Monetary Approach To Poverty

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(i) The Monetary Approach: The monetary approach is the most popular approach to identification and measurement of poverty. In this approach, poverty identifies with a shortfall income from the poverty line. Where the poverty lines define as a threshold level of income which can purchase the minimum consumption bundle of good and services needed for the survival of subsistence life. The threshold level of income depends on the monetary value of those items which are included in the consumption bundles and its market prices (Grosh and Glewwe 2000). This approach is quite compatible with the utility maximising behaviour of Individuals. This monetary approach to poverty can be justified in two ways: first the minimum right approach, where a certain amount of income is needed to fulfil the basic needs of life. That level of basic income is regarded as the universal right of the individual. Secondly identifies those who are poor in many dimensions, not only the lack of income or resources but also nutrition, health, education etc. Rowntree defined a poverty line by evaluating the level of income which is required for nutritionally balanced diets along with clothes and shelter. Those are laying below this line were defined as primary poverty. Those who were living in obvious want and squalor despite being above the defined poverty line were categorised as secondary poverty (Rowntree 1902). Ravallion has suggested to defining the poverty line

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