New measure for urban poverty

For the first time India will have a standard methodology to count the urban poor households. An expert group set up by the Planning Commission's perspective planning division has submitted a detailed methodology to identify below poverty line (BPL) households in urban areas. The group was assigned the task in May 2010. According to the group's report, income-based criteria will not be used to identify the poor. Rather, it has created a simple and transparent formula where households will be either automatically included or excluded from the list.

Unlike for the rural poor, India doesn't have a standard methodology to identify poor households in urban areas. States have been using their own criteria to identify the urban poor for selecting beneficiaries for various development programmes. Usually, most of them use the urban poverty line for urban areas as the main criteria. This is a consumption expenditure-based poverty line. There have been allegations of widespread exclusion of the poor from various programmes due to faulty identification.

In May 2010, the Planning Commission set up this group of experts to suggest a uniform criteria to identify BPL households in urban areas. Though there have been regular attempts to measure urban poverty ratio, no such effort was made to identify the poor.

The group has recommended abolition of any income-based methodology as it is done in most of the cases. “This process of focusing on income has, in the past, led to significant inclusion and exclusion errors,” says the report.

Vulnerability criteria

Instead, it suggests households should be termed poor on the basis of three vulnerabilities: residential, occupational and social. It has created indicators to measure a household's “depth or intensity” for each of these vulnerabilities.

The urban poor will be identified using a three-stage process. They are: automatic exclusion, automatic inclusion and a scoring index, with each having separate indicators. In the first stage, households meeting any indicator will be excluded. The remaining households would then be examined for the automatic inclusion stage. The residual households will be subjected to the scoring index (see highlights). In the index with scores ranging from 0 to 12, any household scoring zero will be automatically excluded from the BPL list while those scoring between one to 12 will be included.

Currently, states are identifying rural BPL households through a nation-wide survey. Given that there are large number of urban programmes that target poor beneficiaries, the methodology comes at the right time. But when it will be finally approved and adopted for conducting survey is still not clear.

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