Pariksha SaathiLesson 6 of 10 · Indian Economy
Poverty Lines, Types of Unemployment and Welfare Schemes
Drafted with AI assistance and fact-checked on 28 October 2026; not yet read line by line by a human editor. Spotted a mistake? Tell us. Editorial standards & corrections
Measuring poverty
Absolute poverty is the inability to afford a minimum basket of food and other essentials; relative poverty compares a person's position with others in the same society. India measures absolute poverty with a poverty line, an amount of monthly consumption spending per person, and the head count ratio is the share of people below it. The Planning Commission made the official estimates using the large consumption expenditure surveys of the NSSO. Before independence Dadabhai Naoroji discussed a subsistence-based poverty line, and after it a Planning Commission working group proposed a national minimum in 1962.
From calories to a basket of goods
The Task Force led by Y.K. Alagh (1979) defined the poverty line by calorie needs: the spending needed for 2400 kilocalories per person per day in rural areas and 2100 in urban areas. The Lakdawala Expert Group (report 1993) kept this calorie base but made poverty lines state-specific, updating them with the Consumer Price Index for Agricultural Labourers (rural) and for Industrial Workers (urban). The Tendulkar Expert Group (report 2009) moved away from calorie norms to a poverty line basket that also covered spending on health and education, used one basket for rural and urban areas adjusted for prices, and used the mixed reference period for data; for 2011-12 its line was about Rs 27 a day in rural areas and Rs 33 in urban areas. The Rangarajan Expert Group (report 2014) returned to separate rural and urban baskets based on norms for calories, protein and fat plus essential non-food items, with lines of about Rs 32 a day (rural) and Rs 47 (urban) for 2011-12; the government did not formally adopt it.
Multidimensional poverty
Income or spending alone misses deprivations such as poor health or lack of schooling. The Global Multidimensional Poverty Index (MPI), introduced in 2010 by the UNDP and the Oxford Poverty and Human Development Initiative (OPHI), uses three equally weighted dimensions, health, education and standard of living, measured through 10 indicators: nutrition, child mortality, years of schooling, school attendance, cooking fuel, sanitation, drinking water, electricity, housing and assets. A person is multidimensionally poor if deprived in at least one-third of the weighted indicators. NITI Aayog's National MPI uses the same three dimensions and adds indicators such as maternal health and bank accounts.
Types of unemployment
Disguised unemployment exists when more people work on a task than are needed, so removing some does not reduce output; their marginal productivity is zero, as on small family farms. Seasonal unemployment comes with the off-season in agriculture or tourism. Frictional unemployment is the short gap while people change jobs. Structural unemployment is long-term, caused by a mismatch between workers' skills and available jobs or by a shortage of capital; technological unemployment, when machines replace labour, is a form of it. Cyclical unemployment rises in recessions when demand falls. Educated unemployment and underemployment, where people work less than they wish or below their skills, are common in India.
Measuring unemployment
The NSSO uses three approaches: usual status (a reference period of 365 days, divided into principal and subsidiary status), current weekly status (a reference week of 7 days) and current daily status (activity on each day of the reference week, the most detailed measure). The Periodic Labour Force Survey (PLFS), launched by the NSSO in 2017, now gives the main labour indicators: the labour force participation rate, the worker population ratio and the unemployment rate, which is the unemployed as a share of the labour force, not of the whole population.
Long-running welfare schemes
The Integrated Child Development Services (ICDS) began on 2 October 1975. The Integrated Rural Development Programme (IRDP, 1978-79) was extended to all blocks on 2 October 1980; the National Rural Employment Programme (1980) and the Rural Landless Employment Guarantee Programme (1983) were merged into the Jawahar Rozgar Yojana in 1989. The National Social Assistance Programme (NSAP), which now gives pensions to the elderly, widows and persons with disabilities, and the national mid-day meal programme both began on 15 August 1995. The Swarnjayanti Gram Swarozgar Yojana (1999) for self-employment through self-help groups became the National Rural Livelihoods Mission (Aajeevika) in 2011, later renamed Deendayal Antyodaya Yojana-NRLM. The Indira Awaas Yojana (1985-86) for rural housing was restructured as the Pradhan Mantri Awas Yojana-Gramin in 2016, while PMAY-Urban began in 2015.
MGNREGA
The National Rural Employment Guarantee Act was passed in 2005 and came into force on 2 February 2006 in 200 districts, starting from Anantapur in Andhra Pradesh, before covering all rural districts; Mahatma Gandhi's name was added on 2 October 2009. It gave every rural household whose adult members asked for unskilled manual work a legal right to at least 100 days of wage employment in a financial year, work within 5 km of home, an unemployment allowance if work was not given within 15 days, at least one-third of the beneficiaries women, and social audits by the gram sabha. The Viksit Bharat - Guarantee for Rozgar and Ajeevika Mission (Gramin) Act 2025 (VB-G RAM G Act) was enacted to replace MGNREGA, raising the guarantee to 125 days.
Key facts
- Alagh Task Force 1979: calorie-based poverty line - 2400 kcal rural and 2100 kcal urban per person per day.
- Lakdawala Expert Group (1993): state-specific poverty lines updated with CPI-AL (rural) and CPI-IW (urban).
- Tendulkar Expert Group (2009): basket including health and education, mixed reference period; 2011-12 line about Rs 27 rural and Rs 33 urban per day.
- Rangarajan Expert Group (2014): separate rural and urban baskets; 2011-12 line about Rs 32 rural and Rs 47 urban per day.
- Global MPI (2010, UNDP and OPHI): 3 dimensions - health, education, standard of living - and 10 indicators; poor if deprived in at least one-third of weighted indicators.
- Disguised unemployment: marginal productivity zero (agriculture); frictional: between jobs; structural: skill or capital mismatch; cyclical: recession.
- NSSO approaches: usual status (365 days), current weekly status (7 days), current daily status; PLFS launched in 2017.
- ICDS 1975; IRDP nationwide 1980; JRY 1989; NSAP and national mid-day meal 15 August 1995; SGSY 1999; NRLM (Aajeevika) 2011.
- MGNREGA: Act 2005, in force 2 February 2006 (Anantapur), Mahatma Gandhi's name 2009; 100 days of wage work, one-third women, social audit; the VB-G RAM G Act 2025 was enacted to replace it, raising the guarantee to 125 days.
Quick revision
Poverty line = consumption spending per person; Alagh 1979 calories (2400 rural, 2100 urban); Lakdawala 1993 state lines; Tendulkar 2009 basket with health and education (Rs 27/33 a day, 2011-12); Rangarajan 2014 (Rs 32/47); Global MPI 2010 UNDP-OPHI, 3 dimensions, 10 indicators; disguised, seasonal, frictional, structural, cyclical unemployment; PLFS 2017; ICDS 1975, IRDP 1980, JRY 1989, NSAP 1995, NRLM 2011; MGNREGA 2005/2006, 100 days; VB-G RAM G Act 2025 enacted to replace it (125 days).