ISLAMABAD: A new report from the Asian Development Bank says that the $1.25 per day measures do not fully capture the extent of extreme poverty.

As rapid economic growth in Asia and the Pacific region had led to a dramatic improvement in living standards, extreme poverty when measured as income or expenditure of less than $1.25 per person per day in 2005 purchasing power parity terms, could fall to 1.4 per cent by 2030 if the current trends continue.

A poverty rate below 3pc is interpreted as poverty having been eradicated, says the ADB report, “Key Indicators for Asia and the Pacific 2014” published on Wednesday.

According to ADB Chief Economist Shang-Jin Wei, “$1.25 a day is not enough to maintain minimum welfare in many parts of our region. “A fuller understanding of poverty is needed to help policymakers develop effective approaches to address this daunting challenge,” he said.

The report suggests that three additional elements should be factored into the poverty picture: cost of consumption specific to Asia’s poor; food costs that rise faster than the general price level; and vulnerability to natural disasters, climate change, economic crises, and other shocks.

According to key findings of the report, broadly following the procedure used to determine the conventional $1.25 poverty line — but focusing on data from Asia — produces an estimated Asia-specific extreme poverty line of $1.51 per person per day.

Using this poverty line would raise Asia’s poverty rate in 2010 by 9.8 percentage points — from 20.7pc to 30.5pc. The number of extreme poor would increase by 343 million people.

The report says while taking into account the fact that the increase in food prices is greater than the increase in the general consumer price index, Asia’s 2010 poverty rate would increase by four percentage points, an addition of 141 million poor. The poor spend far more of their income on food than the non-poor. So food insecurity must be accounted for when measuring poverty.

Published in Dawn, August 21st, 2014