Meaning of Poverty:- Poverty refers to a condition where people are not able to fulfill their minimum necessities of life like food, clothing and shelter (home to live in).
Poverty is a challenge not only for India, but for the whole world. About 270 million people of the world live in India alone, this is more than 1/5 part of the total poor people of the whole world.
The main objective of India after independence : –
- Poverty reduction and providing minimum basic necessities to the people.
- The post-independence Five Year Plans laid emphasis on the upliftment of the poorest (Antyodaya) and achieving a minimum standard of living for all.
Characteristics of a poor person:-
- Malnutrition is alarmingly high among the poor. Starvation and hunger are the key features of the poorest households.
- Ill health, disability or serious illness and poor access to medical facilities make them physically weak. Their children are less likely to survive or be born healthy.
- They have limited economic opportunities as the poor person lacks basic literacy and skills. So, they face unstable unemployment. Lack of income yielding assets such as land etc. lead to unemployment.
- They borrow from money lenders who charge high rates of interest that lead them into chronic indebtedness.
- The poor are highly vulnerable. They are not able to negotiate their legal wages from employers and are exploited.
- Most poor households have no access to safe drinking water and electricity. Their primary cooking fuel is firewood and cow dung cakes.
- Gender inequality prevails within the family in regard to participation of gainful employment, education and in decision-making.
Rural Poor vs Urban Poor
The rural poor are those who are mainly landless agricultural laboures, tenants with very small holdings, or landless laborers who are engaged in a variety of non-agricultural activities:-
- A large section of the rural poor in India are small farmers. The land they have is less fertile and dependent on rains. Their survival depends on subsistence crops and sometimes on livestock.
- Rapid increase in population has led to fragmentation of land holdings. Due to which there has been a steady decline in the availability of land per capita.
- The income from these small holdings is not sufficient to meet the basic needs of the family.
In urban poverty, the rural poor who come from urban areas in search of alternative employment and livelihood, laborers who work on various types of daily wages and who sell many things on the side of the roads Example: – cart sellers, rag pickers , cobblers, beggars etc. is included. Workers are the most vulnerable in the society as they have neither job security nor property.
- A large section of the urban poor in India are largely the overflow of the rural poor who had migrated to urban areas in search of alternative employment and a livelihood.
- Industrialisation has not been able to absorb all these people. The urban poor are either unemployed or intermittently employed as casual labourers.
- Casual labourers are the most vulnerable in society as they have no job security, no assets, limited skills, sparse opportunities and no surplus to sustain them.
How poor people are identified:-
Jail cost of living
In pre-independent India, Dadabhai Naoroji was the first to discuss the concept of Poverty Line.
The concept of poverty line was first discussed by Dadabhai Naoroji in pre-independence India. He used the menu for a prisoner and used appropriate prevailing prices to arrive at what may be called ‘jail cost of living’. which was three-fourths of the total cost of living in prison.
Attempts made to identify number of poor in the country after independence:-
- In 1962, the Planning Commission, now called NITI Aayog, set up a study group.
- In 1979, another body named ‘Task Force on Estimates of Minimum Requirements and Effective Consumption Demand’ was set up
- In 1989 and 2005, ‘expert groups’ were formed for the same purpose.
Categories of poor:-
Chronic (chronic) poor :- Usually they are always poor But maybe sometimes some money keeps coming but not always. (Example: daily wage worker)
Transient (short term) poor :-
- Churning poor :- who regularly come and go in poverty. (such as small farmers and seasonal workers)
- Occasionally poor :- Sometimes poor who are rich most of the time but sometimes bad luck comes in the category of poor.
Non-poor: Those who are never poor.
Poverty Line: Poverty Line is cut-off point on the line of distribution, which usually divides the population of the country as poor and non-poor.
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- It is the minimum amount of money (usually in terms of monthly per capita expenditure) needed for a person to meet his basic needs.
- The concept of poverty line is used to measure the extent of poverty in a country.
Estimation of poverty line:
- Calorie based estimation: The Planning Commission has defined poverty line on the basis of recommended nutritional requirements of 2400 calories per person per day for rural areas and 2100 calories per person per day for urban areas.
- Per capita expenditure based estimation: The government of India uses Monthly Per Capita Expenditure (MPCE) as proxy for income of households to identify the poor.
Based on 2011-12 prices, the poverty line was defined for rural areas as consumption worth Rs 816 per person a month and for urban areas it was Rs 1,000 per person per month.
Limitations of using Per Capita Monthly Expenditure or Limitations of Poverty Line
- It groups all the poor together and does not differentiate between the very poor and the other poor. Hence, it would be difficult to identify who among the poor need help the most.
- This mechanism takes into account expenditure on food and a few select items as proxy for income. There are many factors, other than income and assets which are associated with poverty like the accessibility to basic education, health care, drinking water and sanitation which need to be considered to develop poverty line.
- The existing mechanism for determining poverty line also does not take into consideration social factors that trigger and perpetuate poverty such as illiteracy, ill health, lack of access to resources, discrimination or lack of civil and political freedoms.
- Many a times, the way the data are collected, items that are included in the consumption basket, methodology followed to estimate the poverty line and the number of poor are manipulated to arrive at the reduced figures of the number of poor in India.
Absolute poverty:- It refers to the total number of people living below the poverty line. It is a condition characterized by lack of basic human needs including food, pure drinking water, sanitation facilities, health, shelter, education etc. It depends not only on income but also on access to social services. It refers to the situation when a person fails to reach this minimum consumption.
Measure absolute poverty :-
1. The poverty line is used as a measure.
2. The people below the poverty line are absolutely poor.
Relative poverty:- It refers to the poverty of the people as compared to the regions or nations. When we compare the income of different people, and we find that some people are more poor than others, it is called relative poverty. People who have a substantial portion of income can meet their basic needs but are still considered poor under the relative poverty model. Because their economic condition is not good enough in relation to the society.
1. Relative poverty does not consider how poor a poor person is or whether he is deprived of the basic necessities of life.
2. It compares the inequality of income and property ownership. It helps in understanding the relative position of different sections of the population.
3. The drawback of the relative measure of poverty is that it only reflects the relative position of different sections of the population on the basis of income.
Relationship between employment and poverty:-
Yes, there is a direct relationship between unemployment and poverty. An unemployed person has no means of earning a living and cannot meet his basic needs. He cannot avail of good education, medical facilities and has no means of earning assets.
- A large section of the urban poor in India is the poor from rural areas who migrate to urban areas in search of employment and livelihood.
- The urban poor are either unemployed or are intermittently employed as temporary labourers. Informal workers are the most vulnerable in the society as they do not have job security, limited skills and no assets.
- Hence poverty is related to the nature of employment. Unemployment or under-employment and sudden and intermittent lack of work in both rural and urban areas that force indebtedness, in turn, exacerbate poverty.
- Indebtedness is one of the important factors of poverty.
Poverty trends in India from 1973-74 to 2011-12 :-
When the number of poor is estimated as the proportion of people below the poverty line, it is known as ‘head count ratio’.
A) Official data on poverty is now made available to the public by NITI Aayog (formerly Planning Commission). It is estimated on the basis of consumption expenditure data collected by the National Sample Survey Office (NSSO).
B) In 1973-74, more than 320 million people were below the poverty line. This number has come down to around 270 million in 2011-12.
C) In terms of proportion, in 1973-74, about 55 percent of the total population was below the poverty line. In 2011-12, it has come down to 22 per cent.
D) In 1973-74, more than 80 percent of the poor lived in rural areas and this situation has not changed even in 2011-12. This means that more than three-fourths of the poor in India still live in villages.
Rural Urban Poverty :-
- In the 1990s, the absolute number of poor in rural areas had declined whereas the urban numbers increased marginally.
- The poverty ratio (number of poor to total population) declined continuously for both urban and rural areas.
- During 1973-2012, there has been a decline in the number of poor and their proportion. The ratio is declining much slower than the absolute number of poor in the country.
- The gap between the absolute number of poor in rural and urban areas got reduced whereas in the case of ratio the gap has remained the same until 1999-2000 and has widened in 2011-12.
Poverty Level in the States :-
A) The proportion of poor in India has come down from 55 to 22 percent during 1973-2012.
B) Six states – Tamil Nadu, Uttar Pradesh, Bihar, Madhya Pradesh, West Bengal and Orissa – comprised a large section of the poor in 1973-74.
C) During 1973-2012, several Indian states like West Bengal and Tamil Nadu reduced poverty levels to a great extent due to socialist government and Green Revolution as well as economic development.
D) The poverty level in four states – Odisha, Madhya Pradesh, Bihar and Uttar Pradesh – is still well above the national poverty level.
Causes of poverty in India:-
Historical reasons:
1) De-industrialisation:- There was substantial de-industrialisation in India under the British rule. Imports of manufactured cotton cloth from England displaced much local production, and India became an exporter of cotton yarn, and not cloth which resulted in massive unemployment and poverty in India.
2) Decline of agriculture:- The British introduced the revenue settlement systems like zamindari system which exploited farmers and caused immense misery and poverty. British policies involved sharply raising rural taxes that enabled merchants and moneylenders to become large landowners. The British Raj impoverished millions of people in India by exporting raw materials and food grains to Britain. Many people died due to famine and hunger.
3) Drainage of funds:- India’s foreign trade with Britain resulted in drain of wealth from India as Britain’s main goals were to provide market for British exports, use the export surplus generated to service its debt payments to Britain and for India to provide manpower for the British imperial armies.
After Independence :-
1) Unequal distribution of income and wealth:- Unequal distribution of income and wealth has perpetuated poverty in India.
- Land ownership is an important determinant of material well-being. Those who own some land have a better chance of improving their living conditions.
- However, since independence the government has attempted to redistribute land among the landless. This move was successful only to a limited extent.
- A large section of agricultural workers were not able to cultivate small holdings as they had neither the money (property) or the skill to make the land productive and the size of the holding was too small for good production.
2) Rapid population growth:-
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- With the rapid growth of population and without alternative sources of employment, the per head availability of land for cultivation has steadily declined leading to fragmentation of land holdings.
- The income from these land holdings is not sufficient to meet the family’s basic requirements.
3) Indebtedness:-
- Indebtedness is one of the important factors of poverty.
- This situation arises due to the inability of the farmers to repay the loans taken for farming and other domestic needs either due to crop failure or due to drought or other natural calamities.
- Unemployment or under-employment and the casual and intermittent nature of work in both rural and urban areas is also a factor, which forces people to borrow at very high interest rates and leads to indebtedness.
4) Social Exclusion:-
Most members of the Scheduled Castes and Scheduled Tribes are not able to participate in the emerging employment opportunities in various sectors of the urban and rural economy as they do not have the necessary knowledge and skills to do so.
5) Unemployment and Underemployment:-
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- A large section of urban poor in India are largely the overflow of the rural poor who migrate to urban areas in search of employment and a livelihood.
- However, industrialisation has not been able to absorb all these people Thus the urban poor are either unemployed or intermittently employed as casual labourers who are among the most vulnerable in society as they have no job security, no assets, limited skills, sparse opportunities and no surplus to sustain them.
- Poverty is, therefore, closely related to nature of employment.
6) Inflation:-
The sharp rise in the prices of food grains and other essential commodities adds to the hardships of the lower income groups.
7) Low Economic Growth and Slow Industrial Growth:-
- Growth has been very low in both the agricultural and industrial sectors. In the agriculture sector, public investment has declined over the past two decades, resulting in small and fragmented land holdings along with low productivity.
- Industrialization has not been able to absorb the overflow of the rural poor who migrate to urban areas in search of employment.
Scholars cite several factors that have led farmers to commit suicide:-
1. It is difficult to transform cultivation of high yielding commercial crops without adequate technical support, immediate remedial steps in agricultural technology in the field of agricultural extension services and lack of timely advice to the farmers due to which they are facing problems. becomes incapable. and take wrong decisions.
2. Decline in public investment in agriculture in the last two decades.
3. Low germination rates of seeds provided by large global firms, spurious seeds and pesticide sales by private agents.
4. Crop failure, pest attack and drought.
5. Loans from private moneylenders at high interest rate of 36% to 120%.
6. Declining pricing and profits due to cheap imports.
7. Due to scarcity of water for crops, farmers were forced to borrow money at exorbitant interest rates to sink borewells.
Vicious circle of poverty: It implies circular constellation of forces tending to act and react one another in such a way as to keep a poor country in a state of poverty
In economics, the cycle of poverty is the “set of factors or events by which poverty, once started, is likely to continue unless there is outside intervention”.
This cycle can be broken only with some external stimulus such as foreign investments which will lead to higher capital formation, higher productivity and higher income.
How to remove poverty?
1. Speed of economic development:- The first and foremost measure necessary to remove poverty is to accelerate the pace of economic development.
2. Reducing inequalities of income:- If income inequalities increase with higher growth rate, then the benefits of economic development will only go to the rich class, while the number of poor will increase. Thus inequalities must be reduced if the benefits of development are to reach the poor.
3. Population Control:- There is a high growth rate of population especially among the poor. Therefore (to remove poverty, it is very necessary that the population growth rate be checked) If we intensify the family planning campaign and reduce the growing population among the poor, then poverty can be removed to a great extent. can go.
4. Agricultural Development:- The eradication of widespread poverty in rural areas is possible only when proper emphasis is given on agricultural development. Therefore (there is a serious need to increase agricultural production and productivity) the government should take steps to provide financial assistance to small and marginal farmers, high yielding seed varieties, irrigation facilities, fertilizers etc.
5. More employment opportunities:- Poverty can be eliminated by providing more employment opportunities. So that people can fulfill their basic needs.
6. Land Reforms:- By imposing limits on land holdings and their effective implementation, a good amount of land can be acquired to distribute land among the landless labourers. On receipt of land, the landless laborers would be able to employ themselves.
| Government’s three pronged strategy towards poverty alleviation |
| Development Oriented Approach | Poverty Alleviation Program (Employment Oriented Strategy) |
Minimum Infrastructure |
| This approach is based on the expectation that the effects of economic growth (rapid increase in GDP and per capital income) would be rapid across all sections of the society and would also reach the poorer sections. There was rapid industrial development of agriculture and a change in production through the Green Revolution. Assessment – It is not effective in reducing poverty. a) Population growth has resulted in very little increase in per capita income. The gap between the poor and the rich has really widened. b) Green Revolution has widened the inequalities between large and small farmers regionally c) The society did not wish nor felt capable of redistributing land
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This is the second approach introduced from the Third Five Year Plan. It is based on the hope that income and employment for the poor can be increased through the creation of additional wealth and job creation.
Food for work:-Self-Employment Programs Launched in the 1970s: a) REGP (Rural Employment Generation Programme): It aims to create self-employment opportunities in rural areas. Under this program, financial assistance can be obtained in the form of bank loan for setting up small scale industries. Khadi Village Industries Commission is implementing it. |
It aims at providing minimum basic amenities like education, health, water supply and sanitation, provision of food grains at subsidized rates to improve the living standards of the people through public expenditure on social consumption needs. Programs under this approach are expected to supplement the expenditure of the poor, create employment opportunities and improve health and education. Requirement:- According to the Fifth Five Year Plan, “Despite increasing employment opportunities, the poor will not be able to buy all the essential goods and services for themselves. There are three major programs aimed at improving the food and nutritional status of the poor. : PDS (Public Distribution System): (Providing food grains and essential commodities at reasonable prices.) ICDS (Integrated Child Development Scheme): (Provides food, preschool education and primary health care to children below 6 years of age and their mothers.) Mid-day (Lunch) Meal Scheme: (Provides meals to primary school children.) Other programmes: Pradhan Mantri Gram Sadak Yojana, Pradhan Mantri Gramodaya Yojana and Valmiki Ambedkar Awas Yojana are also efforts to develop rural infrastructure and housing conditions. NSAP (National Social Assistance Program): Launched by the central government, it focuses on the following aspects 1. Under this program, elderly people who have no one to take care of them are given pension to maintain themselves. 2. Poor women who are destitute and widows are also covered under this scheme. 3. Since 2014, Pradhan Mantri Jan Dhan Yojana is available in which people in India are encouraged to open bank accounts. (Scheme to provide health insurance to poor people.) Apart from promoting the habit of saving, the scheme aims to transfer all the benefits of government schemes and subsidies directly to the account holders. Each bank account holder will get Rs 1 lakh accident insurance and Rs 30,000 life insurance cover.
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Critical evaluation of government schemes and poverty alleviation programs
Efforts to eradicate poverty have resulted in the fact that for the first time since independence, the percentage of absolute poor in some states is now much below the national average. Government policies have also failed to address the vast majority of vulnerable people living at or just above the poverty line.
Despite various strategies to address poverty, hunger, malnutrition, illiteracy and lack of basic facilities remain a common feature in many parts of India. Neither program has resulted in appreciable change in property ownership, process of production and improvement in infrastructure for the needy.
Main reasons include:
A) Due to unequal distribution of land and other assets, the benefits from direct poverty alleviation programs have been appropriated by the non-poor.
B) The amount of resources allocated for these programs is not sufficient in comparison to the dire situation of poverty.
C) These programs mainly depend on the actions of government and bank officials, who are wrongly motivated, inadequately trained, vulnerable to corruption and pressure from various local rich classes. As a result, resources are used inefficiently and wasted.
D) There is also non-participation of local level institutions in program implementation.
What needs to be done:-
High growth alone is not enough to reduce poverty. Successful implementation of any program is not possible without the active participation of the poor.
A) Poverty can be effectively eradicated only when the poor start contributing to development through their active participation in the development process. This is possible through the process of social encouragement.
B) It will also help in creating employment opportunities which can increase the level of income, skill development, health and literacy.
C) It is necessary to identify poverty-stricken areas and provide infrastructure like schools, roads, electricity, telecommunications, IT services, training institutes etc.