Describe how the poverty line is estimated in India.

Solution:

A person is considered poor if his or her income or consumption level falls below a given minimum level necessary to fulfil basic needs. Each country uses an imaginary line that is considered appropriate for its existing level of development and its accepted minimum social norms. This is called the poverty line.

While determining the poverty line in India, a minimum level of food requirement, clothing, footwear, fuel and light, educational and medical requirements, etc., are determined for subsistence. These physical quantities are multiplied by their prices in rupees, and thereby the poverty line is arrived at. The numbers involved in the calculation of the poverty line vary. Since the economics of living in the rural parts of the country is different from that of living in the urban parts, the poverty line deducted for individuals living in the rural areas is different from that deducted for individuals living in the urban areas.