The computation of poverty in terms of Monthly Per Capita Consumption Expenditure (MPCE) based on the Mixed Reference Period was recommended by the
Tendulkar Committee
Understanding Poverty Measurement in India
Poverty estimation in India has evolved over time, with various expert groups and committees recommending different methodologies. These methods often differ in how consumption expenditure is measured and what constitutes the poverty line. The question asks about a specific recommendation related to the computation of poverty using Monthly Per Capita Consumption Expenditure (MPCE) based on the Mixed Reference Period (MRP).
The Role of Consumption Expenditure in Poverty Estimation
Poverty lines in India are traditionally based on consumption expenditure rather than income. Household surveys collect data on the consumption of various goods and services. The total consumption expenditure is then divided by the household size to arrive at the per capita consumption expenditure. This per capita figure is crucial for determining if a household is above or below the poverty line.
Reference Periods: Uniform vs. Mixed
The way consumption data is collected for different items varies depending on the recall period used in surveys. There are mainly two types of reference periods used:
- Uniform Reference Period (URP): This method uses a 30-day recall period for all consumption items.
- Mixed Reference Period (MRP): This method uses a 365-day recall period for five low-frequency items (clothing, footwear, durable goods, education, and institutional health expenses) and a 30-day recall period for all other items.
Studies showed that MRP provides a more accurate picture of the consumption of durable and infrequent purchases, leading to different MPCE estimates compared to URP.
Tendulkar Committee Recommendations on Poverty Measurement
The Expert Group to Review the Methodology for Estimation of Poverty, chaired by Suresh Tendulkar (Tendulkar Committee), was constituted in 2005 and submitted its report in 2009. This committee made several key recommendations to address the shortcomings of the previous poverty estimation methodologies.
One of the significant recommendations of the Tendulkar Committee was the shift from the Uniform Reference Period (URP) to the Mixed Reference Period (MRP) for estimating Monthly Per Capita Consumption Expenditure (MPCE). The committee argued that using MRP provides a more realistic representation of consumption patterns, especially for items consumed infrequently.
Key aspects of the Tendulkar Committee's recommendations included:
- Using the MRP-based MPCE for poverty estimation.
- Updating the poverty line based on urban consumption basket data and extending it to rural areas, allowing for variation in prices across states and regions.
- Including private expenditure on health and education in the consumption basket, in addition to food.
- Moving away from basing the poverty line solely on calorie norms.
By recommending the MRP-based MPCE, the Tendulkar Committee's methodology led to higher poverty estimates compared to the previous Lakdawala Committee's method, which primarily relied on URP.
Comparison with Other Committees
It is helpful to briefly understand the contributions of other committees mentioned in the options:
| Committee | Key Contribution to Poverty Estimation |
|---|---|
| Dandekar and Rath (1971) | Provided one of the earliest poverty lines based on a minimum calorie intake (2250 calories per person per day), linked to expenditure. |
| Alagh Committee (1979) | Defined poverty lines separately for rural and urban areas based on nutritional requirements and associated consumption expenditure. Used average calorie requirements for different age groups. |
| Lakdawala Committee (1993) | Accepted the state-specific poverty lines derived by Alagh Committee. Recommended using CPI-AL (Agricultural Labourers) for rural and CPI-IW (Industrial Workers) for urban areas to update poverty lines. Relied primarily on Uniform Reference Period (URP). |
| Tendulkar Committee (2009) | Recommended shifting to Mixed Reference Period (MRP) for MPCE estimation. Updated poverty lines based on urban poverty line basket and included education and health expenditure. |
Based on the analysis of the methodologies recommended by various committees, it is clear that the Tendulkar Committee specifically recommended the computation of poverty based on Monthly Per Capita Consumption Expenditure (MPCE) using the Mixed Reference Period (MRP).
Conclusion
The computation of poverty in terms of Monthly Per Capita Consumption Expenditure (MPCE) based on the Mixed Reference Period (MRP) was a key recommendation of the Tendulkar Committee. This shift in methodology significantly impacted poverty estimates in India, providing a more nuanced understanding of consumption patterns and poverty levels.
Revision Table: Poverty Estimation Committees in India
| Committee | Year of Report | Key Recommendation/Methodology | Reference Period Used (Relevant to Question) |
|---|---|---|---|
| Dandekar and Rath | 1971 | Calorie-based poverty line (2250 kcal) | Implied/Early methods, not focusing specifically on URP/MRP distinction |
| Alagh Committee | 1979 | Calorie-based state-specific poverty lines (rural/urban) | Implied/Early methods, not focusing specifically on URP/MRP distinction |
| Lakdawala Committee | 1993 | Used state-specific poverty lines, price indices (CPI-AL, CPI-IW) for updates | Primarily Uniform Reference Period (URP) |
| Tendulkar Committee | 2009 | Shifted to urban-based poverty line, included health/education, updated price indices | Mixed Reference Period (MRP) for MPCE |
Additional Information on MPCE and Poverty Lines
Understanding MPCE and different reference periods is crucial for comprehending poverty estimation methodologies. MPCE is the average amount spent by a person in a household on goods and services over a month. This figure is compared against a defined poverty line expenditure to determine if a household is poor.
The choice between URP and MRP affects the measured MPCE, particularly for items consumed irregularly. Items like clothing, footwear, durables, education, and health are purchased or consumed less frequently than food items. Using a 365-day recall (MRP) for these items captures the annual expenditure pattern better than a 30-day recall (URP), which might miss such expenditures entirely in a given month or heavily skew the monthly average if a large purchase occurred.
The poverty line itself represents the minimum expenditure needed per person per month to meet basic needs. Different committees have proposed different methods for setting and updating this line, taking into account food, shelter, clothing, and sometimes health and education. The Tendulkar Committee's contribution was significant because it updated the consumption basket used to define the poverty line and, importantly, changed the method of measuring consumption expenditure by adopting the MRP.
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