Economics Chapter 3 Poverty as a Challenge – Notes & Study Material

Terminology

Antyodaya Anna Yojana (AAY) for ‘the poorest of poors’ and elders. ​ Global poverty scenario : There has been a substantial decline in global poverty. However, it is marked with great  regional differences. Poverty has declined more in China and South-East Asian countries. Inter-state disparities : The proportion of poor people is not the same in every state. In 20 states and union territories, the poverty ratio is less than the national average. Odisha and Bihar are the poorest states of India with poverty ratios of 47 per cent and 43 per cent respectively. The lowest incidence of poverty is found in Jammu and Kashmir with poverty ratio of just 3.5 per cent.  National Food for Work Programme (NFWP) was launched in 2004. ​ National Rural Employment Guarantee Act (NREGA) : It was passed in September 2005. The Act provides 100-days assured employment every year to every rural household in 200 districts. Pradhan Mantri Gramodaya Yojana (PMGY) : It was launched in 2000. ​ Poor : A poor person is the one who is lacking sufficient money to live at a standard considered comfortable or normal in a society. Some of the examples of poor people are : daily wage workers at construction sites, child labourers in dhabas, rickshaw-pullers, domestic servants, cobblers, beggars, etc. ​ Poverty : Poverty is a state or condition in which a person or community lacks the financial resources and essentials to enjoy a minimum standard of life and well-being that’s considered acceptable in society.​​Indicators of poverty : Nowadays, poverty is looked through other indicators like illiteracy level, lack of access to health care, lack of job opportunities, lack of access to safe drinking water, social exclusion sanitation, etc. All these can be termed as indicators of poverty.​ Social exclusion : The concept of social exclusion states that poor people have to live in poor surroundings excluded from neighbourhoods of people who are better off. ​​Poverty line : It is a measure based on levels of income and consumption by people to identify poor. The concept of poverty line is based on the fact that a person must have a minimum level of income and consumption to satisfy the basic needs of food, clothing, clean water, education and healthcare.​ ​Prime Minister Rojgar Yojana (PMRY) : The aim of this programme (which was started in 1993) was to create self-employment opportunities for educated unemployed youth in rural areas and small towns. ​ ​Rural Employment Generation Programme (REGP) : REGP was launched in 1995 to create self-employment opportunities in rural areas. ​ ​Swarnajayanti Gram Swarojgar Yojana (SGSY) : SGSY was started in 1999. The programme aims at bringing the assisted poor families above the poverty line. ​​

Poverty

When a person is unable to fulfill his basic needs of food, clothing and shelter, then he is said to be living in poverty. One of the biggest challenges of independent India has been to bring millions of its people out of abject poverty.

 

Poverty as Seen by Social Scientists

(i) Now poverty is looked through other social indicators like illiteracy level, lack of general resistance due to malnutrition, lack of access to healthcare, lack of job opportunities lack of access to safe drinking water, sanitation etc.

(ii) Analysis of poverty based on social exclusion and vulnerability is now becoming very common.

Poverty Line

(i) A common method used to measure poverty is based on the income or consumption levels.
 

(ii) A person is considered poor if his or her income or  consumption level falls below a given ‘minimum level necessary to fulfill basic needs.

 

 

Determination of Poverty Line

(i) While determining the poverty line in India a minimum level of food requirement, clothing, footwear, fuel and light, educational and medical requirement are determined for subsistence. These physical quantities are multiplied by their prices in rupees.

 

(ii) Poverty line is based on the desired calorie requirement. Food like cereals, pulses, milk, vegetables etc together provide these calories.  

These calories are calculated and converted into rupees and added to the value of other needs like clothing, footwear fuel, etc.

(iii) The accepted average calorie requirement in India 2,400 calories per person per day in rural areas and 2,100 calories per person per day in urban areas.

 

(iv) The calorie requirement of the people in rural areas is more than that of the people in urban areas because they do more physical work as compared to people in urban areas.

 

(v) Though calorie requirement is lower in urban areas as compared to rural areas, the amount fixed as poverty line for urban areas is higher because the cost of essential goods is higher in urban areas.

 

(vi) Poverty line is updated periodically (normally every 5 years) by conducting sample surveys carried out by National Sample Survey Organisation (NSSO).

 

Poverty Estimates 

There is a substantial decline in poverty rates in India from about 55% in 1973 to 36% in 1993. The proportion of people below poverty line further came down to about 26% in 2000.

 

Vulnerability 

Vulnerability to poverty is a measure which describes the greater probability of certain communities of becoming or remaining poor in the coming years.

 

Vulnerable Groups

(i) Poverty line is not the same for all social groups and economic categories in India.

 

(ii) Social groups which are most vulnerable to poverty are scheduled caste and scheduled tribe households.

 

(iii) Among the economic groups, the most vulnerable groups are the rural agricultural labour households and the urban casual labour households.

 

(iv) The average percentage for people below poverty line for all groups is 26.

 

(v) 51 out of 100 people belonging to scheduled tribes are not able to meet their basic needs. Similarly 50% of casual workers in urban areas are below poverty line, About 50% of the landless agricultural workers and 43% of scheduled castes are also poor.

 

(vi) Apart from these social groups, women, elderly people and female infants are systematically denied equal access to resources available to the family. This group is the poorest of the poor.

 

 

Inter State Disparities

(i) The proportion of the poor is not the same in every state.

 

(ii) State level poverty has declined but the success rate of reducing poverty varies from state to state.

 

(ii) In 20 states and union territories, the poverty ratio is less than the national average.

 

(iv) Poverty is still a serious problem in Orissa, Bihar, Assam, Tripura and Uttar Pradesh. Orissa and Bihar continue to be the two poorest states with poverty ratios of 47 and 43

per cent respectively.

 

(v) Urban poverty is also high in Orissa, Madhya Pradesh, Bihar and Uttar Pradesh.

 

(vi) There has been a significant decline in poverty in Kerala, Jammu and Kashmir, Andhra Pradesh, Tamil Nadu, Gujarat and West Bengal.

 

(vii) States like Punjab and Haryana have traditionally succeeded in reducing poverty with the help of high agricultural growth rates.

 

Global Scenario

(i) Extreme economic poverty-defined by the World Bank as living on less than $ 1 per day has fallen from 28% in 1990 to 21% in 2001.

 

(ii) Global poverty has declined but it is marked with regional differences.

 

(iii) Poverty declined in China and South-East Asian countries as a result of rapid economic growth and massive investment in human resource development.

 

(iv) In countries of South Asia (India, Pakistan, Sri Lanka, Nepal, Bangladesh and Bhutan) the decline has not been rapid.

 

(v) In sub Saharan Africa poverty rose from 41% in 1981 to 46% in 2001.

 

(vi) In Latin America the ratio of poverty remained the same.

(vii) Poverty has also resurfaced in some of the former socialist countries like Russia where it was non-existent earlier.

 

(viii) International poverty line means population living below $1 a day.

 

(ix) The Millennium Development Goals of the United Nations calls for reducing the proportion of people living on less than $ 1 a day to half the 1990 level by 2015.

 

Causes of Poverty

(i) One historical reason is the low level of economic development under the British colonial administration.

 

(ii) The policies of the colonial government ruined traditional handicrafts and discouraged development of industries like textiles.

 

(iii) Low rate of growth persisted, leading to less jobs and low incomes.

 

(iv) High growth rate of population and less availability of jobs led to unemployment leading to poverty.

(v) Lack of land resources has been one of the major cause of poverty in India.

 

(vi) To fulfill social obligations and observe religious ceremonies people in India including the poor spend a lot of money and have to take loans which they are unable to repay and fall into a debt trap leading to extreme poverty.

 

(vii) Small farmers need money to buy agricultural inputs like seeds fertilisers, pesticides etc. Since they hardly have any savings they have to take loans which they are unable to

repay and fall into a debt trap leading to extreme poverty.

 

 

Anti-Poverty Measures

(i) The current anti-poverty strategy of the government is based broadly on two plans

(a) Promotion of economic growth.

(b) Targeted anti-poverty programmes.

 

(ii) Economic growth has increased and helped significantly in the reduction of poverty. But it is not enough and is comparatively a slow process.

 

(iii) Growth in the agriculture sector is much below expectations and a large number of people are dependent on agriculture.

Targeted Anti-Poverty Programmes

Because of the slow reduction of poverty there was a need for targeted anti-poverty

programmes some of them are

 

(i) National Rural Employment Guarantee Act (NREGA) 2005

 (a) The act provides 100 days assured employment every year to every rural household in 200 districts. Later, the scheme will be extended to 600 districts.

 

(b) 1/3rd of the proposed jobs would be reserved for women.

 

(c) The central government will also establish National Employment Guarantee Funds. State Governments will establish State Employment Guarantee Funds for implementation of the scheme.

 

(d) If an applicant is not provided employment within 15 days he/she will be entitled to a daily unemployment allowance.

 

(ii) National Food for Work Programme (NFWP) 2004

 (a) This scheme was launched in 2004 in 150 most backward districts of the country.

 

(b) It is open to all who want to do manual unskilled labour.

 

(c) It is implemented as a 100 % centrally sponsored scheme and food grains are provided free of cost to the states.

 

(iii) Prime Minister Rozgar Yojana (PMRY) 1993

(a) This scheme was started in 1993 to create self-employment opportunities for educated  unemployed youth in rural areas and small towns.

 

(b) These unemployed youth are helped in setting up small business and industries.

 

(iv) Rural Employment Generation Programme (REGP) 1995

The aim of the programme is to create self employment opportunities in rural areas and small towns.

 

(v) Swarnajayanti Gram Swarozgar Yojana (SGSY) 1999

 The programme aims at bringing the assisted poor families above the poverty line by organising them into self help groups through a mix of bank credit and government

subsidy.

 

(vi) Pradhanmantri Gramodaya Yojana (PMGY) 2000 

Under this scheme additional central assistance is given to states for basic services such as primary health, primary education, rural shelter, rural drinking water and rural electrification.

 

(vii) Antyodaya Anna Yozana (AAY) 

Under this scheme the poorest of the poor were identified and 25 kg of food grains were made available at a highly subsidised rate of 2 per kg for wheat and 3 for rice.

 

The Challenges Ahead

(i) Poverty has declined in India but not upto the desired level.

 

(ii) Poverty reduction remains India’s most important challenge.

 

(iii) Certain social and economic groups are vulnerable to poverty.

 

(iv) The official definition of poverty is about minimum subsistence level of living rather than a reasonable level of living.

 

(v) Many scholars advocate that we must broaden the concept into human poverty.

(vi) Human poverty not only considers lack of money but also absence of education, healthcare or shelter and freedom from caste and gender discrimination.