Broadening Poverty Definitions in India: Basic Needs in Urban Housing

This paper considers how the official poverty line in India would have to change if it were to be set at a level that allowed urban households to afford minimally adequate accommodation. It discusses the difficulties in incorporating housing needs into poverty lines, noting that households that rent accommodation are treated differently in India’s poverty statistics from those who are owners. Drawing on data from two very large, official, nationally representative surveys, the paper shows that a substantial percentage of urban households have unmet housing needs even when they are above the poverty line. Controlling for household living standards, unmet needs are greatest in unlisted slums, but substantial in listed and non-slum communities as well. Data from renting households are used to calculate the costs of housing with minimally acceptable characteristics. These costs are estimated to be approximately one-quarter of the official urban poverty line. The paper argues that in view of the size of the housing component, the urban poverty line should be reconfigured to reflect the costs of basic needs for accommodation.