Question 8 from UPSC CSE 2019 - Economics

Question

In a given year in India, official poverty lines are higher in some states than in others because

Accepted Answer

Correct Option: B. price levels vary from state to state

Strategy: Focus on what sets official poverty lines apart in different states. The core determinant is not the poverty rates, GSP, or PDS quality, but the cost of living—specifically, price levels. State-wise price differentials mean basic consumption costs more in some states than others, so poverty lines are adjusted upwards where prices are higher. This points unambiguously to option B.

Key Info: In India, the official poverty line represents the minimum per capita expenditure required to purchase a subsistence basket of goods. The Planning Commission (now NITI Aayog) sets these thresholds based on consumption baskets that meet calorific and basic need requirements.

The key aspects of its calculation are:
- The monetary thresholds vary from state to state due to significant differences in prevailing price levels.
- State-specific price indices, such as the Consumer Price Index for Agricultural Labourers (CPI-AL) or Rural/Urban indices, are used to adjust for these differences.
- This adjustment ensures the real value of the poverty line basket remains equivalent across states, meaning a higher cost of living results in a higher official poverty line.

This process facilitates comparability of poverty estimates by accounting for actual purchasing power. It is important to note that factors like poverty rates, Gross State Product (GSP), or Public Distribution System (PDS) performance do not directly influence the calculation of the poverty line itself.

Answer

Option A: poverty rates vary from state to state

Answer

Option C: Gross State Product varies from state to state

Answer

Option D: quality of public distribution varies from state to state