Poverty & Unemployment (Part – II)

1. Which of the following are the types of poverty? [U.P. P.C.S. (Pre) 2023]

1. Absolute poverty

2. Relative poverty

3. Subjective poverty

4. Functional poverty

Choose the correct answer using the code given below:

(a) Only 1 and 4
(b) Only 1, 2 and 3
(c) Only 3 and 4
(d) Only 1 and 2

Correct Answer: (b) Only 1, 2 and 3

Solution:Poverty can be analysed as follows:

First classification refers to the type of base information used: Objective and Subjective poverty; Second is depending on the scale or reference used to set the thresholds: Absolute and Relative poverty; Third is based on the length of duration of poverty: Transversal poverty (in a fixed year) and Persistent poverty (Long term). The studies which use the information directly collected by a researcher in terms of the measurement of various variables are called Objective poverty studies. The perception of the individuals or households about their own self converts into Subjective poverty studies. Absolute poverty indicates a situation when an individual is not able to afford basic goods and services like food, housing and clothes. It is also linked to destitution. Relative poverty places the concept of poverty in relation with other people around. Hence, option (b) is the correct answer.

2. In which year UNO adopted a definition of absolute poverty? [U.P.P.C.S. (Pre) 2017]

(a) 1994
(b) 1995
(c) 1996
(d) 1997

Correct Answer: (b) 1995

Solution:In 1995, UNO adopted a definition of absolute poverty. As per the definition, absolute poverty is a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to services. The World bank updated the global poverty line in September, 2022 to US $ 2.15 per person per day (at 2017 PPP) from the earlier US $ 1.90 per person per day (at 2011 PPP). This means that anyone living on less than US $ 2.15 a day is considered to be living in extreme poverty.

3. Which of the following methods has/have been used to estimate poverty in India? 200 [U.P.P.C.S. (Pre) 2020]

1. Head Count Ratio

2. Calorie Intake

3. Household Consumption Expenditure

4. Per Capita Income

Select the correct answer from the codes given below, Codes:

(a) 2 and 3
(b) 1, 2 and 3
(c) 3 only
(d) 1, 2, 3 and 4

Correct Answer: (b) 1, 2 and 3

Solution:At present Household Consumption Expenditure method is used to estimate poverty in India. The current methodology for poverty estimation is based on the recommendations of an Expert Group (Tendulkar Committee), which was constituted in 2005 and submitted its report in 2009. Expenditure on food (for sufficient calorie Intake) is a main sub-set of household consumption expenditure, besides the spending on health and education under the methodology recommended by the Tendulkar Committee. The Head Count Ratio (HCR) is the population proportion that exists, or lives, below the poverty threshold. In India, the HCR is obtained using urban and rural poverty lines which are applied on the MPCE distribution of the States. The aggregated BPL population of the States is used to obtain the final all-India HCR and poverty lines in urban and rural areas. Hence, option (b) is the correct answer.

4. The basis of poverty estimates in India is: [U.P.R.O./A.R.O. (Pre) 2013]

(a) Per capita income
(b) Per capita expenditure
(c) Household consumption expenditure
(d) None of the above

Correct Answer: (c) Household consumption expenditure

Solution:Poverty line estimation in India has been based on the consumption expenditure and not on the income levels due to difficulties in assessing incomes of self-employed people, daily wage labourers, large fluctuation in income due to seasonal factors, additional side incomes as well as data collection difficulties in largely rural and informal economy of India. Since households may be able to access credit markets or household savings and thereby smooth their consumption to some degree, consumption expenditures may be able to provide a better basis for determining a household's actual standard of living. Hence, most of the Poverty Estimation Committees proposed that per capita consumption expenditure or household expenses were the right statistical choice for calculating poverty in India. Incidence of poverty is estimated by the Planning Commission (now NITI Aayog) on the basis of age temple surveys on household consyog) expenditure conducted by the NSSO (now NSO).

5. Which organization carries out the survey for determining the poverty line? [B.P.S.C. (Pre) 2022]

Correct Answer: (b) NSSO

Solution:Poverty line estimation in India has been based on the consumption expenditure and not on the income levels due to difficulties in assessing incomes of self-employed people, daily wage labourers, large fluctuation in income due to seasonal factors, additional side incomes as well as data collection difficulties in largely rural and informal economy of India. Since households may be able to access credit markets or household savings and thereby smooth their consumption to some degree, consumption expenditures may be able to provide a better basis for determining a household's actual standard of living. Hence, most of the Poverty Estimation Committees proposed that per capita consumption expenditure or household expenses were the right statistical choice for calculating poverty in India. Incidence of poverty is estimated by the Planning Commission (now NITI Aayog) on the basis of age temple surveys on household consyog) expenditure conducted by the NSSO (now NSO).

6. Unemployment and poverty estimates in India are based on: [R.A.S./R.T.S. (Pre) 2016]

(a) NSSO household consumption expenditure survey
(b) CSO household consumption expenditure
(c) Planning Commission's household consumption expenditure survey
(d) NSSO family income survey

Correct Answer: (a) NSSO household consumption expenditure survey

Solution:Poverty line estimation in India has been based on the consumption expenditure and not on the income levels due to difficulties in assessing incomes of self-employed people, daily wage labourers, large fluctuation in income due to seasonal factors, additional side incomes as well as data collection difficulties in largely rural and informal economy of India. Since households may be able to access credit markets or household savings and thereby smooth their consumption to some degree, consumption expenditures may be able to provide a better basis for determining a household's actual standard of living. Hence, most of the Poverty Estimation Committees proposed that per capita consumption expenditure or household expenses were the right statistical choice for calculating poverty in India. Incidence of poverty is estimated by the Planning Commission (now NITI Aayog) on the basis of age temple surveys on household consyog) expenditure conducted by the NSSO (now NSO).

7. The basis of determining the poverty line in India is: [U.P.U.D.A./L.D.A. (Spl.) (Mains) 2010]

(a) Income data
(b) Saving data
(c) Consumption data
(d) Investment data

Correct Answer: (c) Consumption data

Solution:Poverty line estimation in India has been based on the consumption expenditure and not on the income levels due to difficulties in assessing incomes of self-employed people, daily wage labourers, large fluctuation in income due to seasonal factors, additional side incomes as well as data collection difficulties in largely rural and informal economy of India. Since households may be able to access credit markets or household savings and thereby smooth their consumption to some degree, consumption expenditures may be able to provide a better basis for determining a household's actual standard of living. Hence, most of the Poverty Estimation Committees proposed that per capita consumption expenditure or household expenses were the right statistical choice for calculating poverty in India. Incidence of poverty is estimated by the Planning Commission (now NITI Aayog) on the basis of age temple surveys on household consyog) expenditure conducted by the NSSO (now NSO).

8. Poverty level in India is established on the basis of: [U.P. Lower Sub. (Pre) 2013, U.P.R.O./A.R.O. (Mains) 2013, U.P.P.C.S. (Pre) 2009]

(a) Per capita income in different States
(b) Household average income
(c) Household consumption expenditure
(d) Slum population in the country

Correct Answer: (c) Household consumption expenditure

Solution:Poverty line estimation in India has been based on the consumption expenditure and not on the income levels due to difficulties in assessing incomes of self-employed people, daily wage labourers, large fluctuation in income due to seasonal factors, additional side incomes as well as data collection difficulties in largely rural and informal economy of India. Since households may be able to access credit markets or household savings and thereby smooth their consumption to some degree, consumption expenditures may be able to provide a better basis for determining a household's actual standard of living. Hence, most of the Poverty Estimation Committees proposed that per capita consumption expenditure or household expenses were the right statistical choice for calculating poverty in India. Incidence of poverty is estimated by the Planning Commission (now NITI Aayog) on the basis of age temple surveys on household consyog) expenditure conducted by the NSSO (now NSO).

9. Which Index is considered as the basis for estimation of poverty in urban areas? [Jharkhand P.C.S. (Pre) 2023]

(a) Consumer Price Index of Agricultural Labourers
(b) Wholesale Price Index
(c) Stock Index
(d) Consumer Price Index of Industrial Workers (CPI-IW)

Correct Answer: (d) Consumer Price Index of Industrial Workers (CPI-IW)

Solution:Consumer Price Index for Industrial Workers (CPI-IW) is considered as the basis for estimation of poverty in urban areas, while CPI for Agricultural Labourers (CPI-AL) is considered as the basis for estimation of poverty in rural areas, CPI-IW and CPI-AL are used for updating State specific poverty lines for urban and rural areas, respectively.

10. The methodology followed for poverty estimation by using 61 NSSO data in 2004-05 is: [J.P.S.C. (Pre) 2016]

(a) Uniform Recall Method (URM) only
(b) Mixed Recall Method (MRM) only
(c) Both URM and MRM
(d) Both URM and MRM

Correct Answer: (c) Both URM and MRM

Solution:From the 61st Round of National Sample Survey data, two different household consumption distribution for the year 2004-05 have been obtained. The first one from the consumption data collected using 30-day recall (also known as reference period) for all the items. The other distribution is obtained from the consumer expenditure data collected using 365 day recall period for five infrequently purchased non-food items, namely, clothing, footwear, durable goods. education and institutional medical expenses and 30 days recall period for the remaining items. These two consumption distribution has been termed as Uniform Recall Period (URP) consumption distribution and Mixed Recall Period (MRP) consumption distribution respectively. The Planning Commission, using the Expert Group methodology has estimated poverty in 2004-05 using both the distributions.