rangarajan Committee – Recommendations

• Methodology Used: The Rangarajan committee's estimate is based on an impartial large household survey conducted by the Center for Monitoring Indian Economy (CMIE).
• It has also employed alternative methodologies, such as classifying a household as poor if it is unable to save.
• Normative and behavioural level: The poverty line should be based on the following normative and behavioural levels:
• The ideal and desirable level of nutrition is the normative level of appropriate nutrition.
• Non-food expenditures are determined by people's general behaviour: what they use or consume.
• Nutritional Requirement: For normative levels of adequate nutrition – average requirements of calories, proteins, and fats for all-India rural and urban regions, based on Indian Council of Medical Research (ICMR) norms, differentiated by age, gender, and activity:
• Calories: 2090 kcal in cities and 2155 kcal in the countryside.
• Protein: 48 gm in rural areas, 50 gm in metropolitan areas.
• Fat: 28 gramsin urban areas, 26 gm in rural ones.
• Poverty Threshold: People in cities who spend less than ₹ 47 per day and people in villages who spend less than ₹ 32 per day are deemed poor.
• The Rangarajan committee calculated that the number of poor was 19 percent greater in rural areas and 41 percent higher in urban areas using this methodology than the Tendulkar committee formula.
• Modified Mixed Reference Period (MMRP): Instead of Mixed Reference Period (MRP), it was advised that reference periods for different items be taken as follows:
• Clothing, footwear, education, institutional medical treatment, and durable commodities are guaranteed for 365 days.
• 7-day period for edible oil, egg, fish, and meat, as well as vegetables, fruits, spices, beverages, snacks, processed foods, cookware, cigarettes, and intoxicants.
• 30-days for residual food, fuel, and light, as well as incidental products and services such as non-institutional medical, rent, and taxes.

Rangarajan Committee – Criticism

The Rangarajan committee missed an opportunity to look beyond spending-based poverty rates and consider the prospect of a more holistic understanding of deprivation.

Conclusion

The Rangarajan committee's estimate is based on a large-scale household survey conducted by the Center for Monitoring Indian Economy (CMIE). It has also employed alternative methodologies, such as classifying a household as poor if it is unable to save.

FAQs

MCQs

1. Which of the following committees redefined the poverty line in India in 2014?

A. Tendulkar Committee
B. Kelkar Committee
C. Rangarajan Committee
D. Gadgil Committee

2. According to the Rangarajan Committee, what was the poverty line for urban areas in 2014?

A. Rs. 32 per day
B. Rs. 47 per day
C. Rs. 50 per day
D. Rs. 60 per day

3. What percentage of India’s population was estimated to be living below the poverty line according to the Rangarajan Committee?

A. 21.9%
B. 26.7%
C. 29.5%
D. 35.0%

4. What methodology did the Rangarajan Committee use to estimate poverty?

A. Income-based approach
B. Multidimensional approach
C. Expenditure-based approach
D. Asset-based approach

5. How did the poverty estimates of the Rangarajan Committee compare to those of the Tendulkar Committee?

A. The Rangarajan Committee estimated a higher percentage of poverty
B. The Tendulkar Committee estimated a higher percentage of poverty
C. Both committees estimated the same percentage of poverty
D. The Rangarajan Committee did not revise the poverty estimates

GS Mains Questions and Model Answers

1. Discuss the significance of the Rangarajan Committee’s recommendations on poverty estimation in India.

Answer: The Rangarajan Committee (2014) played a crucial role in redefining poverty estimation in India. Its revised methodology included a multidimensional approach, considering various factors like food security, education, health, and basic amenities, rather than focusing solely on income or expenditure. The committee’s redefined poverty line set higher thresholds for both urban and rural areas, recognizing that previous estimates did not fully account for the real cost of living. As a result, the percentage of India’s population living below the poverty line increased to 29.5%, up from 21.9% under the Tendulkar Committee. The recommendations had important implications for the government’s social welfare policies, as a higher poverty line meant more people were eligible for benefits under schemes like MGNREGA and the Public Distribution System (PDS).

2. Analyze the differences between the Tendulkar Committee and the Rangarajan Committee in their approach to poverty estimation.

Answer: The Tendulkar Committee and Rangarajan Committee had notable differences in their approaches to poverty estimation. The Tendulkar Committee (2009) used an expenditure-based approach, setting poverty lines based on per capita consumption expenditure, with a focus on food, health, and education. The Tendulkar Committee also adjusted for the cost of living and inflation, setting the poverty line at Rs. 27 per person per day in rural areas and Rs. 33 per person per day in urban areas. In contrast, the Rangarajan Committee (2014) adopted a multidimensional approach, considering factors like food security, basic amenities, and education, in addition to income and expenditure. The Rangarajan Committee’s higher poverty threshold resulted in a greater percentage of the population being classified as living below the poverty line (29.5%) compared to the Tendulkar Committee’s estimate (21.9%). This shift had a profound impact on policy decisions and welfare program eligibility.

3. Evaluate the implications of the Rangarajan Committee’s poverty line revision for social welfare programs in India.

Answer: The revision of the poverty line by the Rangarajan Committee had significant implications for social welfare programs in India. By increasing the poverty line threshold to Rs. 32 per day in rural areas and Rs. 47 per day in urban areas, the committee's findings expanded the number of individuals considered to be living below the poverty line. This meant that more people became eligible for government welfare programs, such as the Public Distribution System (PDS), MGNREGA, and other anti-poverty schemes. The committee’s recommendations could potentially lead to increased government spending on these programs as more individuals qualified for benefits. However, this raised concerns about the fiscal sustainability of expanding social welfare programs. At the same time, the revised poverty line provided a more realistic picture of poverty in India, highlighting the need for continued efforts to address socio-economic disparities.

Previous Year Questions on Rangarajan Committee

1. UPSC CSE Prelims 2019

Question: Which of the following committees is associated with poverty estimation in India?
A. Kelkar Committee
B. Gadgil Committee
C. Rangarajan Committee
D. Sarkaria Committee

Answer: C. The Rangarajan Committee (2014) was established to review and revise the methodology for estimating poverty in India.

2. UPSC CSE Mains 2017 (GS Paper 2)

Question: "The revision of poverty lines by various committees has sparked debate on the real extent of poverty in India." Discuss the significance of the Rangarajan Committee’s recommendations in this context.
Answer: The revision of poverty lines by committees like the Tendulkar Committee and the Rangarajan Committee has generated debate on the real extent of poverty in India. The Rangarajan Committee (2014) redefined poverty thresholds to reflect the rising cost of living and adopted a multidimensional approach to poverty estimation. This resulted in a higher percentage of the population being classified as poor (29.5%) compared to the earlier estimate by the Tendulkar Committee (21.9%). The revised estimates highlighted the need for a more comprehensive understanding of poverty, taking into account factors such as food security, education, and health. The findings of the Rangarajan Committee had significant implications for policy formulation, as they expanded the scope of social welfare programs and called for targeted interventions to address poverty in both rural and urban areas.