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Determining poverty threshold

Mohammed Abul Kalam
ASYSTEMATIC and comprehensive analysis of the interrelation between population change and poverty incidence is to a large extent handicapped by the lack of a universally accepted concept or definition of poverty, as well as precise methods or techniques for measuring its levels and trends.
While demographers and statisticians have developed clear and uniform definitions of various components of population change and accurate techniques for measuring these components, there is considerable variation in regard to the way in which poverty is perceived and measured. Indeed, the concept of poverty hardly lends itself to a precise definition.
However, there are basically two approaches to the estimation of overall improvishment within a country — relative poverty, and absolute poverty. Relative poverty is measured in terms of relative shares in income or consumption of various sections of the population, for example, the proportion of income received by the lowest 20% or 40% of the population. This measure shows the inequality of distribution of incomes but does not say anything about the level of deprivation of the various sections of the people.
Absolute poverty is commonly measured by the proportion of the population that is unable to meet specified minimum needs. In other words, it refers to a group that falls below defined minimum basic needs for subsistence, usually referred to as the poverty line. Since poverty has a dimension of intensity as well as of size, persons falling below the poverty or minimum needs line should not all be assumed tobeeither equally or absolutely
deprived. Within the group that falls below the line, those on the brink of the line maybe onlyon the margin of subsistence while those at the bottom may suffer far greater deprivation.
There is considerable variation in the methods and techniques adopted by researchers even within the same country in determining the poverty or threshold line. Consequently, no uniform poverty line has been applied across various studies. In a few cases, the poverty line was based on the minimum expenditures required for meeting the absolutely necessary food and non-food items.
In most cases the poverty line was calculated in terms of nutritional requirements alone; housing, clothing, health and other essential needs were not taken into consideration. Whateverthe norms adopted for defining the poverty threshold, the decision still remains arbitrary and hence subject to some controversy.
Apart from the several issues in the area of poverty analysis, which still remain unresolved, the current database in many developing countries of the region does notappear to be adequate for obtaining accurate estimates of the incidence of poverty. It may also be noted that poverty implies insufficient food and nutrition intake, inadequate housing, poor sanitation, disease and high mortality, low levels of education, unemployment or underemployment, etc.
All these factors, individually or collectively, may be associated with various components of population change. Hence, an estimate ofpoverty based on a single measure such as per capita or per household income may be sufficient for many purposes, but is likely to be misleading in assessing interactions with demographic variables.
In most developing countries one can observe a parallel between demographic characteristics such as high overall population growth, high fertility, high infant mortality, and high population density on the one hand, and poverty among a large section of the people on the other. The tendency, therefore, has been to infer that population and poverty are inextricably linked and that each is a determinant and consequence of the other, of which population growth is, by and large, responsible for the increasing poverty in many ofthese countries.
It is true that there are certain linkages or reciprocal actions between population and poverty. These relationships are exceedingly complex and most of the factors involved have not been properly understood. The exact nature of the relationships must be established after careful investigation and analysis and not simply assumed in advance of such investigation.
The topic is one in which ideology and preconception, rather than empirical considerations, tend to predominate. For many observers, population growth is either the primary cause of poverty or a major obstacle to its elimination. For others, population growth contributes to progress.
The interrelationship between population and poverty can be examined at two levels — macro or aggregate level, and micro orhouse-hold level. Most of the available studies relate to the macro level perspective by analysing the impact of population growth on land, natural resources, savings and investment, or on the provision of infrastructure facilities and services.
But it is the micro level, where divisions are usually made in regard to family size and migration, that serves as the starting point for most of the interactions between population and poverty. Indeed, these interactions are most strongly felt at the micro level, which absorbs the effects of mortality and life cycle variations in dependency. Although some of the micro-level relationships between population and poverty affect the individual, and others affect the household, a majority of studies analysing these relations have focused on the household.
A country must increase its level of invest-mentinorderto speed up the rate of growth of its economy. Capital is the most important factor in economic development, but rapidly increasing population aggravates the prob-
lem of capital shortage in many developing countries. The main source of capital formation is domestic savings affected through refraining from consuming some part of the current national output and setting aside that part for the purpose of investment in future production.
Any population growth requires some investment of available capital just to maintain the same level of per capita GNR The higher the rate of population growth, the greater the proportion of available capital that must be used for investment simply to maintain constant per capita GNP and the less there is available to increase per capita GNR
But rapidly increasing population affects both the rate as well as the distribution of investment In most countries an increasingly large proportion of the limited resources have to be set apart for feeding, clothing, educating and providing health and other facilities and services for the large and increasing number of dependent children. This increased current consumption expenditure will tend to restrict both public and private savings and hence investment.
Further, a substantial percentage of even the limited investment is devoted to meeting social needs such as school building, hospitals, houses, as well as non-development activities at the expense of investment in the directly and immediately productive spheres. Such an imbalance in the distribution of investment would not only affect the rate of economic growth, but would also have a depressingeffect on the level of future investment.
It mayalso be noted that while in thedevel-oped countries it is possible to reinvest much of the increased production in economic development, in the developing countries increased production has tended to be balanced by the increase in the numbers of people. The inevitable results have been increasing poverty and lack of surplus capital for socio-economic development in the developingcountries.
It is therefore, argued that the prospects for accumulation of capital necessary for investment in development will be limited so long as populations in the developing countries continue to growat the current high rates.
Mohammed Atxil Kalam is Principal Scientific Officers Head, Department of Medical Sociology, Institute of Epidemiology,