Poverty can be defined as a social

phenomenon in which a section of the

society is unable to fulfill even its basic
necessities of life.
In India, the generally accepted definition of poverty
emphasises minimum level of living rather than a
reasonable level of living.
 WHY IS
POVERTY A
BIG
CONCERN?
VICIOUS CIRCLE OF POVERTY

VICIOUS
LOW
CIRCLE
OF DEMAND
POVERTY
 STUDIES
OF
POVERTY IN INDIA
Ojha’s Estimate of Poverty-

Mr. P.D. Ojha estimated the number of persons below the

poverty line on the basis of an average calorie intake of
2,250 per capita per day. This entailed monthly per capita
consumption expenditure of Rs. 15-18 (1960­61 prices) in
urban areas andofRs. 8-11 in rural areas. On this basis,
Ojha estimated that 184 million persons in the rural areas
(51.8 per cent of total rural population) and 6 million
persons in the urban areas (7.6 per cent of urban
population) lived below the poverty line. For the country
as a whole, 190 million persons (44 per cent of total
population) could be classed as poor in 1960-61.
Dandekar and Rath's study of Poverty in India

Dr. Y.M. Dandekar and Mr. Nilkantha Rath

estimated the value of the diet with 2,250 calories
as the desired minimum level of nutrition. They
suggested that whereas the Planning Commission
accepts Rs. 20 per capita per month (or Rs. 240
per annum) as the minimum desirable standard, it
would not be fair to use this figure for both the
urban and the rural areas. Dandekar and Rath,
Dandekar and Rath, therefore, suggested
somewhat lower minimum for rural population,
i.e., Rs. 180 per capita per annum and, a somewhat
higher minimum Rs. 270 per capita per annum for
the urban population at 1960-61 prices. Dandekar
and Rath estimated that in 1968-69 about 40 per
cent of the rural population (i.e.166 million) and
alittle more than 50 per cent of the urban
population (i.e.49 million) lived below the poverty
line
Minhas' Study of Rural Poor
Another estimate made by B.S. Minhas on the basis of
NSS data revealed that if one regards the level of per
capita annual consumption expenditure of Rs. 240 as
the bare minimum, then 50.6 per cent of the
population lived below the poverty line in 1967-68.
there has been a steady decline in the proportiod of
people below the poverty line, Le., from 65 per centjt
1956-57 to 50.6 per cent in 1967-68. In other words, we
had around 210 million poor people in rural areas in
1967-68, and the corresponding number in the earlier
year varied between 206 and 221 million.
Bardhan's Study of Rural Poor-

Dr. P.K. Bardhan questioned the validity of the

GNP deflator used by Dr. B.S. Minhas in his study.
Bardhan suggested the use of agricultural labour
price' index as a more suitable deflator. His main
argument was that the national income deflator
covers both the! agricultural and manufactured
commodities and as such it is very likely to
'understate the rise in prices paid by the! rural
poor because the budget of the poor in the rural
areas) includes a much smaller proportion of the
manufactures than the national average.
Bardhan considered Rs. 15 at 1960-61 prices to be
the national minimum as it was conservative
approximation to the minimum standard fixed by
the Planning Commission's Study. Bardhan's
study brought out the conclusion the percentage
of rural people below the poverty line as defined
above has gone; up from 38 per cent in 1960-61 to
54 per cent in 1968-69.'
Estimate of Poverty by the Seventh
Finance Commission (1978)

From the data, it was revealed that 277 million

persons lived below the augmented poverty line in
1970­71. As a percentage of population of the 15 States,
the people below the poverty line constituted 52 per
cent. Out of this 225 million persons in the rural areas
and 52 million persons in the urban areas lived below
the poverty line.
 From the Seventh Finance Commission data, the following
distinctive features emerge:
 
(i) As compared to all the earlier studies, the proportion of
population living below augmented poverty line indicates
a relatively higher figure of 52 per cent.

(ii) The proportion of persons below the poverty line in

the rural and urban areas is nearly the same. This is also in
sharp contrast to the conclusions of earlier studies
The World Bank study on Poverty
More recent evidence by the World Bank supports
the view that the proportion of persons below the
poverty line has come down from 52.4 per cent in 1970
to 42.5 per cent in 1983 and further to 39.6 per cent in
1988. Gaurav Datt and Martin Ravallion also estimate
that person below the poverty line are 43.9 per cent -
40 per cent in urban and 45 per cent in rural areas.
Gaurav Datt and Martin Ravallion
Study
Gaurav Datt and Martin Ravallion clearly bring out that
poverty gap in rural area is 12.7 per cent and in urban areas
is 10.94 per cent. Obviously, greater effort is needed to
reduce poverty gap by having specific programmes for
rural areas to alleviate poverty.
1
P (poverty gap) = Po.G where G = (Z –Y)/ Z where Z
represents the poverty line and Y represents the average
consumption expenditure of poor in each state.
Po expresses the percentage of population below the
poverty line to the corresponding total population.
Planning Commission Expert Group
Report (1993)
. The Poverty Line recommended by the Task Force
on projection of minimum needs and effective
consumption demand, namely a monthly per capita
total expenditure of Rs. 49.09 (rural) and Rs. 56.64
(urban) rounded respectively to Rs. 49 and Rs. 57 at
all-India level at 1973-74 prices be adopted as the base
line. This was anchored in the recommended per
capita daily intake of 2,400 calories in rural areas with
reference to the consumption pattern as obtained in
1973-74. The Expert group recommended that these
norms may be adopted uniformly for all states.
Planning Commission Expert Group (1993) estimated
that rural poverty ratio has declined from 56.4% in
1973-74 to 39.1% in 1987-88. As against it, there is a
relatively smaller decline in urban poverty ratio which
has comedown from 49.2% in 1973-74 to 40.1 % in
1987-88. The overall poverty ratio has, therefore,
declined from 54.9% in 1973-74 to 39.3% in 1987-88.
INTERNATIONAL COM­PARISONS OF
POVERTY AND INEQUALITY OF INCOMES

In a study conducted jointly by the World Bank and

the Institute of Development Studies at Sussex
University (England), the extent of inequality was
classified into three broad categories: (I) High
inequality, (2) Moderate inequality, and (3) Low
inequality. For analysing relative inequality the study
examined the income shares of the lowest 40 per cent,
the middle 40 per cent and the top 20 per cent of the
households
The degree of inequality was measured on the basis of
the share of the lowest 40 per cent of the population
as under:
Share of lowest 40 per cent of population in national
income.
I. High inequality: less than 12 per cent.
II.Moderate inequality: Between 12 and 17 per cent.
III.Low inequality: 17 per cent and above
Distribution of Income in Selected
Countries
COUNTRY LOWEST MIDDLE HIGHEST H/L
20% 60% 20%

US 6.6 50.4 43.0 6.5

INDIA 8.1 45.8 46.1 5.7
PAK 9.5 49.4 41.1 4.3
SWITZER 6.9 52.8 40.3 5.8

U K (1991) 6.6 50.4 6.5

43.0

LANKA (1995) 8.0 49.2 42.8 5.4

 THE FIVE YEAR PLANS AND REMOVAL OF POVERTY

The raising of the standard of living of the masses is

one of the objectives of planning in India. The Second
Plan talked of creating a 'milieu' for the small man.
The Fourth Plan talked of improvement in the
condition of the common man and the weaker
sections, especially through provision of 'employment
and education'. It also emphasised the attainment of a
'national minimum' as an essential pre-requisite to
improve the conditions of the 'lower income groups' .
Fifth Plan and Poverty-
Despite all the pious sentiments for the weaker
sections the number of the poor continued to swell in
the country. The Garibi Ratao (Remove poverty)
slogan raised during the Parliamentary elections of
1971, brought .
The Fifth Plan stated: "at present over 220 million are
estimated to be living below this level" The clearest
expression of the diagnosis of poverty was made in
the Fifth Plan
Sixth Plan and Poverty-
The Sixth Plan (1978-83) stated that "according to a
recent estimate using norms of calorie consumption,
the percentage of population below the poverty line
in 1977­78 may be projected at 48 per cent in the rural
areas and 41 per cent in the urban areas. The total
number of the poor, so defined, would be about 290
million. About 160 million of these fall below 75 per
cent of the poverty line.
Like its predecessor, the Sixth Plan (l980-85) hoped
that growth process would bring down the poverty
percentage from 48.4 per cent in 1979-80 to 38.9 per
cent in 1984 1:l5.
Seventh Plan and Poverty-
The Seventh Plan reviewing the impact of the poverty
programmes mentions: 'There is now evidence to
suggest that the process of economic growth and the
anti­poverty programmes have made a significant dent
in the problem of poverty.“
In the light of the information provided by the
National Sample Survey (38th Round), "one can
conclude that 34 million people crossed the poverty
line between 1977-78 and 1984-85. During the Seventh
Plan, the planners hope that number of poor persons
will fall from 273 million in 1984-85 to 211 million by
1989-90 and in percentage terms from 36.9 per cent to
25.8 per cent by 1989-90. In their over-enthusiasm, the
planners project that the percentage of people below
the poverty line is expected to decline to 10 per cent by
1994-95 and further to a level of 5 per cent in the year
2000.
Ninth Plan and Poverty-
The Ninth Five Year Plan used the concept of 'poverty
gap' developed by World Bank to measur,e the severity
of poverty.
the Ninth Plan states: "It will be seen (Refer table 16)
that the annual average rate of decline of the poverty
ratio during the period 1973-74 to 1993-94 has been 2.05
per cent in both rural and urban areas, and 2.09 per
cent for the country as a whole. The poverty gap ratio
during this period declined by 3.31 per cent per year in
rural areas, 2.71 per cent per year in urban areas and 3.21
per cent per year for the country as a whole.
Tenth Plan and Poverty-
Tenth Plan accepts that 26 per cent of the popula­tion
i.e. 260 million persons were below the poverty line in
1999-2000. Out of these 75 percent (195 million) were
in the rural areas and 25 per cent (65 million) were in
the urban areas. India accounts for 22 per cent of the
world's poor.  
With a programme of generating 50 million
employment opportunities during the Tenth Plan
accompanied by an overall growth of GDP by 8 per
cent per annum.
Tenth Plan targets to reduce poverty by about 7
percentage points, from 26.1 per cent in 1999-2000 to
19.3 per cent in 2006-07: However, most of the poor
would be concentrated in six states-Bihar, M.P.,
Orissa, Uttar Pradesh, West Bengal and Maharastra,
These six states would have 164 million poor (i.e. 75%
the total poor) in 2006-07. As against them, Haryana,
Punjab, Gujarat, Himachal Pradesh, Goa, Delhi are
likely to register negligible level of poverty (2%) by
2006-07.
ECONOMIC REFORMS AND REDUCTION OF
POVERTY
Dr. Gaurav Datt of the World Bank in his article "Has
Poverty Declined since Economic Reforms? has drawn
the following conclusions:-
1. While there was a marked decline in both rural and
urban poverty rates between 1973-74 and 1986­87,
there is no sign of anything comparable thereafter
2. For the rural sector, for the period 1973-74 and 1990-
91, headcount index of poverty declined at the annual
rate of 2.7 per cent, the rate of decline since then (i.e.
in the post-reform period) is not significantly
different from zero.
3. For the urban sector, during 1973-74 and 1990­91,
head count index of poverty declined at the annual
average rate of 2.2 per cent, the same trend is
continued in the post-reform period (1990-91 to
1996-97) at the annual average rate of 2.2 percent.
4. While the urban sector seems to have continued its
march of poverty reduction in the process of
growth, rural poverty reduction was choked off by
lack of rural growth.
Dr. Gaurav Datt has identified stagnation in rural
growth as the basic cause of slowdown in poverty
reduction. This naturally puts a question mark on the
very nature of the reform process in terms of rural
welfare.
CAUSES OF FAILURE TO REDUCE POVERTY
Now the question arises: Why did the plans in India
fail to eliminate degradation, not to speak of
removing poverty?
This was due to the fact that the planners assumed
that the growth plus strategy aiming at an increase of
national income, supplemented by policies of
progressive taxation and public expenditure, would
lead to a rise in the level of living of the poor.

GARIBI HATAO AMIRI HATAO

POVERTY ERADICATION PROGRAMMES IN
INDIA-