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Why We Need to Keep Updating the Poverty Line – Academia

Online Niel November 8, 2024

eradicating poverty has always been a national priority under every administration. The Prabowo Subianto-Gibran Rakabuming Raka government has even set itself the goal of establishing unified poverty data within the first 100 days in office.

This effort aims to ensure that policies can be precisely targeted, accelerating the reduction of Indonesia’s poverty rate. However, when discussing poverty data, one crucial issue remains a point of ongoing debate.

Currently, the poverty line used to determine whether someone is considered poor continues to face widespread criticism and is often seen as inadequate. According to the World Bank (2024), Indonesia’s poverty line is now close to the average poverty line of low-income countries, while Indonesia itself has already reached upper-middle-income status.

Statistics Indonesia (BPS) is the official agency responsible for issuing poverty statistics in the country. In calculating poverty, the BPS has traditionally used the basic needs approach, a method that aligns with the Poverty and Inequality Handbook published by the World Bank. This method is also used by other developing countries.

Calculating poverty requires establishing a poverty line, which reflects the minimum monthly expenditure in rupees that an individual needs to meet the basic needs of life, including both food and non-food items.

The poverty line consists of two components: the food poverty line (minimum necessary expenditure on food, equivalent to 2,100 kilocalories per capita per day) and the non-food poverty line (minimum necessary expenditure on essential non-food items). People whose average monthly per capita expenditure falls below this poverty line are then classified as poor.

Since 1984, BPS has been calculating poverty rates, first published in the report “Number and Percentage of the Poor Population in Indonesia 1976-1981”. Essentially, the method used has remained the same until now.