Poverty and Developmental Issues
Meaning of ‘Poverty’
Definition
- 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.”
Classification of Poverty
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.
- Also known as extreme poverty or abject poverty, it involves the scarcity of basic food, clean water, health, shelter, education and information.
- Absolute poverty
- 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.
- Relative Poverty
Poverty in India at the eve of Independence
- 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 Methodologies proposed by various committees for calculation of Poverty
Pre-Independence Poverty Estimation
- Dadabhai Naoroji in his book, “Poverty and Unbritish Rule in India” made the earliest estimation of poverty line (₹16 to ₹35 per capita per year)
- This estimation was based on the cost of a subsistence or minimum basic diet
- National Planning Committee’s (1938)
- This Committee set up under the chairmanship of Jawaharlal Nehru suggested a poverty line (ranging from ₹15 to ₹20 per capita per month) based on a minimum standard of living
- Dadabhai Naoroji in his book, “Poverty and Unbritish Rule in India” made the earliest estimation of poverty line (₹16 to ₹35 per capita per year)
- The Bombay Plan (1944)
- Bombay Plan1 proponents suggested a poverty line of ₹75 per capita per year, which was much more modest than that of the National Planning Committee
- The Bombay Plan (1944)
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
- The Tendulkar Committee suggested several changes to the way poverty was measured
- 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
Current Poverty level in India
- In 2013, based on the Tendulkar poverty line, Planning Commission released poverty data for 2011-12.
- The number of poor in the country was pegged at 269.8 million or 9% of the population
Some developments in recent years relating to Poverty Estimates are as follows:
- Task Force set up by Niti Ayog
- The task force suggested four options for tracking the poor.
- Continue with the Tendulkar poverty line
- Switch to the Rangarajan or other higher rural and urban poverty lines;
- Track progress of the bottom 30% of the population;
- Track progress along specific components of material poverty such as nutrition, housing, drinking water, sanitation, electricity and connectivity.
- The task force suggested four options for tracking the poor.
- Updation of SECC Data
- Issue arises whether Socio Economic Caste Census (SECC) offer an alternative to Poverty line.
- SECC allows schemes to be targeted for each of the inclusion criteria or deprivation indicator.
- To an extent, SECC data is more robust and in tune with ground reality than the traditional poverty line, which is based on consumption expenditure of households – Poverty line basket(PLB)
- The SECC data is also extremely granular, with locality and house number as well as details of family members, occupation, level of education, kind of house, ownership of selected gadgets, among other things. The SECC is therefore useful for identifying potential beneficiaries of social programs such as affordable housing, electricity, water and toilets but not for tracking overall poverty over time
- Multidimensional Poverty Index by Niti Ayog
- NITI Aayog has constituted a Multidimensional Poverty Index Coordination Committee (MPICC) with members from relevant Line Ministries and Departments
- The exercise is aimed at compelling states to take aggressive poverty reductions measures by competing with each other.
- The results are also expected to feed into the UNDP’s Multidimensional Poverty Index (MPI).
Poverty Alleviation programmes since Independence
- 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
- Fifth Plan (1974–1978)
The major Poverty Alleviation Programmes in India since Independence are as follows:
| Scheme/Programme | Year | Objective/Provisions |
| FOOD RELATED | ||
| Public Distribution System | Pre-Independence | · This scheme was first started in 1945, during the Second World War, and was launched in the current form after 1947 · After he increase in Agricultural production after Green Revolution, the outreach of PDS has been extended to tribal blocks, and areas of high poverty incidence in the 1970s and 1980s
|
| Revamped Public Distribution System | 1992 | · The Revamped PDS was launched in 1992, with a view to strengthen and streamline the PDS as well as to improve its reach in far-flung, hilly, remote and inaccessible areas where substantial section of poor live |
| Annapurna scheme | 1999-2000 | · This scheme was started to provide food to senior citizens who cannot take care of themselves and are not under the National Old Age Pension Scheme (NOAPS), and who have no one to take care of them in their village · The scheme mostly targeted groups of ‘poorest of the poor and ‘indigent senior citizens’ |
| Antyodaya Anna Yojana (AAY) | 2000 | · This scheme provides foodgrains at a highly subsidized rate of Rs.2.00 per kg for wheat and Rs.3.00 per kg for rice to the poor families under the Targeted Public Distribution System (TPDS) |
| Targeted Public Dsitribution System(TPDS) | 1997 | · In 1997 RPDS became TPDS (Targeted PDS) which established Fair Price Shops for the distribution of food grains at subsidized rates · The primary goal is to distribute essential food commodities like rice, wheat and kerosene at highly subsidized rates to the people living below the poverty line. This poverty alleviation scheme helps in addressing the issue of food insecurity in rural areas of India. |
| EMPLOYMENT RELATED | ||
| Integrated Rural Development Programme (IRDP) | 1978 | · It was among the world’s most ambitious programs to alleviate rural poverty by providing income-generated assets to the poorest of the poor · Major objective of the scheme was to raise families of identified target group below the poverty line by creating sustainable opportunities for self-employment in the rural sector |
| Rural Landless Employment Guarantee Programme | 1983 | · This was launched to generate additional employment opportunities for the landless people in the villages. |
| Jawahar Rozgar Yojna | 1989 | · This was launched with the objective of providing 90-100 Days Employment per person particularly in backward districts · People below Poverty Line were main targets |
| Sampoorna Gramin Rozgar Yojana (SGRY) | 2001 | · This was a scheme launched by the Government of India to gain the objective of providing gainful employment for the rural poor · It was launched by merging the provisions of Employment Assurance Scheme (EAS) and Jawahar Gram Samridhi Yojana (JGSY) · The programme is self-targeting in nature and aims to provide employment and food to people in rural areas who lived below the poverty line |
| Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) | 2005 | · It aims to enhance livelihood security in rural areas by providing at least 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work · Another aim of MGNREGA is to create durable assets (such as roads, canals, ponds and wells) · Through the process of providing employment on works that address causes of chronic poverty such as drought, deforestation and soil erosion, the Act seeks to strengthen the natural resource base of rural livelihood and create durable assets in rural areas. Effectively implemented, MGNREGA has the potential to transform the geography of poverty |
| National Rural Livelihood Mission | 2011 | · Launched with the objective “To reduce poverty by enabling the poor households to access gainful self- employment and skilled wage employment opportunities resulting in appreciable improvement in their livelihoods on a sustainable basis, through building strong and sustainable grassroots institutions of the poor.” |
| National Urban Livelihood Mission | 2013 | · It focuses on organizing urban poor in Self Help Groups, creating opportunities for skill development leading to market-based employment and helping them to set up self-employment ventures by ensuring easy access to credit |
| INCENTIVES/SUBSIDIES RELATED | ||
| Pradhan Mantri Gramin Awaas Yojana | 1985 | · The scheme aimed at creating 20 lakh housing units, by giving out loans to people at subsidised rates to make houses · It improved the standard of living of rural areas: health, primary education, drinking water, housing, and roads; thereby alleviating some aspects of poverty and address the issue of development in the rural areas |
| National Maternity Benefit Scheme | 1999-2000 | · It is for families below the poverty line · This scheme provides a sum of ₹6000 to a pregnant mother in three instalments · The scheme was updated in 2005-06 into Janani Suraksha Yojana |
| Jawahar Gram Samridhi Yojana (JGSY)
| 1999 | · The main aim of this program was the development of infrastructure rural areas like roads, schools and hospitals · Its secondary objective was to give out sustained wage employment |
| Rashtriya Swasthya Bima Yojana | 2008 | · Rashtriya Swasthya Bima Yojana (RSBY, literally “National Health Insurance Programme”,is a government-run health insurance programme for the Indian poor. The scheme aims to provide health insurance coverage to the unrecognised sector workers belonging to the BPL category and their family members shall be beneficiaries under this scheme |
| Pradhan Mantri Ujjwala Yojana (PMUY) | 2016 | · It was launched to distribute 50 million LPG connections to women of Below Poverty Line (BPL) families. |
Impact of LPG reforms on reducing poverty in India
- 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.
- 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
- 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
Reasons why Poverty still exists in India
- 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
- Equitable access to land is an important measure of poverty reduction
- 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
- Ex: Consider the case of Karnataka, where the Suvarna Aarogya Suraksha Scheme (SASS) and the Rashtriya Swasthya Bima Yojana (RSBY) is being implemented
- The Suvarna Aarogya Suraksha Scheme potentially overlaps with the health insurance schemes for handloom weavers and handicraft artisans supported by the Central Government.
- It is also likely that some of the members of cooperative societies may also belong to BPL families covered under SASS and the RSBY
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
Actions required to address the prevalent issue of Poverty in India
- 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
- While efforts should be made to accelerate economic growth, the use of capital-intensive technologies imported from the Western Countries should be avoided
- 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
- 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.
- 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
On the whole, 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, because of which India is ranked 66 out of 109 countries in the Global Multi Dimensional Poverty Index
- Hence, the need of actions to enable the fruits of development to reach all sections of the population
