The Head Count Ratio (HCR) simply measures the percentage of the population below the poverty line. It provides no information about how far below the poverty line the poor are. The Poverty Gap (PG), on the other hand, measures the average depth of poverty; it quantifies the aggregate income (or consumption) deficit of the poor relative to the poverty line. The total poverty gap (sum of shortfalls for all poor individuals) represents the minimum cost of eliminating poverty through perfectly targeted transfers, making it a more informative measure for policy design.
Poverty Gap is a better measure of absolute poverty than Head Count Ratio because :
Asked in MPSC CS Prelims 2013 · Topic: Nature of Indian Economy (Poverty and Income Inequality)
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Answer: C. It indicates total income shortfall that needs to be corrected to remove absolute poverty.
More Economic Development questions
- Which of the following criteria was considered by P.D. Ojha Committee (1960-61) for calculating poverty line ?
- Per capita consumption expenditure as a measure of poverty in India was used for the first time by :
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