With reference to Poverty Gap Ratio, consider the following statements;

1. The poverty gap ratio is the mean shortfall of the total population from the poverty line (counting the non-poor as having zero shortfall), expressed as a percentage of the poverty line.

2. There was a nearly 50% decline in PGR both in rural and urban areas during 2004- 05 to 2011-12, reflecting that the conditions of the poor have improved both in rural and urban areas.

Which of the statements given above is/are correct?

Solution

● Statement 1 is correct: The Poverty Gap Ratio is the gap by which mean consumption of the poor below poverty line falls short of the poverty line. It indicates the depth/intensity of poverty; the more the PGR, the worse is the condition of the poor. While the number of poor people indicates the spread of poverty, PGR indicates the depth of the poverty. ● Statement 2 is correct: During 2004-05 to 2011- 12, PGR also reduced in both rural and urban areas. While the rural PGR declined from 9.64 in 2004-05 to 5.05 in 2011-12 in the urban areas, it declined from 6.08 to 2.70 during the same period. A nearly 50% decline in PGR both in rural and urban areas during 2004-05 to 2011- 12, reflects that the conditions of the poor have improved both in urban and rural areas.