Poverty and Inequality is a fundamental concept in Indian socio-economics, representing a state of deprivation and unequal distribution of resources. Poverty is categorized as absolute poverty, the inability to meet basic survival needs like food and shelter, and relative poverty, which is deprivation compared to the average standard of living in society. Inequality refers to the unequal distribution of income, wealth, and opportunities among different groups.
The earliest estimation of poverty in India was made by Dadabhai Naoroji in his book Poverty and Unbritish Rule in India, proposing a poverty line of Rs 16-35 per capita per year based on 1867-68 prices. Post-independence, the Planning Commission introduced the concept of a poverty line in 1962. The first systematic assessment was by V.M. Dandekar and N. Rath in 1971, using National Sample Survey (NSS) data and a minimum nutritional requirement of 2,250 calories per person per day.
Poverty is primarily measured using a Poverty Line based on per capita consumption expenditure data collected by the National Sample Survey Office (NSSO). The Y.K. Alagh Committee (1979) defined the poverty line using a calorie norm of 2,400 calories in rural and 2,100 calories in urban areas. The Suresh Tendulkar Committee (2009) later revised the methodology to move away from a purely calorie-based norm, including private expenditure on health and education. Inequality is measured using the Gini coefficient, where a value of 0 represents perfect equality and 1 represents perfect inequality. The NITI Aayog also uses the Multidimensional Poverty Index (MPI), which considers health, education, and living standards.
The concept connects directly to major government welfare schemes like the National Food Security Act (NFSA) and institutions like the NITI Aayog, which monitors these issues. While the official national poverty line has not been revised since the Tendulkar Committee's estimates for 2011-12, recent data from the Household Consumption Expenditure Survey (HCES) 2022-23 indicates a significant change. The consumption-based Gini index improved from 28.8 in 2011-12 to 25.5 in 2022-23, suggesting a reduction in consumption inequality. Furthermore, the NITI Aayog's National MPI 2023 reported a reduction in multidimensional poverty from 29% in 2013–14 to about 15% in 2019–21.