Questioning the poverty line aggregation approach in India: Issues of mismatches and overlaps

Abstract

AbstractThe Rangarajan Expert Group (REG), an official constituted panel of experts, decided to extend the traditional practice of food component‐based poverty line to three components (food, essential nonfood, and other nonfood) based poverty line. Although this multiple component‐based poverty identification is an innovative step; the present study questions the justification for combining the food and nonfood dimensions and estimating poverty just by an aggregated poverty line as presented by the REG. To test this argument empirically, this study evaluates the mismatches and overlaps in poverty identification based on the REG approach of an aggregated poverty line and the proposed component‐specific poverty line approach in the present study, using the unit level data of the 68th round of the Consumption Expenditure Survey of NSSO (conducted during 2011–2012). Our analysis reveals a high proportion of mismatches (with minimal overlaps) and therefore, this nullifies the notion that the REG aggregated poverty line‐based poverty identification is capable of measuring food and nonfood deprivations separately. Moreover, the substantial evidence of misclassification errors between “poor” as per the REG aggregated poverty line and the three constructed categories of poor by the present study namely “Ultra poor,” “Actually poor,” and “Possibly poor” also shows that the REG aggregated poverty line cannot serve as a proxy to represent the extent of joint deprivation in food, essential nonfood, and other nonfood components.