Question map
In a given year in India, official poverty lines are higher in some States than in others because
Explanation
The correct answer is option B because state-specific poverty lines essentially reflect the differences in the cost of living in different States of the country[3]. Poverty lines are based on state differences in price levels and are updated periodically using a system of state-by-state price indexes, which are estimated separately for rural and urban households[4]. The State with the highest prices has a poverty line which is 57 per cent higher than that for the State with lowest prices[2]. This clearly demonstrates that price level variations across states are the determining factor for differences in official poverty lines. Options A, C, and D are incorrect because poverty lines are not set based on poverty rates, Gross State Product, or quality of public distribution systems, but rather on the basis of state-specific price levels to account for differing costs of living.
Sources- [1] https://www.mospi.gov.in/sites/default/files/publication_reports/saarc_social_charter_status_report.pdf
- [2] https://www.mospi.gov.in/sites/default/files/publication_reports/saarc_social_charter_status_report.pdf
- [3] https://www.mospi.gov.in/sites/default/files/publication_reports/saarc_social_charter_status_report.pdf
- [4] https://www.princeton.edu/~deaton/downloads/deaton_kozel_great_indian_poverty_debate_wbro_2005.pdf
PROVENANCE & STUDY PATTERN
Guest previewThis is a 'First Principles' Economy question. It tests if you understand that the Poverty Line is a monetary threshold derived from a consumption basket. If the basket (minimum needs) is standard, the only variable that changes the monetary threshold across regions is the Cost of Living (Price Levels).
This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.
- Statement 1: In India in a given year, are official poverty lines higher in some States because poverty rates vary across States?
- Statement 2: In India in a given year, are official poverty lines higher in some States because price levels vary across States?
- Statement 3: In India in a given year, are official poverty lines higher in some States because Gross State Product varies across States?
- Statement 4: In India in a given year, are official poverty lines higher in some States because the quality of public distribution systems varies across States?
- Explicitly states India uses State-specific poverty lines and explains why they differ.
- Shows the primary reason for differences is variation in cost of living across States (not differences in poverty rates).
- Notes that poverty lines and poverty ratios are estimated at the sub-national (State) level.
- Confirms State-specific poverty lines exist for rural and urban areas, implying lines vary across States.
- Refers to the existence of 'state- and sector-specific poverty lines' used by the Planning Commission.
- Indicates official practice of having different poverty lines across States (and sectors).
Contains the exact multipleāchoice question asking why official poverty lines differ across states, listing 'poverty rates vary' and 'price levels vary' as candidate reasons ā showing these are standard hypotheses/patterns considered.
A student could take this list of candidate reasons and check state price level (cost of living) data and state poverty estimates to see which correlate with higher official lines.
The same MCQ formulation appears again, indicating that variations in poverty rates and in price levels across states are commonly cited factors in official discussions of statewise poverty lines.
Use statewise poverty rate tables alongside state price indices to test whether areas with higher poverty rates tend to have higher official poverty lines or whether cost differences explain them.
Defines the poverty line as based on private consumption expenditure for food and nonāfood items and notes methods depend on local socioāeconomic needs ā implying local price/consumption patterns can affect the poverty line.
Combine this rule with state Consumer Price Index (CPI) and typical consumption baskets to infer why some states' official lines might be higher (higher local prices or different consumption norms).
Notes that poverty lines or poverty ratios of one state are sometimes used for small/other regions (e.g., 'Poverty Ratio of Assam is used for Arunachal Pradesh'), implying poverty lines are understood as stateāspecific measures.
A student could map which states have distinct official lines versus those that borrow another state's line and then compare with state poverty/price data to see if distinct lines align with differing poverty/price conditions.
Provides concrete statewise poverty percentages showing large interāstate variation (e.g., Odisha 57.0%, Punjab 8.4%), demonstrating that poverty rates do vary markedly across states.
Using these state poverty rates plus knowledge of which states report higher official poverty lines, a student could check whether higher official lines coincide with higher measured poverty or instead track with prices.
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