1) Meaning of poverty
Poverty is a situation where people lack sufficient resources to meet basic needs (food, clothing, shelter, health, education).
1.1 Absolute vs relative poverty
- Absolute poverty: inability to meet minimum basic needs (often measured by a poverty line).
- Relative poverty: poverty compared to average living standards in society (inequality-related).
1.2 Income poverty vs multidimensional poverty
- Income/consumption poverty focuses on monetary measures.
- Multidimensional poverty includes non-income deprivations (education, health, sanitation, housing, etc.).
2) Poverty line and poverty ratios (high-yield)
2.1 Poverty line concept
A poverty line is a threshold (income/consumption) below which a person is considered poor.
Historically in India, poverty estimation has been linked to:
- minimum calorie norms (older approaches),
- consumption expenditure (NSS-based methods),
- price adjustments (rural vs urban).
2.2 Headcount ratio (HCR)
It is easy to understand but does not show intensity of poverty.
2.3 Poverty gap (concept)
Measures how far the poor are below the poverty line (depth of poverty).