UPSC Prelims 2019 Q24: Indian Economy – Human Development, Poverty & Employment Schemes
- (a) poverty rates vary from State to State
- (b) price levels vary from State to State
- (c) Gross State Product varies from State to State
- (d) quality of public distribution varies from State to State
Answer: (b) price levels vary from State to State
Explanation
Why State Poverty Lines Differ
| Option | Claim | Verdict | Detail |
|---|---|---|---|
| (a) | Poverty rates vary state to state | NOT the reason | Poverty rates are the OUTPUT of applying a poverty line, not the input that sets it. |
| (b) | Price levels vary state to state | CORRECT | Poverty line is the monetary value of a defined consumption basket. Since prices of food/clothing/services differ across states, the same basket costs more in high-price states -> higher poverty line. This is why Rangarajan/Tendulkar methodology uses state-specific price adjustments. |
| (c) | GSDP varies state to state | NOT the reason | GSDP measures state output, not household consumption cost. |
| (d) | PDS quality varies state to state | NOT the reason | PDS quality affects welfare delivery but does not fix the poverty line value. |
Answer: (b) price levels vary from State to State.
Why each option is right or wrong
- (a) Incorrect. Poverty rate is an outcome of applying a line, not a cause of line differences.
- (b) CORRECT. Different states have different price levels (cost-of-living), so the monetary value of the poverty-line consumption basket differs. Tendulkar/Rangarajan methodology explicitly uses state-specific price indices.
- (c) Incorrect. GSDP measures aggregate output, not household consumption prices.
- (d) Incorrect. PDS quality affects welfare access, not the analytical poverty line.
Key point
Poverty line = rupee value of a consumption basket. Different state prices -> different rupee values for the same basket. That is why lines differ across states.
Remember
Official state poverty lines differ because price levels (cost of the consumption basket) vary from state to state. Since the poverty line is the monetary value of a defined basket, higher-price states have higher lines. The Tendulkar and Rangarajan methodologies use explicit state-wise price adjustments.
Common mistakes
- Reversing cause and effect - poverty rates DO differ, but that is the RESULT of applying the line, not the reason it varies.
- Confusing poverty line (monetary) with poverty ratio (percentage headcount).
- Not knowing Tendulkar/Rangarajan committees use state-wise price adjustments (Fisher price index, MPCE data).
Exam tip
Poverty methodology anchors: Alagh (1979) - calorie-based. Lakdawala (1993) - state PLs using CPI. Tendulkar (2009) - MPCE + mixed reference. Rangarajan (2014) - separate rural/urban baskets, higher lines. All use state-wise price adjustments.
Sources
- Planning Commission - Tendulkar Committee Report (2009)
- NCERT Class 11 - Indian Economic Development (Poverty measurement chapter)