Tuesday, September 3, 2013

Who is below poverty line?



For many years before, the person who had been living below $1 a day, he was considered as poor in the world.  It was not getting adjusted for inflation.  The new poverty line of $1.25 a day was announced by the World Bank in 2008.  This one is the latest one.  This level is accompanied with some additional explanation and reasoning including that it is a common level found amongst the poorest countries.  The World Bank has drawn the estimates of poor in the world.  The estimates considered here are for the year 2005 for different levels of poverty and for the equivalency between various currencies; the countries’ currency was converted to USD a day at 2005 purchasing power parity (PPP).  In case of India, the $1.25 is equivalent to INR 31.25, if one uses the PPP conversion rate of dollar. This one is close to what the Planning Commission has recently put to the public.  They have issued the All-India level of Rs. 816 per capita monthly for rural areas and the same for urban people it is given as Rs. 1000.  This amounts to vary between Rs. 27.20 to Rs. 33.33 a day.  But these figures have been out right rejected by the public at large.  They could have made a uniform level of Rs. 31.25 i.e. Rs 937.50 a month.  We may note that 1.4 billion people in the world were below this $1.25 level of poverty and the number swells to 5.15 billions out of 6.46 billions in case this level is raised to $10.  The latter level may be more relevant to the developed economy like that of USA. Thus, depending on the means available in an economy, one may fix the desired poverty level.  It may be noted that trade exchange rate is not relevant rate here for conversion. 

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