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Poverty
Poverty is general scarcity or the state of one who lacks a certain amount of material possessions
or money. It is a multifaceted concept, which includes social, economic, and political elements.
1. Absolute Poverty - Absolute poverty or destitution refers to the lack of means necessary to
meet basic needs such as food, clothing and shelter. Absolute poverty is synonymous with
destitution and occurs when people cannot obtain adequate resources (measured in terms of
calories or nutrition) to support a minimum level of physical health. Absolute poverty means
about the same everywhere, and can be eradicated as demonstrated by some countries.
2. Relative Poverty - Relative poverty occurs when people in a country do not enjoy a certain
minimum level of living standards as compared to the rest of the population and so would vary
from country to country, sometimes within the same country. Relative poverty occurs
POVERTY IN INDIA.
Poverty in India is an important issue in India, despite having one of the fastest growing
economies in the world, clocked at a growth rate of 7.6% in 2015, and a sizable consumer
economy: Deutsche Bank Research estimated that there are nearly 300 million people
who are middle class. In 2015, around 170 million people, or 12.4%, lived in poverty
The different definitions and different underlying small sample surveys used to determine
poverty in India, have resulted in widely different estimates of poverty from 1950s to
2010s. In 2012, the Indian government stated 22% of its population is below its
Program, estimated 23.6% of Indian population, or about 276 million people, lived below
millions or 21.9% people out of 1.2 billion of Indians lived below poverty line of $1.25 in
2011-2012.
According to Global Wealth Report 2016 compiled by Credit Suisse Research Institute,
India is the second most unequal country in the world with the top one per cent of the
a. Before Independence
The 19th century and early 20th century saw increasing poverty in India during the
colonial era. Over this period, the colonial government de-industrialized India by
importing these from Britain's expanding industry with 19th century industrial
innovations, while simultaneously encouraging conversion of more land into farms, and
Eastern regions of India along the Ganges river plains, such as those now known as
eastern Uttar Pradesh, Bihar, Jharkhand and West Bengal, were dedicated to producing
poppy and opium, which were then exported to southeast and east Asia particularly
China, with the trade an exclusive monopoly first of East India Company, and later the
colonial British institutions. This shift from Industry to Agriculture was the primary
It further led to the decrease in the fertility of land thereby facilitating frequent
These colonial policies moved unemployed artisans into farming, and transformed India
as a region increasingly abundant in land, unskilled labour and low productivity, and
scarce in skilled labour, capital and knowledge. On an inflation adjusted 1973 Rupee
basis, the average income of Indian agrarian labourer was Rs. 7.20 per year in 1885,
against an inflation adjusted poverty line of Rs. 23.90 per year. Thus, not only was the
average income below poverty line, the intensity of poverty was severe.
After Independence
b. 1950s
Professor. Minhas disagreed with the practice of using calories as the basis for poverty
estimation and proposed a poverty line based on real expenditure per year (Rs 240 per annum).
In 1956-57, a good harvest year, he computed India's poverty rate to be 65% (215 million
c. 1960s
A Working Group was formed in 1962 to attempt to set a poverty line for India. This Working
Group used calories required for survival, and income needed to buy those calories in different
parts of rural India, to derive an average poverty line of Rs. 20 per month at 1960-61 prices.
Poverty Rate - 41%
d. 1970s
Prof. Dandekar and Rath in 1971 used a daily intake of 2,250 calories per person to define the
poverty line for India. Using NSSO data regarding household expenditures for 1960–61, they
determined that in order to achieve this food intake and other daily necessities, a rural dweller
required an annual income of ₹ 170.80 per year (₹ 14.20 per month, adjusted to 1971 Rupee). An
urban dweller required ₹ 271.70 per year (₹ 22.60 per month). They concluded from this study
that 40 percent of rural residents and 50 percent of urban residents were below the poverty line in
1960–61.
e. 1990s
There are wide variations in India's poverty estimates for 1990s, in part from differences in the
methodology and in the small sample surveys they poll for the underlying data. A 2007 report for
example, using data for late 1990s, stated that 77% of Indians lived on less than ₹ 20 a day
(about US$0.50 per day). In contrast, Datt estimated India's national poverty rate to be 35% in
e. 2000s.
The Planning Commission of India determined that the poverty rate was 39%.
f. 2015
In their annual report of 2012, Reserve Bank of India names the state of Goa as having the least
poverty of 5.09% while national average stands at 21.92%. As per the Report the state in India
1. Climatic factors:
Climatic conditions constitute an important cause of poverty. The hot climate of India reduces
the capacity of people especially the ruralites to work for which production severely suffers.
Frequent flood, famine, earthquake and cyclone cause heavy damage to agriculture. Moreover,
absence of timely rain, excessive or deficient rain affect severely country’s agricultural
production.
2. Demographic Factors
Rapid growth of population aggravates the poverty of the people. The growth of population
exceeds the rate of growth in national income. Population growth not only creates difficulties in
the removal of poverty but also lowers the per capita income which tends to increase poverty.
The burden of this reduction in per capita income is borne heavily by the poor people. Population
growth at a faster rate increases labour supply which tends to lower the wage rate.
4. Economic causes:
Poverty and real income are very much interrelated. Increase in real income leads to reduction of
the magnitude of poverty. So far as agricultural sector is concerned, the farmers even today are
following the traditional method of cultivation. Hence there is low agricultural productivity
Land and other forms of assets constitute sources of income for the ruralites. But, unfortunately,
there has been unequal distribution of land and other assets in our economy. The size-wise
distribution of operational holdings indicates a very high degree of concentration in the hands of
At present consequent upon industrialization new factories and industries are being set up in
rural areas. Village industries fail to compete with them in terms of quality and price. As a result
they are closed down. The workers are thrown out of employment and lead a life of poverty.
workers are the small and marginal farmers and the landless agricultural labourers.
5. Social causes:
(i) Education:
Education is an agent of social change and egalitarianism. Poverty is also said to be closely
related to the levels of schooling and these two have a circular relationship. The earning power is
endowed in the individual by investment in education and training. But this investment in people
takes away money and lack of human investment contributes to the low earning capacity of
individuals.
In this way people are poor because they have little investment in themselves and poor people do
Caste system in India has always been responsible for rural poverty. The subordination of the
low caste people by the high caste people caused the poverty of the former. Due to rigid caste
system, the low caste people could not participate in the game of economic progress.
A Shudra was not allowed to become a trader and a Vaisya could earn his bread only by trade.
Birth would decide their occupation and their economic fate. K. V. Verghese rightly observes,
“Caste system acted as a springboard for class exploitation with the result that the counterpart of
the poverty of the many is the opulence of the few. The second is the cause of the first.”
version of the erstwhile Jawahar Rozgar Yojana (JRY). It was started on 1 April 1999. The main
aim of this programme was development of rural areas. Infrastructure like roads to connect the
village to different area, which made the village more accessible and also other social,
educational (schools) and infrastructure like hospitals. Its secondary objective was to give out
sustained wage employment. This was only given to BPL (below the poverty line) families.
2. National Family Benefit Scheme (NFBS)
This scheme was started in August 1995 by the Government of India. This scheme is sponsored
by the state government. It was transferred to the state sector scheme after 2002-03. This scheme
provides a sum of 20000 Rs to a person of a family who becomes the head of the family after the
death of its primary breadwinner. The breadwinner is defined as a person who is above 18 who
earns the most for the family and on whose earnings the family survives.
IRDP in India is among the world's most ambitious programs to alleviate rural poverty by
providing income-generated assets to the poorest of the poor. This program was first introduced
in 1978-79 in some selected areas, but covered all the areas by November 1980. During the sixth
five-year plan (1980–85) assets worth 47.6 billion rupees were distributed to about 16.6 million
poor families. During 1987-88, another 4.2 million families were assisted with an average
investment of 4,471 per family or 19 billion rupees overall. The main objective of IRDP is to
raise families of identified target group below poverty line by creation of sustainable
opportunities for self-employment in the rural sector. Assistance is given in the form of subsidy
by the government and term credit advanced by financial institutions (commercial banks,
4. MGNREGA.
The NREGA bill notified in 2005 and came into force in 2006 and further modified it as
the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in oct 2,2009.
This scheme guarantees 150 days of paid work to people in the rural areas. The scheme has
proved to be a major boost in Indian rural population's income. To augment wage employment
opportunities by providing employment on demand and by specific guaranteed wage
employment every year to households whose adult members volunteer to do unskilled manual
work to thereby extend a security net to the people and simultaneously create durable assets to
alleviate some aspects of poverty and address the issue of development in the rural areas.
As per Mahatma Gandhi NREGA, the State government is required to provide employment to a