Poverty

• Poverty is the state of one who lacks a usual or socially acceptable amount of money or material possessions.
• Poverty is said to exist when people lack the means to satisfy their basic needs
  • In this context, the identification of poor people first requires a determination of what constitutes basic needs
  • These may be defined as narrowly as “those necessary for survival” or as broadly as “those reflecting the prevailing standard of living in the community.”

• On the basis of social, economic and Political aspects, Poverty can be classified as follows:

Absolute poverty

• • Also known as extreme poverty or abject poverty, it involves the scarcity of basic food, clean water, health, shelter, education and information.
    • • Those who belong to absolute poverty tend to struggle to live and experience a lot of child deaths from preventable diseases
  • Absolute Poverty is usually uncommon in developed countries.
  • It was first introduced in 1990, the “dollar a day” poverty line measured absolute poverty by the standards of the world’s poorest countries; which in 2015, was changed to $1.90 a day, by the World Bank.
    • • This number is controversial; therefore each nation has its own threshold for absolute poverty line.

Relative Poverty

• • It is defined from the social perspective, that is living standard compared to the economic standards of population living in surroundings. Hence it is a measure of income inequality
  • Usually, relative poverty is measured as the percentage of the population with income less than some fixed proportion of median income
  • It is a widely used measure to ascertain poverty rates in wealthy developed nations.

Situational Poverty

• • It is a temporary type of poverty based on occurrence of an adverse event like environmental disaster, job loss and severe health problem
  • People can help themselves even with a small assistance, as the poverty comes because of unfortunate event

Generational Poverty

• • It is handed over to individual and families from one generation to the one.
  • This is more complicated, as there is no escape because the people are trapped in its cause and are unable to access the tools required to get out of it

Rural Poverty

• • This occurs in rural areas, where there are less job opportunities, less access to services, less support for disabilities and quality education opportunities
  • People here tend to live mostly on farming and other menial work available in the surroundings.

Urban Poverty

• • The major challenges faced by the Urban people, because of Poverty include:
  • Limited access to health and education
  • Inadequate housing and services
  • Violent and unhealthy environment because of overcrowding
  • Little or no social protection mechanism.

• The National Planning Committee of 1936 noted the appalling poverty of undivided India
  • There was lack of food, of clothing, of housing and of every other essential requirement of human existence.
• At the time of Independence the incidence of poverty in India was about 80% or about 250 million
• After Independence, the reports published estimated poverty rates in 1950s as cyclical and a strong function of each year’s harvest
  • In 1956-57, India’s poverty rates was computed to be 65%(215 million people)

Various expert groups constituted by the Planning Commission have estimated the number of people living in poverty in India

Working Group (1962)

• • The poverty line in India was quantified for the first time in 1962, by this Group in terms of a minimum requirement (food and non-food) of individuals for healthy living
  • The Group formulated separate poverty lines for rural and urban areas (₹20 and ₹25 per capita per month respectively in terms of 1960-61 prices) without any regional variation
  • The poverty line excluded expenditure on health and education, both of which, were to be provided by the State

Study by VM Dandekar and N Rath (1971)

• • Although this was not a study commissioned by the Planning Commission, the origins of India’s poverty line lie in the seminal work of these two economists
  • They first established the consumption levels required to meet a minimum calorie norm,  of 2,250 calories per capita per day
  • Unlike previous scholars who had considered subsistence living or basic minimum needs criteria as the measure of poverty line, they derived poverty line from the expenditure adequate to provide 2250 calories per day in both rural and urban areas
  • They found poverty lines to be Rs. 15 per capita per month for rural households and Rs. 22.5 per capita per month for urban households at 1960‐61 prices

Task Force on “Projections of Minimum Needs and Effective Consumption Demand” headed by Dr. Y. K. Alagh (1979)

• • Official poverty counts began for the first time in India based on the approach of this Task Force
  • Poverty line was defined as the per capita consumption expenditure level to meet average per capita daily calorie requirement of 2400 kcal per capita per day in rural areas and 2100 kcal per capita per day in urban areas
  • Based on 1973-74 prices, the Task Force set the rural and urban poverty lines at 49.09 and Rs.56.64 per capita per month at 1973-74 prices.

Lakdawala Expert Group (1993)

• • It did not redefine the poverty line and retained the separate rural and urban poverty lines recommended by the Alagh Committee at the national level based on minimum nutritional requirements.
  • However, it disaggregated them into state-specific poverty lines in order to reflect the inter-state price differentials
  • Over the years, this method lost credibility. The price data were flawed and successive poverty lines failed to preserve the original calorie norms

Tendulkar Expert Group (2009)

• • The Tendulkar Committee suggested several changes to the way poverty was measured
    • It recommended a shift away from basing the poverty lines from calorie norms used in all poverty estimations since 1979 and towards target nutritional outcomes instead
    • Instead of two separate poverty line baskets (PLBs) for rural and urban poverty lines, it recommended a uniform all-India urban PLB across rural and urban India.
    • It recommended using Mixed Reference Period (MRP) based estimates, as opposed to Uniform Reference Period (URP) based estimates used in earlier methods for estimating poverty.
    • It recommended incorporation of private expenditure on health and education while estimating poverty.
    • It validated the poverty lines by checking the adequacy of actual private consumption expenditure per capita near the poverty line on food, education and health by comparing them with normative expenditures consistent with nutritional, educational and health outcomes respectively.
    • Instead of monthly household consumption, consumption expenditure was broken up into per person per day consumption, resulting in the figure of Rs 32 and Rs 26 a day for urban and rural areas.
    • As a result, the national poverty line for 2011-12 was estimated at Rs. 816 per capita per month for rural areas and Rs. 1,000 per capita per month for urban areas

Rangrajan Committee (2014)

• • Due to widespread criticism of Tendulkar Committee approach as well as due to changing times and aspirations of people of India, Rangarajan Committee was set up in 2012
  • It reverted to the practice of having separate all-India rural and urban poverty line baskets and deriving state-level rural and urban estimates from these.
  • It recommended separate consumption baskets for rural and urban areas which include food items that ensure recommended calorie, protein & fat intake and non-food items like clothing, education, health, housing and transport.
  • This committee raised the daily per capita expenditure to Rs 47 for urban and Rs 32 for rural from Rs 32 and Rs 26 respectively at 2011-12 prices
  • Monthly per capita consumption expenditure of Rs. 972 in rural areas and Rs. 1407 in urban areas is recommended as the poverty line at the all India level
  • However, The government did not take a call on the report of the Rangarajan Committee

• Since the early 1950s, the government of India has initiated, sustained, and refined various planning schemes to help the poor attain self-sufficiency in acquisition of food and overcome hunger and poverty
• All the Five year plans introduced in India, had elements in them to reduce Poverty; of which the following Five year plans(FYP) had explicit provisions in them aimed at Poverty alleviation:

Fifth Plan (1974–1978)

• • • It laid stress on employment, poverty alleviation (Garibi Hatao), and justice
    • It also assured a minimum income of Rs. 40 per person per month calculated at 1972-73 prices

Seventh Plan (1985–1990)

• • • The thrust areas of the Seventh Five-Year Plan were: social justice, removal of oppression of the weak, using modern technology, agricultural development, anti-poverty programmes, full supply of food, clothing, and shelter, increasing productivity of small- and large-scale farmers, and making India an independent economy
    • From perspective of Poverty, it aimed at improving the living standards of the poor with a significant reduction in the incidence of poverty.

Eighth Plan (1992–1997)

• • • The major objectives included, controlling population growth, poverty reduction, employment generation, etc.

Ninth Plan (1997–2002)

• • • It offered strong support to the social spheres of the country in an effort to achieve the complete elimination of poverty

Tenth Plan (2002–2007)

• • • One of the main objectives of the plan, was Reduction of poverty rate by 5% by 2007

Eleventh Plan (2007–2012)

• • • It aimed at Rapid and Inclusive growth(Poverty reduction)

Twelfth Plan (2012–2017)

• • • The government intended to reduce poverty by 10% during the tenure of the plan

The major Poverty Alleviation Programmes in India since Independence are as follows:

India embarked on economic reforms 1991 – the positive impacts of which, on poverty are as follows:

• • A World Bank study reveals that poverty declined by 1.36 percentage points per annum after 1991,  compared to that of 0.44 percentage points per annum prior to 1991
    • Their study shows that among other things, urban growth is the most important contributor to the rapid reduction in poverty even though rural areas showed growth in the post-reform period
  • The second conclusion is that in the post-reform period, poverty declined faster in the 2000s than in the 1990s
    • The official estimates based on Tendulkar committee’s poverty lines shows that poverty declined only 0.74 percentage points per annum during 1993-94 to 2004-05
    • But poverty declined by 2.2 percentage points per annum during 2004-05 to 2011-12. Around 138 million people were lifted above the poverty line during this period
    • This indicates the success of reforms in reducing poverty
  • The poverty of Scheduled Castes and Scheduled Tribes also declined faster in the 2000s.
    • The Rangarajan committee report also showed faster reduction in poverty during 2009-10 to 2011-12
  • Consequentially, Higher economic growth, agriculture growth, rural non-farm employment, increase in real wages for rural labourers, employment in construction and programmes like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) contributed to higher poverty reduction in the 2000s compared to the 1990s.

Other negative impacts of LPG relating to poverty, that need to be accounted for, are as follows:

• • Poverty declined faster but inequality increased in the post-reform period
  • India still has 300 million people below the poverty line
  • The Gini coefficient measured in terms of consumption for rural India increased marginally from 0.29 in 1993-94 to 0.31 in 2011-12
    • There was a significant rise in the Gini coefficient for urban areas from 0.34 to 0.39 during the same period

Heavy pressure of population

• • India’s population was 84.63 crores in 1991 and became 102.87 crores in 2001
  • Rapid population growth causes excessive sub-division and fragmentation of holdings. As a result, per capita availability of land has greatly declined and households do not have access to sufficient land to produce enough output and income for them.
  • Rapid growth in population in India since 1951 has caused lower growth in per capita income causing lower living standards of the people

Unemployment and under employment

• • Due to continuous rise in population, there is chronic unemployment and under employment in India.
  • There is educated unemployment and disguised unemployment, and Poverty is just a reflection of this aspect

Lack of Inclusive Economic Growth

• • The first important reason for mass poverty prevailing in India is lack of adequate economic growth in India
  • Despite increase in National Income and Savings rate since independence, poverty in India did not reduce sufficiently as:
    • industrial growth did not generate much employment opportunities
    • Growth strategy mainly benefitted the rich, than aiding the poor
    • Capital intensive and labour-displacing technology was adopted in the growing industries. As a result, unemployment and underemployment increased
    • Besides, due to the increase in income inequalities during this period, rise in average per capita income could not bring about significant rise in per capita income of the weaker sections of the society
    • Further, trickledown effect of overall economic growth was operating only to a small extent

Sluggish Agricultural Performance and Poverty

• • • The experience of Punjab and Haryana shows that, the agricultural growth through use of new high yielding technology (during Green revolution), poverty ratio can be significantly reduced
    • However, in various states of the country such as Orissa, Bihar, Madhya Pradesh, Assam, East Uttar Pradesh, where poverty ratio is still very high; new high-yielding technology has not been adopted on a significant scale and as a result agricultural performance has not been good. As a result, poverty prevails to a larger extent in them.
    • Further, Indian policy makers have neglected public sector investment in agriculture, particularly irrigation
      • As a result, irrigation facilities whose availability ensures adoption of new high-yielding technology and leads to higher productivity, income and employment, are available in not more than 33 per cent of cultivable land
      • As a result, many parts of the country remain semi-arid and rain-fed areas, where agricultural productivity, income and employment are not sufficient to ensure significant reduction in poverty

Non-implementation of Land Reforms

• • • • Equitable access to land is an important measure of poverty reduction
        • Access to adequate land, a productive asset, is necessary for fuller employment of members of an agricultural household
      • Most of the rural poor are agricultural labourers (who are generally landless) and self-employed small farmers owning less than 2 acres of land
        • They also are unable to find employment throughout the year. As a result, they remain unemployed and under-employed for a large number of days in a year

Inflation and Food Prices

• • • • • Inflation, especially rise in food prices, raises the cost of minimum consumption expenditure required to meet the basic needs. Thus, inflation pushes down many households below the poverty line

As assessment of Poverty Alleviation programmes, state three major areas of concern which prevent their successful implementation

• • • • • Due to unequal distribution of land and other assets, the benefits from direct poverty alleviation programmes have been appropriated by the non-poor
        • Compared to the magnitude of poverty, the amount of resources allocated for these programmes is not sufficient
        • The programmes depend mainly on government and bank officials for their implementation. Since such officials are ill motivated, inadequately trained, corruption prone and vulnerable to pressure from a variety of local elites, the resources are inefficiently used and wasted
      • There is also non-participation of local level institutions in programme implementation
      • Overlapping of similar government schemes is a major cause of ineffectiveness as it leads to confusion among poor people and authorities and the benefits of the scheme do not reach the poor.
      • The poverty alleviation program may not properly identify and target the exact number of poor families in rural areas. As a result, some of the families who are not registered under these programs are benefited by the facilities rather than the eligible ones

Shortage of Capital and Able Entrepreneurship

• • • • • Capital and able entrepreneurship have important role in accelerating the growth. But these are in short supply making it difficult to increase production significantly, when compared to other developing countries

Social Factors

• • • • • The social set up is still backward and is not conducive to faster development.
        • Laws of inheritance, caste system, traditions and customs are putting hindrances in the way of faster development and have aggravated the problem of poverty

More Citizen participation

• • Without the active participation of the poor, successful implementation of any programme is not possible
  • Poverty can effectively be eradicated only when the poor start contributing to growth by their active involvement in the growth process.
    • This is possible through a process of social mobilisation, encouraging poor people to participate to get them empowered

Accelerating Economic Growth

• • • While efforts should be made to accelerate economic growth, the use of capital-intensive technologies imported from the Western Countries should be avoided
      • Instead, we should pursue labour-intensive path of economic growth.
      • Such monetary and fiscal policies should be adopted that provide incentives for using labour-intensive techniques

Agricultural Growth and Poverty Alleviation

• • The higher agricultural growth leads to lower poverty ratio. The expe­rience of Punjab and Haryana has confirmed this inverse relation between agriculture growth and poverty.
    • It is also true that, all India level employment generated by new green revolution technology has been cancelled out by increasing mechanisation of agricultural operations in various parts of a country
    • Thus, in the light of the finding of zero employment elasticity of agricultural output, positive impact of agricultural growth on the incomes of small farmers and, more particularly on the wage income of agricultural labourers, cannot be denied
    • Hence, the need to balance between the two aspects
  • Also, there is need to increase public investment in infrastructure and ensure adequate access to credit to the small farmers

Accelerating Human Resource Development

• • Focus on Education, Health and Skill development, not only generates a good deal of employment opportunities but also raises productivity and income of the poor
  • Hence, the need of efficient implementation of schemes like Pradhan Mantri Kaushal Vikas Yojana, Sarva Shiksha Abhiyan (SSA) etc, going forward

Growth of Non-Farm Employment

• • For reduction of poverty, growth of non-farm employ­ment in the rural areas is of special importance.
  • Non-farm employment can be created in marketing (i.e., petty trade), transportation, handicrafts, dairying, and forestry, processing of food and other agricultural products, repair workshops, etc.

Providing access to more Assets to vulnerable sections

• • Rapid growth of population after independence has led to greater sub- di­vision and fragmentation of agricultural holdings, and this has resulted in lack of employment opportunities for agricultural labourers
  • Redistribution of land through effective measures, such as implementation of tenancy reforms so as to ensure security of tenure and fixation of fair rent could be an important measure of reducing rural poverty

Poverty alleviation has always been accepted as one of India’s main challenges by the policy makers

• There is improvement in terms of per capita income and average standard of living; even though some progress towards meeting the basic needs has been made; But when compared to the progress made by many other countries, our performance has not been impressive
• Hence, the need of actions to enable the fruits of development to reach all sections of the population