Poverty in India and Its Decompositions: A Critical Appraisal of the New Method1

This paper has two objectives. First, it critically discusses the new method of measuring poverty. In doing so, it raises some concerns implicit in the report- (a) the need to go beyond calories to have an understanding of nutritional requirement, which could not be adequately addressed in the new method, (b) the need to incorporate expenditure on health, education and sanitation, as these are not being adequately provided by the state, which also raises serious apprehensions on whether India is a welfare state, and (c) the need to come up with multi-dimensional measures of poverty. Nevertheless, the paper contends that the approach followed in the report is pragmatic, but some additional information could have been put in the public domain to take the debate beyond the poverty line. Second, we use the new poverty lines to compute incidence, depth and severity and inequality across states and some other subgroups as also sectoral and growth-inequality decompositions at the aggregate all India level for 2004-5 and 2009-10. Among the old hotspots of BiMORU, Rajasthan and Uttaranchal have moved out and Assam has come in, Madhya Pradesh and Odisha show considerable reductions, but it is the increase of incidence in Bihar (which otherwise seem