TNPSC Daily Notes: Poverty and Unemployment in India — Estimation Committees, MPI & PLFS 2025 | இந்தியாவில் வறுமையும் வேலையின்மையும் — மதிப்பீட்டுக் குழுக்கள், MPI மற்றும் PLFS 2025 — 20 September 2026

1. How India Measures Poverty

Poverty in India has always been measured as a consumption phenomenon rather than an income one, because household income is difficult to capture accurately in a largely informal economy. The National Sample Survey Office collects household consumer expenditure data, and a poverty line is drawn as the level of monthly per-capita expenditure below which a person is classified as poor. The most common summary measure is the Head Count Ratio — the share of the population below the line. Two refinements are also used: the Poverty Gap Index, which measures how far below the line the poor fall, and the Squared Poverty Gap, which gives extra weight to the very poorest. Inequality, a related but distinct idea, is captured by the Lorenz Curve and the Gini Coefficient.

2. The Chain of Expert Committees

The intellectual history begins outside government. Dadabhai Naoroji attempted the first estimate in 1901, and the National Planning Committee (1938) under Jawaharlal Nehru proposed a minimum standard of living. After Independence, a Planning Commission Working Group in 1962 fixed the first official line at Rs. 20 rural and Rs. 25 urban per capita per month.

Dandekar and Rath (1971) gave the exercise a scientific nutrition anchor with a norm of 2,250 calories per day. The Alagh Task Force (1979) separated rural and urban calorie norms at 2,400 and 2,100 kcal respectively — rural work being more physically demanding. The Lakdawala Committee (1993) made two important changes: it created state-specific poverty lines, and it stopped adjusting survey estimates to National Accounts figures, updating lines instead by CPI-AL (rural) and CPI-IW (urban).

The Tendulkar Committee (2009) marked the biggest methodological break. It abandoned the calorie anchor, adopted the Mixed Reference Period, and built a basket that included spending on health and education. Its 2011-12 poverty lines of Rs. 816 (rural) and Rs. 1,000 (urban) produced a headcount of 21.9% — 25.7% rural and 13.7% urban. Criticism that these lines were still too low led to the Rangarajan Committee (2014), which restored a nutrition anchor along with normative spending on clothing, rent, education and transport. Its higher lines of Rs. 972 and Rs. 1,407 raised the poverty estimate to 29.5%. The Government has never formally accepted the Rangarajan estimates, so Tendulkar remains the last officially used monetary series.

3. The Multidimensional Turn

Because money alone does not capture deprivation, NITI Aayog now publishes a National Multidimensional Poverty Index built on the Alkire-Foster method developed at the Oxford Poverty and Human Development Initiative. It uses three equally weighted dimensions — Health, Education and Standard of Living — measured through 12 indicators: nutrition, child and adolescent mortality and maternal health (Health); years of schooling and school attendance (Education); and cooking fuel, sanitation, drinking water, electricity, housing, assets and bank account (Standard of Living). A household is identified as poor when its weighted deprivation score reaches one-third. The index itself is the product of the headcount ratio (H) and the average intensity of deprivation (A), so MPI = H x A.

On this measure India’s poverty headcount dropped from 29.17% in 2013-14 to 11.28% in 2022-23, lifting roughly 24.82 crore people out of multidimensional poverty in nine years. Separately, the World Bank’s June 2025 revision of the international extreme poverty line to 3.00 US dollars a day at 2021 purchasing power parity showed India’s extreme poverty falling from 27.1% in 2011-12 to 5.3% in 2022-23.

4. Unemployment — Concepts and Current Data

Economists classify Indian unemployment into several types. Disguised unemployment occurs when more people work on a task than it requires, so the marginal product of the extra worker is near zero — the classic case is a family farm. Seasonal unemployment follows the agricultural calendar. Structural unemployment arises when workers’ skills do not match the jobs the economy creates. Frictional unemployment is the short gap while changing jobs, and cyclical unemployment follows a downturn in demand. Educated unemployment — graduates unable to find suitable work — is a persistent Indian concern, and underemployment covers those working fewer hours or below their skill level.

The PLFS Annual Report 2025, the first based on a full calendar year, reports for persons aged 15 and above in usual status: LFPR 59.3% (male 79.1%, female 40.0%), WPR 57.4% and an unemployment rate of 3.1%, with rural unemployment at 2.4% and urban at 4.8%. Youth unemployment (15-29) stood at 9.9% and unemployment among the educated (secondary and above) at 6.5%. About 61.6 crore persons were employed. By employment status, 56.2% were self-employed, 23.6% in regular wage or salaried work and 20.2% in casual labour. By sector, agriculture still absorbed 43.0% of workers, manufacturing 12.1% and construction 12.0%. A quarter of those aged 15-29 were not in employment, education or training (NEET).

5. Policy Response

India’s anti-poverty architecture combines employment guarantee, self-employment support and skilling. MGNREGA (2005) guarantees 100 days of unskilled wage employment to rural households on demand. DAY-NRLM and DAY-NULM organise rural and urban poor into self-help groups. PMEGP and PM-SVANidhi support micro-enterprise and street vendors, while Skill India, PMKVY and PM Vishwakarma address the skills gap. Food security through the National Food Security Act, 2013 and PMGKAY complements income support. For the examination, remember that employment schemes are largely demand-driven and rights-based, while skilling schemes are supply-side interventions.