In India, the official poverty level is primarily estimated on the basis of which key economic indicator?

Introduction / Context:
Measuring poverty is a crucial task for policymakers in India because it directly affects the design of welfare schemes, food subsidies, and social security programmes. Different countries may use different criteria to define who is poor. In India, expert committees and planning bodies have historically used consumption based measures rather than purely income based measures. This question asks you to identify the key indicator used to estimate the official poverty level in India, distinguishing consumption expenditure from other possible indicators like slum population, per capita income, or tax reported income.

Given Data / Assumptions:

• The context is the official poverty line as used in Indian planning and policy discussions.
• Poverty lines are often tied to the ability to consume a minimum basket of goods and services, especially food.
• Household consumer expenditure surveys provide detailed data on what families spend on various items.
• Other indicators like slum population or per capita income are related to development but are not the primary basis for poverty line calculation.

Concept / Approach:
India has traditionally used a consumption expenditure approach to estimate poverty. Committees such as the Lakdawala Committee and later expert groups specified a minimum consumption basket, often linked to calorie norms and basic non food needs. The cost of this basket is estimated using data from large scale household consumer expenditure surveys. Households whose consumption expenditure falls below this cost are classified as poor. While per capita income and slum statistics are important indicators of development, they are not the direct benchmark for the official poverty line. Therefore, the correct answer must refer explicitly to household consumer expenditure on essential goods and services.

Step-by-Step Solution:
Step 1: Recall that India uses a consumption based method for poverty estimation rather than a purely income based one. Step 2: Recognise that detailed data on consumption comes from periodic household consumer expenditure surveys. Step 3: Understand that the poverty line is set at the level of expenditure required to buy a minimum basket of goods and services. Step 4: Compare the answer options and identify which one explicitly mentions household consumer expenditure. Step 5: Note that options referring to slum population, per capita income, or tax reported income are not the direct basis for the poverty line. Step 6: Choose the option stating that household consumer expenditure is the basis for estimating poverty in India.

Verification / Alternative check:
To verify, review how official poverty estimates have been produced. National Sample Survey data on household consumption are routinely used to compute the proportion of people whose monthly per capita consumption expenditure falls below a specified threshold. This method focuses on actual consumption rather than income reported to tax authorities, which may be underreported or unavailable for informal workers. Slum population measures physical living conditions but does not include rural poverty. Per capita income averages can hide deep inequalities and do not specify how income translates into access to nutrition and basic services. Hence, consumption expenditure remains the primary, more direct measure for poverty estimation in India.

Why Other Options Are Wrong:
Slum population captures urban housing deprivation but does not cover rural poverty or all aspects of consumption. Per capita income at the state level is a broad indicator of average economic performance and cannot by itself identify who is poor within that state. Household average income reported in tax returns excludes many informal sector workers who may not file returns at all, making it an unreliable basis for poverty measurement. The number of government sector employees has little to do with poverty measurement. Therefore, these options do not reflect the method used in official poverty estimation, which relies on household consumer expenditure surveys.

Common Pitfalls:
Students sometimes assume that income is always the basis for poverty measurement because many international discussions refer to income thresholds. Another common mistake is to confuse visual indicators like slum growth with the official poverty line. In the Indian context, it is important to remember that consumption data are often more reliable and detailed than income data, especially given the size of the informal sector. To avoid confusion, whenever a question mentions poverty estimation in India, link it first to household consumer expenditure and minimum consumption baskets.

Final Answer:
Therefore, the official poverty level in India is primarily estimated on the basis of household consumer expenditure on essential goods and services collected through large scale surveys.