China and India are making immense strides in development. Growth in both countries has been impressive. But there is now much concern about whether impressive growth rates are yielding enough poverty reduction. The present debate about their poverty lines is a reflection of this. In this first part of a two-part article, we consider the definition of the poverty line in China and India. Part 2, in next month's Angle, focuses on the key challenges facing these two Asian giants.
The last two decades have seen a big fall in the number of people living on less than US$1.25 a day, the World Bank's international poverty threshold--down from 1.9 billion in 1990 to 1.4 billion in 2005. By this measure, the global poverty rate fell from 42% in 1990 to 25% in 2005, and it may yet fall to 15% by 2015, or 900 million people.
However, US$1.25 does represent a very low standard of living. Those below it are in extreme deprivation, and many people above this threshold would regard themselves as being poor.
Two big countries, China and India, account for much of this fall in the number of people below the US$1.25 threshold. But despite their progress, both countries are still marked by deep poverty. In both China and India, the debate on poverty--and specifically the poverty line to be used--has recently intensified. Poverty measures have always been a source of controversy, as there is no general consensus about the conceptual and methodologies approaches used to construct poverty lines. The present debate in both countries illustrates this vividly.
India's poverty line
In September 2011, the Indian Planning Commission presented new estimates for the country's poverty lines in urban and rural areas, setting these thresholds at 965 and 781 rupees per capita per month (or about 32 and 26 rupees per capita per day), respectively.
Since the early 1990s, India's official poverty estimates have been made on the basis of the methodology recommended by the Lakdawala Committee established in 1993. These poverty lines are based on per capita consumption levels associated with a commodity bundle that yielded a specified level of caloric intake believed in 1973-74 to be appropriate for rural and urban areas (2,400 and 2,100 kilocalories per capita per day for the rural and urban areas, respectively).
More recently, in December 2005, the Planning Commission appointed a Committee chaired by Suresh Tendulkar to review the Lakdawala poverty lines. In 2009, the Tendulkar...