From: kumarr@ivan.intel.com (Kumar Ranganathan)
Newsgroups: soc.culture.indian
Subject: HOW POOR IS INDIA ?
Keywords: India, poor, World bank
Date: 13 Apr 92 16:56:26 GMT
Article-I.D.: intelhf.1992Apr13.165626.18847
Reply-To: kumarr@ivan.intel.com
Organization: Development Tools Operation, Intel Corp., Hillsboro  OR

The following information is taken from the "World Development Report-1990"
published by the World Bank.

Measuring Poverty
-----------------
Poverty is not the same as inequality. The distinction needs to be stressed.
Whereas poverty is concerned with the absolute standard of living of a part of
society- the poor - inequality refers to relative living standards across the
whole society. At maximum inequality one person has everything and, clearly,
poverty is high. But minimum inequality (where all are equal) is possible 
with zero poverty (where no one is poor) as well as with maximum poverty (where
all are poor).

This report defines poverty as the inability to attain a minimal standard of
living. To make this definition useful, three questions must be answered. How
do we measure the standard of living ? What do we mean by a minimal standard of
living ? And, having thus identified the poor, how do we express the overall
severity of poverty in a single measure or index?

Measuring the standard of living
---------------------------------
Household incomes and expenditures per capita are adequate yardsticks for the
standard of living as long as they include owned production, which is very
important for most of the world's poor. Neither measure, however, captures such
dimensions of welfare as health, life expectancy, literacy and access to public
goods or common-property resources. Being able to get clean drinking water, for
example, matters to one's standard of living, but it is not reflected in
consumption or income as usually measured. Households with access to free
public services are better off than those without, even though their incomes
and expenditures may be the same. Because of these drawbacks, this report
supplements a consumption-based poverty measure with others, such as nutrition,
life expectancy, under-5 mortality and school enrollment rates.
(** Note: This posting will confine itself to a discussion of consumption-based
poverty only).

The poverty line
----------------
All the measures described above are judged in relation to some norm. For
example, we deem life expectancies in some countries to be low in relation to
those attained by other countries at a given date. The choice of the norm is
particularly important in the case of the consumption-based measures of
poverty.

A consumption-based poverty line can be thought of as comprising two elements:
the expenditure necessary to buy a minimum standard of nutrition and other
basic necessities and a further amount that varies from country to country,
reflecting the cost of participating in the everyday life of society. The first
part is relatively straight-forward. The cost of minimum adequate caloric
intakes and other necessities can be calculated by looking at the prices of the
foods that make up the diets of the poor. The second part is far more
subjective; in some countries indoor plumbing is a luxury, but in others it is
a "necessity".

When discussing poverty within countries this report uses country-specific
poverty lines. However, a universal poverty line is needed to permit
cross-country comparison and aggregation. This global poverty line is
inevitably somewhat arbitrary. Rather than settle for a single number this
report employs two: $275 & $370 per person a year. (The amounts are in constant
1985 purchasing power parity (PPP) prices). The lower limit of the range
coincides with a poverty line commonly used for India.

How much poverty is there ?
-------------------------
The simplest way to measure poverty is to express the number of poor as a 
proportion of the population. This *headcount index* is a useful measure,
although it is often criticized because it ignores the extent to which the poor
fall below the poverty line. The income shortfall, or *poverty gap* avoids this
drawback. It measures the transfer that would bring the income of every poor
person exactly upto the poverty line, thereby eliminating poverty.

The use of the upper poverty line- $370 - gives an estimate of 1115 million
people in the developing countries in poverty in 1985. That is roughly 1/3 of
the total population of the developing world. Of these, 630 million - 18% of
the total population of the developing world - were extremely poor; their
annual consumption was less than $275, the lower poverty line. Despite these
massive numbers, the aggregate poverty gap - the transfer needed to lift
everybody above the poverty line was only 3% of developing countries total
consumption. The transfer needed to lift everybody out of extreme poverty was,
of course, even smaller - just 1% of developing countries' consumption. These
figures hide considerable variation within and among countries. The following
table sets out a detailed regional breakdown of these estimates.

Poverty in Developing Countries - 1985.
--------------------------------------
-----------------------------------------------------------------------------
            |   Extremely Poor   |  Poor(including    | Social Indicators
	    |                    |   extremely poor   |
------------|--------------------|--------------------|----------------------
Region      |Number| head |Pover-|Number| head |Pover-|Under 5 |Life  |Net pri-
            |(mill-|count |ty gap|(mill-|count |ty gap|morta-  |expec-|mary sch-
            |ions) |index |      |ions) |index |      |lity    |tancy |ool enro-
            |      |  (%) |      |      |  (%) |      |per 1000| yrs. |llment % 
------------|------|------|------|------|------|------|--------|------|------
Sub-Saharan | 120  |  30  |  4   | 180  | 47   |  11  |  196   |  50  |  56
Africa      |      |      |      |      |      |      |        |      | 
------------|------|------|------|------|------|------|--------|------|------
East Asia   | 120  |  9   | 0.4  |280   | 20   |  1   |   96   |  67  |  96
            |      |      |      |      |      |      |        |      |   
      China |   80 |  8   |  1   | 210  | 20   |  3   |   58   |  69  |  93
------------|------|------|------|------|------|------|--------|------|------
South Asia  | 300  |  29  |  3   | 520  | 51   | 10   |  172   |  56  |  74
            |      |      |      |      |      |      |        |      |   
      India | 250  |  33  |  4   | 420  | 55   | 12   |  199   |  57  |  81
------------|------|------|------|------|------|------|--------|------|------
Eastern     |   3  |  4   |  0.2 |  6   | 8    | 0.5  |   23   |  71  |  90
Europe      |      |      |      |      |      |      |        |      |   
------------|------|------|------|------|------|------|--------|------|------
Middle East |  40  |  21  |   1  | 60   | 31   | 2    |  148   | 61   |  75
& N. Africa |      |      |      |      |      |      |        |      |   
------------|------|------|------|------|------|------|--------|------|------
Latin       |  50  |  12  |   1  | 70   | 19   |  1   |   75   | 66   |  92
America &   |      |      |      |      |      |      |        |      |   
Caribbean   |      |      |      |      |      |      |        |      |   
------------|------|------|------|------|------|------|--------|------|------
All         | 633  |  18  |   1  | 1116 |  33  | 3    | 121    | 62   |  83
Developing  |      |      |      |      |      |      |        |      |   
Countries   |      |      |      |      |      |      |        |      |   
-----------------------------------------------------------------------------