Examining Poverty Lines in China and India

India and China are making mammoth strides in the area of development. However, while development in both nations has been remarkable, there is today much worry about whether such growth yields and will yield adequate poverty decline. Within the past two decades, researchers have seen a large and noticeable fall within the number of people that live on the famous, less than U.S.$1.25 a day, which is the World Bank's global poverty starting point -- down from the reported 1.9 billion in 1990 to five hundred millions less, (1.4 billion) in 2005 (Bardhan, 2010, p. 77). By this measure, international poverty rates fell from 42% (1990) to 25% (2005), and may continue to fall to 15% by the end of 2015, equivalent to 900 million people.

Nevertheless, U.S.$1.25 signifies a very low living standard for people to live on daily. Those below it researchers consider, are in great deprivation, and countless people above the stated threshold may regard themselves as impoverished (Aziz, 2008, p. 125). India and China account for the majority of the fall in number of persons living below said threshold. However, despite their progress, China and India are still characterized by deep poverty. In both countries, the debate on poverty, more specifically, the poverty line in recent times has intensified.

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Some consider poverty measures as a source of controversy, since there is no over-all consensus over the methodological and conceptual approaches used in constructing these lines. The current debate in both nations illustrates this intensely. When discussing India's poverty line, it is important to note the recent poverty line estimates. In September 2011, an organization called the Indian Planning Commission gave new estimates India's poverty lines in rural and urban areas, setting such thresholds at 965 as well as 781 rupees/capita/month. This translates to roughly 32 and 26 rupees daily per capita.

Since the early 90s, India's researchers have made official poverty estimates based on the system recommended by an organization called the Lakdawala Committee, founded in 1993. Per capita consumption levels dictate these poverty lines and are related to a commodity bundle that produced a quantified level of caloric intake understood in 1973-74 to be suitable: 2,100 and 2,400 kilocalories per capita per day for urban and rural areas, in turn (Bhalla, 2012, p. 83).

In December 2005, almost a decade ago, the Planning Commission selected a committee to evaluate the Lakdawala poverty lines. The Tendulkar Committee that is chaired by Suresh Tendulkar, in 2009 concluded that some alterations were necessary, recommending tracing the poverty line in consumption levels collected from the 2004-2005 National Sample Survey, subsequently modifying for the urban-rural price differential.

New estimates based on this information augmented the poverty headcount percentage for rural areas to nearly 42%, up from the 1993 figure of 28% utilizing the Tendulkar methodology. Based on the new estimates, over 327 million Indians within rural areas live in poverty, a noticeable increase of 105 million persons in complete terms (Gupta, 2012, p. 37). With new estimates also came desire to understand energy poverty as this plays a role in the standard of living of people in India. "After the establishment of how access to energy enhances development and the achievement of the millennium development goals, energy poverty has become a major issue. In India, there is a great interest in addressing the subject of energy poverty, in order to reach development goals set by the Government" (Bhide & Monroy, 2011, p. 1057).

Due to the uncertainty of the poverty lines even with the Tendulkar methodology, the Indian government is looking towards other areas to assess the poverty lines. Assessments in India's poverty lines will provide insight in how things will change in other countries in regards to assessment of living standards. With India and China holding billions of the world's population, their evolution and modification of poverty evaluation will help the world improve and perhaps change living standards and awareness of living standards on an international scale.

China has in recent times, been very successful at lessening extreme deprivation, as evident in current research. 94% of the rural population in China and 44.5% of urban populations lived on the stated less than U.S.$1.25 per day. These figures were taken in the 1980's. By 2005, that percentage decreased to 26% in rural areas, and a remarkable 1.7% in urban areas. The fall indicates a number 627 million people rising above the poverty line (835 million to 207.7 million in 25 years). Extraordinarily, because China's population is so high, the fall in the number exceeds people still living in poverty in other areas of the world such as Latin America.