The idea of defining poverty in terms of a poverty line was first introduced during the India Labour Conference in 1957. A working group under the Planning Commission then stipulated a poverty line of Rs 20 per person per month. In 1979, a Planning Commission task force fixed a poverty line largely based on calories. It defined Rs 49 and Rs 57 per person per month as rural and urban poverty lines respectively at 1973 prices.

This poverty line is still being used with minor changes based on inflation. In 1999-2000, the poverty line after adjusting for inflation were Rs 327 and Rs 454 in rural and urban areas respectively. Till December 2005, these figures stand at approximately Rs 368 and Rs 559 per person per month for rural and urban areas.