New Enroll in our GIC Finance Online Course Here!

    Register

    Question

    Extreme poverty in India dropped to 10.2% in the pre-Covid year of 2019 from as much as 22.5% in 2011 and the pace of reduction in rural India has been more dramatic than in urban areas, according to a World Bank working paper. The poverty level in rural and urban areas declined by 14.7 and 7.9 percentage points, respectively, during the 2011-2019 period. While it eased to 11.6% in rural areas in 2019, the urban poverty level stood at 6.3%. Extreme poverty has been measured in terms of the number of people living on less than $1.90 a day (roughly Rs 145). Interestingly, urban poverty inched up by 2 percentage points in the demonetisation year of 2016 and rural poverty rose by 10 basis points in 2019 (coinciding with an economic slowdown before the Covid spread its tentacles), the paper showed. The World Bank working paper, titled Poverty in India Has Declined over the Last Decade But Not As Much As Previously Thought, has been authored by economists Sutirtha Sinha Roy and Roy van der Weide. This is the second working paper released this month, under the aegis of multilateral agencies, that gauged poverty reduction in India. An IMF working paper authored by economists Surjit Bhalla, Karan Bhasin and Arvind Virmani recently suggested that extreme poverty in India was as low as 0.8% in 2019 and the country managed to keep it at that level in 2020 despite the pandemic, by resorting to food transfers through the Pradhan Mantri Garib Kalyan Yojana.

    Consider the following Statements about: (1)

    The only way to determine poverty level is by the monetary value (per capita expenditure) of the minimum calorie intake that was estimated at 2,400 calories for a rural person and 2,100 calories for a person in the urban area. (2) Government uses Monthly Per Capita Expenditure (MPCE) as proxy for income of households to identify the poor. (3) Monthly Per Capita Expenditure (MPCE) method groups all the poor together and does not differentiate between the very poor and the other poor. Which of the above statement(s) is/are CORRECT?
    A 1 & 3 only Correct Answer Incorrect Answer
    B 2 & 3 only Correct Answer Incorrect Answer
    C 1 and 2 only Correct Answer Incorrect Answer
    D 1,2 & 3 Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    One way is to determine it by the monetary value (per capita expenditure) of the minimum calorie intake that was estimated at 2,400 calories for a rural person and 2,100 calories for a person in the urban area. 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. Poverty can also be judged through income factor.  Most governments use Monthly Per Capita Expenditure (MPCE) as proxy for income of households to identify the poor.

    Practice Next