poverty line baskets. The lines were based on different underlying baskets, however. This meant that the two poverty lines represented different levels of real expenditures.

State-level rural poverty lines were derived from the national rural poverty line by adjusting the latter for price differences between national and state–level consumer price indices for agricultural laborers. Likewise, state-level urban poverty lines were derived from the national urban poverty line by adjusting the latter for price differences between the national and state–level consumer price indices for industrial laborers. National and state-level rural poverty lines were adjusted over time by applying the national and statelevel price indices for agricultural workers, respectively. Urban poverty lines were adjusted similarly over time.

Lakdawala lines served as the official poverty lines until 2004-05. The Planning Commission applied them to URP-based expenditures in the quinquennial surveys to calculate official poverty ratios. Criticisms of these estimates on various grounds led the Planning Commission to appoint an expert group under the chairmanship of Suresh Tendulkar in December 2005 with the charge to recommend appropriate changes in methodology to compute poverty estimates. The group submitted its report in 2009.

In its report, the Tendulkar committee (Planning Commission 2009) noted three deficiencies of the Lakdawala poverty lines. First, the poverty line baskets remained tied to consumption patterns observed in 1973-74. But more than three decades later, these baskets had shifted, even for the poor. Second, the consumer price index for agricultural workers understated the true price increase. This meant that over time, the upward adjustment in the rural poverty lines was less than necessary so that the estimated poverty ratios understated rural poverty. Finally, the assumption that health and education would be largely provided by the government, underlying Lakdawala lines, did not hold any longer. Private expenditures on these services had risen considerably, even for the poor. This change was not adequately reflected in the Lakdawala poverty lines.

To remedy these deficiencies, the Tendulkar committee began by noting that the NSSO had already decided to shift from URP-based expenditures to MRP-based expenditures to measure poverty. With this in view, the committee’s first step was to situate the revised poverty lines in terms of MRP expenditures in some generally acceptable aspect of the existing practice. To this end, it observed that since the nationwide urban poverty ratio of 25.7 percent, calculated from URP-based expenditures in the 2004-05 survey, was broadly accepted as a good approximation of prevailing urban poverty, the revised urban poverty line should be anchored to yield this same estimate using MRP-based per-capita consumption expenditure from the 2004-05 survey. This decision led to the MRP-based per-capita expenditure of the individual at the 25.7 percentile in the national distribution of per-capita MRP expenditures as the national urban poverty line.

The Tendulkar committee further argued that the consumption basket associated with the national urban poverty line also be accepted as the rural poverty line consumption basket. This implied the translation of the new urban poverty line using the appropriate price index to obtain the nationwide rural poverty line. Under this approach, rural and urban poverty lines became fully aligned. Applying MRP-based expenditures, the new rural poverty line yielded a rural poverty ratio of 41.8 percent in 2004-05 compared with 28.3 percent under the old methodology. State-level rural and urban poverty lines were also to be derived from the national urban poverty line by applying the 6