Poverty as a Challenge
Economics Chapter 3
NOTES
SUB TOPICS:
 Meaning of Poverty
 Poverty estimation in India
 Causes of Poverty
 Anti-Poverty measures
 The challenges ahead
Meaning of Poverty:
 Poverty is a condition in which a person lacks the financial resources and essentials things to
enjoy minimum standards of life.
 Poor people can be landless labourers in villages, jhuggi and slum dwellers in cities and
towns, daily wage workers at construction sites, child , workers in dhabas or even beggars.
 India has the largest single concentration of the poor in the world, where every fourth person
is poor.
Two Typical Cases Of Poverty
The following two cases show the many dimensions of poverty, including lack of proper food,
shelter, healthcare, education as well as clean water and sanitation. They also show lack of a
regular means of livelihood.
(i) Urban Case
Ram Saran is a daily wage labourer in a flour mill near Ranchi in Jharkhand. He earns around Rs.
1500 per month when employed. He supports his family of 6 persons, besides sending some
money to his elderly parents. His wife and son also work, but none of his 4 children can attend
school. The family lives in a one-room rented house on the outer areas of the city; The children
are undernourished, have very few clothes or footwear and no access to healthcare.
ii) Rural Case
Lakha Singh is a landless labourer in a small village near Meerut in Uttar Pradesh. By doing odd
jobs for farmers, he earns Rs. 50 per day. Sometimes, he gets some foodgrain or other items
instead of cash. He is not literate and his family of 8 people lives in a kuchha hut near the edge of
the village. They have no access to healthcare, cannot afford new clothes or even soap or oil.
Poverty Analysis by Social Scientists
Social scientists, analyze poverty from many aspects besides levels of income and consumption.
These aspects are
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Poor level of literacy
Malnutrition leading to poor resistance to disease
Lack of access to healthcare
Lack of job opportunities
Lack of access to sanitation and safe drinking water and so on.
Indicators for Poverty
The most commonly used indicators for poverty analysis are social exclusion and vulnerability.
Social Exclusion
 A social exclusion means living in a poor surrounding with poor people, excluded from
enjoying Social equality of better off people in the better surrounding. Social exclusion can
be a cause as well as a result of poverty which leads to exclusion of individuals or groups
from facilities, benefits and opportunities that others enjoy.
 In India, the caste system is based on social exclusion. People belonging to certain caste
were prevented from enjoying equal facilities, benefits and opportunities. This caused more
poverty than the lower income.
Vulnerability
 Vulnerability to poverty is a measure, which describes the greater probability of certain
communities e.g. members of a backward caste or individuals e.g. widow, physically
handicapped person of becoming or remaining poor in the coming time.
 Vulnerability is determined by various options available to different communities in terms of
assets, education, job, health, etc and analyse their ability to face various risks like natural
disasters. The group which face greater risk at the time of natural calamity are called
vulnerable groups.
Poverty Line
Poverty line is an imaginary line used by any country to determine its poverty. It varies from
time to time, place to place and country to country.
The most common method of determining poverty is income or consumption levels i.e. people
will be considered poor if their income or consumption level falls below a given ‘minimum
level’ (poverty line) necessary to fulfil the basic needs.
Poverty Line Estimation in India
 To measure poverty, a common method is generally used which is based on income &
consumption levels. If a person is unable to satisfy his/her basic needs then he or she is
considered as poor. Poverty line also varies with time and place. For each country, poverty
line is considered different.
 Basic amenities like food requirements, clothing, footwear, fuel, education, light & the
medical requirements are determined for measuring poverty.
 Food items like cereals, pulses, vegetables, oil and sugar together provide calories to body.
Calorie requirement varies with age, sex and type of work that a person does.
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In India, the average calorie requirement is 2400 calories / day in rural areas and 2100
calories / day in urban areas. People living in rural areas are also associated with more heavy
physical work hence that calorie requirement is higher in people living in rural areas in
comparison to urban areas.
 The National Sample Survey Organisation (NSSO) is responsible for doing surveys to
determine the standard of the poverty line in the country.
Vulnerable Groups in India
 The proportion of people who are below the poverty line is not equal for all the social groups
and the economic categories in the country. Some groups are more vulnerable than other.
These are Scheduled Castes and the Scheduled Tribe households.
 Also, among the economic groups, agricultural labourers & the urban casual labours
are more vulnerable.
 In India, out of 100 poor people, 43 of them are of Scheduled Tribes. 34% of casual urban
workers are also below the poverty line. 23% percent of the Scheduled Castes community
are also poor.
 Recent studies have shown that except Scheduled Tribe households the other groups of
Scheduled Castes, rural agricultural labourers and the urban casual labourers have seen a
decline in poverty since 1990.
 In poor families, some people also suffer more than others. In some cases, women, female
infants and elderly people are denied equal access to resources available to the family.
Inter-State Disparities
 The proportion of poor people is not the same in every state. Recent estimates show while
the all India HCR (Head Count Ratio) was 21.9% in 2011-12.
 States like Madhya Pradesh, Assam, Uttar Pradesh, Bihar and Odisha had above all India
poverty level.
 Bihar and Odisha continue to be the two poorest states with poverty ratios of 33.7% and
37.6% respectively. Along with rural poverty, urban poverty is also high in Odisha, Madhya
Pradesh, Bihar and Uttar Pradesh.
 In states like Kerala, Jammu and Kashmir, Andhra Pradesh, Tamil Nadu, Gujarat, West
Bengal, there is a significant decline in poverty. The states successful in reducing poverty
have adopted different methods for doing so.
 Some examples are:
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Punjab and Haryana had high agricultural growth rates due to the effects of the Green
Revolution.
Kerala has developed its human resources by investing more in education and health.
West Bengal has reduced poverty by implementing land reforms.
Public distribution of foodgrains at subsidised prices in Andhra Pradesh and Tamil
Nadu has helped in poverty reduction.
Jammu and Kashmir have generated wide-ranging economic activities all across the
state and converted potential in various sectors into employment opportunities.
Global Poverty Scenario
The proportion of people in different countries living in extreme economic poverty— defined by
the World Bank as living on less than $1.90 per day—has fallen from 36 per cent in 1990 to 10
per cent in 2015 but still there are vast regional differences. These are stated below:
(World Bank: It is an international organisation dedicated to providing financing, advice
and research to developing nations to aid their economic advancement.)
 Poverty declined substantially in China and Southeast Asian countries as a result of rapid
economic growth (it is a term which defines an increase in real output of a country) and
massive investments in human resource development.
 Number of poors in China has come down from 88.3 per cent in 1981 to 14.7 per cent in
2008 to 0.7 per cent in 2015.
 In the countries of South Asia (India, Pakistan, Sri Lanka, Nepal, Bangladesh, Bhutan) the
decline has also been rapid 34 per cent in 2005 to 16.2 per cent in 2013. With decline in the
percentage of the poor, the number of poor has also declined significantly from 510.4
million in 2005 to 274.5 million in 2013.
 In Sub-Saharan Africa, poverty in fact declined from 51 per cent in 2005 to 41 per cent in
2015 (see graph 3.3).
 In Latin America, the ratio of poverty has also declined from 10 per cent in 2005 to 4 per
cent in 2015 (see graph 3.3).
 Poverty has also resurfaced in some of the former socialist countries like Russia, where
officially it was non-existent earlier.
 The new sustainable development goals of the United Nations (UN) proposes ending
poverty of all types by 2030.
Causes of Poverty: There are various reasons for the prevalence of widespread poverty in
India. Some of these are
a) Economic exploitation under the British colonial rule can be seen as one of the reasons. The
policies of the British government ruined traditional cottage, handicrafts & textile industries.
The low growth rate was also persistent till the 1980s. There were low job opportunities and
incomes accompanied by high population growth. The growth rate per capita income was
also extremely low.
b) With the dawn of the Green Revolution in the country, new job opportunities were created
also present in the agricultural sector. The problem with this was that it was limited to some
parts of the country. There were industries in the public & private sectors which provided
some jobs but were unable to provide jobs to all the seekers. People who were unable to find
proper jobs started working as construction workers, vendors, domestic servants, rickshaw
pullers, etc. These people then could not afford proper housing and hence started living in
slums.
c) Another reason for this high poverty rates in the country has been huge income inequalities.
This was because of the unequal distribution of land & resources. In India, there is also a
lack of proper land resources and this has also been a major cause of poverty.
d) Proper implementation of government policies will improve the conditions of povertystricken people.
e) Farmers in the country also require money to buy agricultural inputs like fertilizers,
pesticides, seeds etc. They used to borrow money which they were then unable to repay
because of poverty. When they are unable to repay the loan, they become victims of the
indebtedness which is both a cause and effect of poverty.
f)
Money is then spent in the country by both the poor and the non-poor to fulfil social and
religious obligations and ceremonies. This spent money could be used for something else in
a meaningful manner.
Anti-Poverty Measures:
Removal of poverty has been one of the major objectives of
Indian developmental strategy. The current anti-poverty strategy of the government is based
broadly on two planks
(1) Promotion of economic growth: The government has promoted economic growth during the
last few years. Economic growth was low till the 1980s but has increased significantly since then,
causing significant poverty reduction. There is strong linkage between economic growth and
poverty reduction. Economic growth widens opportunities and provides the resources needed to
invest in human development.
High economic growth encourages people to send their children (including the girl child) to
school with hope of better economic returns from investing in education.
The poof may not take direct advantage of economic growth. Due to lack of growth in the
agricultural sector, the large number of people remain poor in rural areas.
(2) Targeted anti-poverty programmes: The government introduced targeted anti-poverty
programmes starting from 1990. The results of these programmes have been mixed due to lack of
proper implementation and improper targeting. Also, some schemes overlap others. Thus, the
benefits of these schemes are not fully reaching the deserving poor.
There were some schemes formulated aimed at reducing poverty. These are:
1) The MGNREGA or rural employment act of 2005. This act provided 100 days of wage
employment to every household in rural areas to ensure their livelihood security. It proposed
that one-third of job vacancies would be reserved for women. It aimed to manage situations
of deforestation, drought and soil erosion.
2) Pradhan Mantri Gramodaya Yojana of 2000 was started to assist states for services like
primary health and education, rural shelter, rural drinking water and rural electrification.
3) In 1999, the Swarna Jayanti Gram Swarozgar Yojana was also started which aimed to
assist low-income families in coming above the poverty line by organising them into selfreliant groups by the help of bank credit and government subsidy.
4) Rural Employment Generation Programme - Launched in 1995 in order to create selfemployment opportunities in the small towns, and rural areas.
5) In 1993, Prime Minister Rozgar Yojana was launched. This initiative aimed to create as
well as provide employment opportunities in rural areas and small towns.
The Challenges Ahead : Poverty has certainly declined in India. But despite the progress,
poverty reduction remains India’s most compelling challenge. Wide disparities in poverty are
visible between rural and urban areas and among different states.
Further, poverty should include not only the matter of the adequate amount of food but other
factors like education, healthcare, shelter, job security, gender, equality, dignity and so on.
These give us the concept of human poverty. Poverty reduction is expected to be lower in the
next 10-15 years.
In addition to anti-poverty measures, the government should focus on the following to reduce
poverty.
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Higher economic growth.
Universal free elementary education.
The decrease in population growth.
Empowerment of women and weaker sections.
 Students can refer the following sites for the notes and sample papers.
 https://cbseacademic.nic.in , https://deekshalearning.com