Explain clearly the method used by Dadabhai Naoroji to determine poverty line? Could u pls explain this in simple words other than that provided in the study material?

Adithya, don't get confused.To estimate the poverty line, Dadabhai Naroji appropriated (estimated) the prices of the different items included in the menu of a prisoner in jail. With this he arrived at a value that indicated the minimum amount of expenditure that one would require to incur to sustain life.

Suppose it is upto you to determine the poverty line. Now, to reach a correct minimum expenditure to be incurred on consumption by an average individual which will be considered as poverty line, you would have to determine how much an average individual consumes.

Individuals in an economy include children and adults. Dadabhai assumed that one-third of the population is children and rest of the population is adult. Further half of the children eat very little and half of the children eat half the diet of an adult. Using this assumption, he defined the minimum consumption required by an average individual using the following formula.

16Nil + 16Half + 23Full = 34Full


Thereafter he defined the poverty line as the price of 3/4 th of diet of an adult as the poverty line in India. If you have any further doubt in this concept, feel free to get back to us.

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