CHAPTER-4 POVERTY
Define Poverty
Poverty refers to the inability of a person to fulfill the minimum requirements of the life.These
minimum requirements include food,clothing, shelter, education and health facilities.
Who are poor?
Poor in urban areas
● Push cart vendors, Street cobbler, women who string flowers, ragpickers,vendors
and beggars are example of poors
● People who live in kutcha hutments with walls made of baked mud and roofs made of
Grass bamboo and wood.
● Those who do not have their dwellings.
Poor in rural areas
● It includes agricultural labourers, cultivators with very small land Holdings ,landless
labourers engaged in variety of non agriculture jobs or tenant cultivators with small
land Holdings
● Many of them are not having their land if they have then it is only dry or wasteland
● Many do not get to have even two meals a day
characteristics of poor people
1. Hunger and starvation are the key feature of the poorest households
2. Poor generally lack basic literacy and skills and hence have very limited economic
opportunities
3. Malnutrition, ill health, disability, serious illness makes them physically weak.
4. They borrow from money lenders who charge high rate of interest that push them into
chronic indebtedness
5. They do not have access to electricity and clean drinking water their primary cooking
fuel is firewood and cow dung cake.
6. Their families are bigger in size which makes their economic condition worse.
7. Gender inequality prevails within their family in regard to participation of gainful
employment, education and decision making .Poor women receive less care on their
way to motherhood.
Measures of poverty
Relative poverty
It refers to poverty of people in comparison to other people, regions or Nations.
Relative poverty compares the inequality of income and asset ownership.It helps in
understanding the relative position of different groups of the population
Absolute poverty
It refers to total number of people living below the poverty line.
Poverty line is a standard fixed in terms of minimum level of consumption.
The person who is unable to meet that minimum consumption level is said to be poor.
In India person who spend rupees 816 on consumption in rural areas and rupees thousand
in urban areas per month at 2011-12 prices are treated as those above the poverty line.
22% of country's population is absolutely poor.
Discuss the method of determining poverty line.
Several attempts have been made to measure poverty some of them are as follows
1.Dadabhai Naroji's Jail cost of living
Before independence Dadabhai naoroji for the first time measured poverty.In order to
estimate it.He use the jail cost of living.It was regarded as the cost of consumption of an
adult Prisoner and use the menu for prisoners with the appropriate prevailing prices. He
divide the population into two parts
A. It was assumed that one third of the country population comprise of children out of
this children population half of them consumed very little while the other half
consume half of the adult diet
B. Two third of the countries population comprise of adult and they consumed full
diet.On this basis the average poverty line comes out to be three fourth of the jail
cost of living.
[⅙*0+⅙*half diet+⅔*full diet=⅙*0+⅙*½+⅔*1=¾]
2. Task force on projection of minimum needs and effective consumption demand
In 1979 it formulated poverty line in terms of minimum nutritional level of food calories
necessary for minimum level of Living. So, Poverty line is estimated on the basis of
recommended nutritional requirement of 2400 calories per person per day for rural areas
and 2100 calories for the urban areas
3. Monthly per capita consumption expenditure
MPCE the monetary expenditure required for meeting minimum calorie intake is calculated
by using the prices of the consumption goods separately for the rural and urban areas.
According to planning commission Tendulkar methodology the minimum monthly per capita
consumption expenditure in 2011-12 is worked out to be e rupee 816 per person in rural
areas and rupee 1000 in urban areas
Q What is poverty line?
Poverty line is a cut off point or the line of distribution which usually divides a population of
the country as poor and non poor. It may be determined in terms of income or in terms of
consumption but consumption is considered to be a preferred parameter because
I.
Consumption reflect actual use of goods and services by an individual as well as the
type of goods actually used while income only show the capacity to purchase
II.
Data is not available on the distribution of income
What is headcount ratio ?
It refers to measurement of poverty in terms of the number of person below poverty line. It is
calculated by dividing the number of people below the poverty line by the total population
Q. How does poverty line categorise poor people?
Ans. There are three categories of poor people as per the poverty line
A. Chronic poor:​ They usually live below the poverty line example casual workers
landless workers etc. such category can be of two types always poor and usually
poor.
B. Transient poor :​Such category can be of two type Churning poor and occasionally
poor churning poor regularly move in and move out of poverty example seasonal
worker, small farmers.Occasionally poor are rich most of the time but may
sometimes have a patch of bad luck example people who gamble.
C. Non poor:-​ never poor category include those who live above poverty line example
doctors, teachers etc
Q. What are the main causes of poverty?
The important causes of poverty are
1. Heavy pressure of population:​In India population has been increasing very rapidly
especially among the poor.As per 2019 India's population size is 1.37billion and rate
of growth of population is 1.19% based on U.N data. Inspite of increase in total
production, per capita income,per capita land,per capita availability of different social
services and food have been inadequate.
2. Under utilisation of natural resources:​ India possesses vast and rich natural
resources but we have not been able to optimally utilize natural resources to the
fullest extent.A large part of a water, energy, forest and mineral resources is either
underutilized or unutilise which ultimately lead to poverty.
3. Widespread unemployment :​India is in the grip of chronic unemployment and
underemployment, since 28 million people are unemployed. This lead to low
productivity, low output, lower income and lower purchasing power which further
perpetuates poverty.
4. Inflationary pressures:​In India, average rise in price has been 8.4% in 2011-12.The
continuous and sharp rise in prices has resulted in fall in the real income of fixed and
low income earner.This ultimately lead to fall in their purchasing power and lower
standard of living.
5. Capital Deficiency:​ Due to deficiency of capital there is low productive capacity, low
income and heavy poverty prevails.
6. Low level of literacy:​ Due to low level of literacy poor peoples are illiterate ,semi
literate and consequently they can get only lower paid jobs.In agriculture sector,
illiterate farmers are unable to use latest technology and methods of production
.Consequently there is low per hectare productivity.
7. Migration from rural areas:​ There is large scale migration from rural areas to Urban
in search of jobs and avalibility of other facilities. Trickle down effect has failed to
reach in rural areas.This results in substantial increase in urban poverty.
8. Social factors :​The social factors like law of inheritance, succession, joint family
system, caste system, religious faith and belief etc.have affected the process of
economic growth .In the agricultural sector farmer still use traditional method of
production , they are also conservative and orthodox too.
9. Lack of infrastructure :​Energy, transport and communication are vital component
of economic infrastructure as well as education health and Housing services the
principal component of social infrastructure are grossly deficient.
10. Low rate of economic development :​It is also a crucial factor which has led to
poverty because low rate of economic development lead to low per capita income
which implies low standard of living and finally low rate of per capita income
perpetuates poverty.
Explain three measures to remove poverty.
Measures to remove poverty in India
A .​Growth oriented approach or Trickle down effect​ It is an economic theory that says
that the growth of GDP and per capita income by allowing the rich to flourish would
eventually benefit the lower income groups also through increase economic activity and
reduce unemployment.It was government approach to poverty reduction.It was felt that rapid
industrial development and transformation of agriculture through green revolution would
benefit the underdeveloped region and the backward section of the community.
However this approach proved to be ineffective because
1. Population growth resulted in a very low growth in per capita income.
2. Green Revolution creates a regional disparity between large and small farmers.
3. There was an willingness and inability to re distribute land.
4. The benefit of economic growth did not Trickle down to the poor.
B. Poverty alleviation programmes
Expanding self employment and wage employment programmes are being considered as
the major way of addressing poverty
C. Minimum need programmes
The third measure is to provide minimum basic need to the people, public expenditure on
social consumption needs, provision of food grains at subsidised rate, education, health,
water supply and sanitation program. Programmes under this approach are expected to
supplement the convention of the poor, create employment opportunities and bring about
improvement in health and education.
The three major programs that aim at improving the food and nutritional status of poor are
a.The public distribution system
b.Integrated Child Development Scheme
c. Midday meal scheme
Poverty alleviation programmes
A .​Self employment programmes
1. Rural Employment generation programme:(REGP)​this program was started by
government to create self employment opportunities in the rural areas and small
towns .It was implemented by Khadi and village Industries Commission .Under it one
can get financial help by way of bank loan to set up small industries.
2. Prime Minister Rojgar Yojna(PMRY):​ Under this the educated unemployed from
low-income families in rural and urban areas can get financial help to setup any kind
of enterprise that generate employment.By 2003 -04million people get employment
under this scheme.It provides a loan of upto rupees 1 lakh for opening his own
enterprise and 2 lakh for other activities.
REGP +PMRY = PMEGP Prime Minister Employment generation programme with effect
from 1-4-2008.
3. ​Swarn Jayanti Shahri Rozgar Yojana .​It AIMS at creating employment opportunities for
both self employment and wage employment in urban areas only .It is centrally sponsored
scheme which is funded on 75 : 25 basis between the centre and the state.
4.​ Swarna Jayanti gram swarozgar Yojana​ It AIMS at promoting micro Enterprises and to
bring poor families above the poverty line by organising themselves into self help groups
Those engaged in these groups are encouraged to save money and lend among themselves
as a small loans.
Later through Banks the government provide partial financial help to SHGS which then
decide whom the loan is to be given for self employment activities.
This program has now been restructured as national rural livelihood mission. A similar
program for national Urban livelihood mission has also been in place for urban poor
B Wage employment programme
The government has launched wage employment programmes for the unskilled people living
in rural areas some of them are;
1. Sampoorna Grameen Rozgar Yojana
​The scheme was launched from September 2001 with the objective of providing
wage employment in rural areas and food security along with the creation of durable
community social and economic assets .The cost of the program is shared between
the centre and the state in 75 : 25 basis.Wages were paid as the combination of food
and cash It is open to all rural poor who did wage employment and decide to do
manual and unskilled work.
2. National food for work programme
This program was launched in 2004 with the objective of intensifying the generation
of supplementary wage employment.It was implemented in 150 most backward
district of the country to provide additional resources apart from the resources
available .It was 100% centrally sponsored scheme.It was incorporated in Mahatma
Gandhi National Rural Employment Guarantee Act in 2005.
3. Mahatma Gandhi National Rural Employment Guarantee Act
Under this act all those who are willing to work at the minimum wage are offered
work for minimum period of hundred days.Those seeking employment are to report in
rural areas where the employment programme is been launched .Under the scheme
4.6 crore households were provided job in the financial year(2018)
4. ​National social assistance programme
​On 15th August 1995 the government initiated this program, Elderly people who do
not have anyone to take care of them are given pension to sustain themselves poor
women who are destitute and Widows are also covered under this scheme
5. ​ Pradhan Mantri Jan Dhan Yojana:
​ From 2014 scheme called Pradhan Mantri Jan dhan Yojana is available in which
people in India are encouraged to open bank account beside promoting saving habit
the scheme intend to transfer all the benefits of government schemes and subsidies
to account holders directly.
POSITIVE EFFECTS OF PAPs
1. Percentage of population below poverty line has declined from 46 % in 1973
74 to 21.9 percent in 2011-12
2. Wage rate has tended to rise over time
3. There is improvement in terms of per capita income and average standard of
living
CRITICAL EVALUATION OF POVERTY ALLEVATION
PROGRAMMES
The poverty alleviation programmes have been found and satisfactory because of the
following reasons
1. Defective planning:​ The selection of schemes under poverty alleviation
programmes were not carried out in rational manner.The financial allocations and
physical target under the programs were determined in a uniform basis per block
without any consideration being given to the size of population and incidence of
poverty.
2. Shortage of financial resources:​ The financial resources in different scheme are
centrally fix without reference to actual cost.
3. Improper implementation ​: These programs depends mainly on government and
Bank officials for their implementation, however corruption, lack of training, pressure
from local leaders and non participation of local level institution resulted in improper
implementation of the program
4. Lack of responsibility:​There must be responsibility or accountability for ensuring
proper identification and use of funds so that only the needy gets the benefit but in
reality it is really a serious problem because no one is accountable if wrong
beneficiaries are chosen or wrong projects are launched.
5. Lack of active participation of poor people :​The poverty alleviation programmes
were largely Government sponsored programs and lack participation of the people.
6. The strategy of PAPs was not linked with the overall development strategy and did
nothing to modify the overall functioning of the economy which is the root cause of
poverty.
Q How is the poverty line fixed in India at the national level?
In the estimation of poverty line consumption data is considered
In the estimation of cut off only private consumption expenditure is considered
In private consumption expenditure we considered not only food item but non food item as
well.
Frequencies are recorded against each class interval indicating a particular level of
consumption
Finally headcount ratio is worked out showing poor and non poor separately for the rural and
urban.
Q What is census ratio?
The percentage of population below poverty line in a country is called census ratio it is
calculated by dividing the total number of poor by population X hundred
Q What are the main programs introduce under minimum basic and amenities
1. Public Distribution system:- This system was launched in India in June 1997.it is a
food security system which is established by the government of India under Ministry
of consumer affair .under this system subsidized food and non food items are
distributed among the poor people food grains ,sugarcane ,kerosene etc are
distributed through the network of ration shops
2. Integrated Child Development Scheme :- This program was launched on 2nd
October 1975 ,that provide food , preschool education and Primary Health Care to
the children under 6 years and their mothers.These services are provided from
Anganwadi centres
3. Mid day meal scheme:- It was launched on 15th August 1995 as a National program
of mid day meal in schools . under the scheme cooked meal is provided to every
child studying in government and government aided primary schools .This meal
should contain 450 Calories and 12 gram of proteins .The objective behind the
scheme is to enhance enrollment ,retention ,attendance and simultaneously
improving nutrition level among the poor children.