5

Poverty in India
Chapter Outline
5.1 Introduction
5.2 Magnitude and Measurement Tool of Poverty
5.3 Causes and Eifects of Poverty
5.4 Poverty Removal Programmes
5.5 Government Measures During Five Year Plans
5.6 Conclusion

"No society can surely be flourishing and

numbers are poor and miserable:"
happy of which by far the greater part of
Adam Smith 1776
The situation facing those in society whose material needs are least satisfied"

Penguin Dictionary of Economics

5.1 INTRODUCTION
As it was true in 1776 so it is in 2013, tall claims of economic growth pale into
insignificance when one finds a sizeable portion of the total population of our
country, suffering from hunger, disease and deprivation. It is indeed heart
breaking that more than sixty eight years after Independence in India, a very
from inadequate standard of
arge section of society remains poor and suffer
basic like adequate food
iving. These people lead a life deprived of necessities
having sufficient nutrition, reasonable clothing and some shelter over their
heads. They do not have access to educational and health care facilities. Most
of do not get even potable water to drink.Planners all overthe world
them
n India must realize that economic growth loses its sheen if it is not
nclusive. Growth becomes meaningful, only if it benefits all strata of society.
sections of the
society. In lr ''a
s of growth must also reach the poorer
in which an individual fails to earn
Ety has been defined as that situation
ncome sufficient to buy his bare means of subsistence.
 Business Envire
POVERTY virone,
5.2 MAGNITUDE AND MEASUREMENT TOOL OF
A person termed poor when he is unable to satisty his
is

ot life. Concept of poverty is socio-economic, and is

minimum ter
difficult to
precisely. One can talk of relative or absolute poverty.
Problem of
poverty is essentially the problem of inequality of income and
extreme of inequality in the standards of
wealh
living and degree of
insecurity. Average citizen of Delhi may be richer than protection:again
average
or Uttar Pradesh. This is citizen Bih
only a matter of relativity. One is richer
relatively poor. Thus we have the people who are affluent and
in the same and not so c
society. Important point here is that poverty
riches of the other. Absolute
poverty
is a state of
aíflue
of one is relative.
absolute deprivation
poverty below the bread line. It is a condition of life so
illiteracy, malnutrition, and squalor as to degraded by dis
necessities. Absolute poverty is deny its victims
basic hu
appalling agonising fromumaa
as well as
standards of human existence
die in They are born in
poverty, grow in
ma
poverty. short, they are in the campany ot
In povertya
grave. We need to remember that poverty from cradle toth
needs to be addressed on poverty breeds poverty. Problem
priority basis by the government of the of povem
(1) Relative Poverty: It indicates country
that a
group or a class of
to lower income is
group poorer when people belongine
higher income group. In most
compared to those
belonging
countries
of world, whether develope
underdeveloped incomes are distributed the
can be seen in every So,
country. It is perennial
unequally.
relative povety
in a
developed country like U.S.A. as well as aproblem, that can be
found
India. According to a developing
report of U.N.O., those countries arecountry ke
relatively poor where per capita income is less considered
capita income is about $330 than $1025. In
per annum. Per India, per
$34,870 that of Japan is capita
$35,993 and Switzerland income in U.S.A.s
India is one of the $36,970. In this was
the poorest 20 poorest countries of the world.
percent people in the national Within India, share od
while that of the income is hardly 7
richest 20 percent is 46 percent
indicates inequalities of percent. Thus, relative
called Lorenz Curve and income. It can be measured poverty
Ginni by using methos
(2) Absolute
Poverty: Those who
coefficient.
to be live below the
suffering
level of
from absolute poverty line, are suppoSe
poverty. In drawing
consumption standard is laid down. In poverty line' minimun
of the total
population is India, nearly 29.8 percen
absolutely
Consumption Expenditure (MPCE) poor by Monthly Per Cape
Distinction between Relative method.
of Chart 5.1 and Absolute Poverty can be
shown with the hey
elp
 5.3
P o r ni nl n d i a

Chart 5.1: Relative and Abaolute Poverty

Poverty

Relative Poverty Absolute

poverty
fa group people
of 1. Refers to the number of persons
to
efers of other people, in living below poverty line.
I. group
the or nations.
to
states, regions
localities, income of relevant for less
reter to per capita 2. Concept is more

different development countries. developed countries (LDCs)

2. May
relative poverty 3. Absolute poverty is estimated with
the country
.Within out by using
Lorenz/ the help of poverty line.
can
bec ufound
Ginni rve/Ginni co-efficint.
of
a most 4. It is estimated that 29.8 percent
to be relatively
India appears Indian population is absolutely poor.
4.
proofcountry

in rural areas
nmission is of the view that an individual
Planning
In India, and in urban area 2,100 calories per day.
Anyone not
calories
t get 2,400 be absolutely poor.
much is said to
getting this
EFFECTS OF POVERTY
CAUSES AND
5.3 of Indian
in India. Colonial exploitation
is chronic
bones
Problem of poverty structure of India into
a skeleton of
Britishers turned body
economy by
flash and blood. Since 1947, the
causes
of poverty can be grouped
of the
devoid of slow pace of development
in population, (b)
as
increase
(a) rapid fewer hands. India is in
of economic power in the
economy, and (c) c o n c e n t r a t i o n It is manifested
economy.
but developing
anunder developed,
following ways: independence period,
In the post
in Population: rate due to high
birth
(1) Rapid Increase increased at a progressive
l951-81. After
population of the country rate (DR) during
death
rate (BR) and rapidly declining time and then
stabilised for s o m e
981, the rate population growth got
of started declining)
at a slow
DR both
Started (when BR and
declining Growth rate of population
cause of poverty. which
pace. This has been the single the time of
independence,
a n n u m at
was 1 percent per moderate at 2.14 percent
Per annum in 1981, tended to
1.72 percent
in
CTeased to 2.22
percent
percent in 2001 and
down to 1.93 burden dependents,
of
991, then c a m e m e a n s heavy
essential tor
pressure population
of i n v e s t m e n t s adversely, which is so
Heavy
and
arfects savings
the plan
economic growth. the most part of
During barring
2) Slow ace of Economi Growth:
annual rate
of 3.8 to 4.0,
an average
0d, GDP has increased at
5.4 Business Environme
Amem
increased by 7 to
DP increased
tew years of X and XI Five Year Plan, when GDP
nomic growth wa
percent annually respectively. Slow pace of economic gro
accompanied with 2 percent growth of population. Consequently
onsequently,
capita income could grow by a little more than 2 percentannually
could hardly make an impression on poverty.
ily. Th
(3) Rising Inequalities in Income and Wealth: Execution
developmental plans during the plan period could not check ris.
inequalities of income and wealth. In rural areas the adoption of
Agricultural Strategy did succeed in raising the per hectare productivi
and production of various crops but it led to the growth of
capitalig
farming. As a result, concentration of economic power in fewer hand.
has increased over the decades. Thus, the gap between the
'haves a
have nots' has widened during the last six decades. As per the
reportd
World Bank of 2001-02, the richest 20 percent of people had 46
perce
of national income, while the poorest 20 percent
population had only
percent or less of national income. Increasing use of modern technoloe
in industries and
agriculture has succeeded in increasing output and
income but employment.
Consequently, relative povertyhas aggravatei
over the years.
(4) Large-Scale Unemployment and Under-employment:
characterised with chronic, structural, seasonal,
India is
open and educated
unemployment. There is large scale disguised unemployment in rmr
areasand under employment in urban areas.
Large number of specia
schemes and programmes were launched to increase job opportunitis
during the plan period, but the number of job seekers joining the labou
force has always been
greater than the number of jobs created. As
result, the backlog of
unemployed has been expanding regularly anN
continuously. Besides, during the last few years a phenomenon ot jo
growth has also been noticed in India.
(5) Insufficient Infrastructure and
slow expansion of
Capital Deficiency: There has bet
energy, transport, communications, banking
insurance, education, health and
housing. All these have be
responsible for the slow pace of n the
other hand, the improvement in
productivity.
of
paucity of capital and capital fornation (due to low at

saving and investment) has been detrimental in ento'

the achieveme
targeted economic growth. Production datthe

required pace. capacity has not

expanac
(6) Globalisation: Since 1991 it has forced rural households tomo
rural households lobal
below
poverty line. Small farmers aremany
unable to compete " b
markets, where prices of farm
products are lRw
 POVERTY REMOoVAL PROGRAMMES
ced tthe
Having discussed h causes of unemployment, it should not be difficult to
measuresto
todeal
deal with the problem. Problem of poverty deserves to be
st mei-dimensional challenge. The problem has to be addressed on a
alt as amu
a r tooting. S o m Some important measures can be mentioned to deal with the
p a w e mo f p o v e r t y .

he Rate of Economic Growth: India suffers from vicious circle

( ) R a i s e

of povert) Poverty is in built in the system. Arvind Panagaria. vice

of
an of NITI-AYOG
chairma ofN in his article, Human "Declining Poverty-The
dvocates
of Reform, adv that a rise in economic growth can be helpful
Face
poverty by the frickle down effect. Jagdish Bhagwati feels
in removing

Lactive
ive pull
pull up
up "effect of growth can be quite effective in reducing
that
tha t has to be ensured that the benefits of economic growth. pass
p o v e r t y . " I t i

P the underdeveloped regions, backward and poor sections of society

Process of Economic Growth must become inclusive and poverty
alleviationfriendly.

Reduction in Growth Rate of Population: To alleviate and reduce

(2) i
essential that the population growth rate is brought down
to
noverty it is
achieve this, multi-pronged attack is necessary.
per
halfa percent year. 1o and
Family welfare and planning programmes have to be expanded
of the reproductive age group need to
inplemented vigorously. Couples benefits of small families. They must
need and
be convinced about the child when one by

decide and plan to

have a they wish rather than have
must be brought down to very
chance. Female and infant mortality rate
low levels, so that parents need not fear
about the survival oftheir children.
rate of real GDP must
in Per Capita Income: Average
Increases
(3) Rapid be greater than the rate of population
be a rising o n e and it should always of living of the people
income rises, standard
growth. When per capita standard of living.
Then they
accustomed to high
improves. They get in the family. Rearingg
additional child arrives
feel the pinch whenever
cumbersome.
of a child becomes costly and must
Incomes: Economic growth
become
4) Reduction in Inequalities of should percolate
down to
words benefits of growth need to
inclusive. In other Monetary and fiscal
measures

society. that can check

poorest person of thefair distribution of income, Trade
De practised to e n s u r e Restrictive and
Monopoly
in fewer hands. Public
Cumulation of wealth be implemented
strictly.
should commodities
'ractices (MRTP) Act in case of
scarce

(PDS) be practised assured of tair price ot their

ribution System need to be (MSP). All
materials. Farmers price
Nrw m i n i m u m support

a policy
of
produce by following and poor.
between
rich
these can check the growing divide from the
above
measures,

(5)
5) Other Measures to E r a d i c a t e Poverty: Apartpoverty.
foll easures in eradicating
following
g meas
measures also help
 Business Enviromm
Condition of Land.lee
onmen
Improvement
(a) Small
in Economic ess Farmer
andmarginal farmers need to be provided all inp

variety uts
ding varietvo
cultivation of land by tractors on rent, high yielding lilke
fertilizers, irrigation on credit, so that improved agriciul
small holdings may become economically viable.
(b) Check Fluctuations in Prices: If prices keep rising, they ero4
value of the wages of landless farmers. Poor people need be Dr
basic items of consumption at reasonable prices through PD

(c) Labour Intensive Techniques of Production: Myrdal sugeests

in a labour abundant economy like India, those techniaue
production should be practised which are labour intensive in nature
(d) Check Regional Disparities: Govern ment should launch an
implement developmental programmes in backward regions of th
country. So that employment and income levels of the people livi
inbackward areas may rise. This step will
go a long way in
maintaining cordial relations between the people of developed and
developed regions.
not so

(e) Encourage Self Employment: Increase in self

employment
opportunities can help in solving the problem of educated, trained
and skilled unemployed persons and creation
of job cpportunities
in ancilliary activities for unskilled/semi-skilled
labour force. By
opening more and more Industrial Training Institutes (1ITs) in
various parts of the country,
large number of opportunities for self
employment can be created. To boost it further loan facilities at
concessional rates of interest, advice about
research and developmental (R & D) facilitiesentrepreneurship,
must be provided
on
priority basis. Further, youths who take up such
projectsfrom
provide employment to themselves may be offered exemption
to

various taxes for the first few

years.
Measures to alleviate menace
of poverty include population control, rapid
increase in per capita income, fair
distribution of
development, check on concentration of income andthewealth, gains of economic
in the condition of
small, improvement
intensive techniques ofmarginal
and landless labourers,
adoption of labour
production, check on regional
promotion of self employment schemes, distribution of disparities and
through Public Distribution System (PDS), free essential commodities
children of school going
age, distribution of
elementary education to all
free treatment of mid-day meals in schools and
poor in public hospitals and free
can help in vaccination programmes
reducing the ills of poverty.
5.5 GOVERNMENT MEASURES DURING FIVE YEAR PLANS
Objective of eradication of
poverty and the setting up
Society' in the country has been 'Socialist Pattern
the Five Year Plans. In extremely close to the heart of planners durins
fact, 65 years ago
during the constituent Ase
P n nm n d i a

5.1
pr. Rajendra Prasad articulated the
tate, esidentDr.
path ahead for
Hc said, "to all we give the assurance that it will peopies
Pre ves. He.
epresentatives, be our
es nd pover
end poverty and squalor and its companions, hunger and diseases;
to
endeavu.s
Aistinction and exploitation and to ensure decent conditions of
t oa b o l i s h d i s t i n c t i o n

India is one of
is one of th
the poorest nations on earth. Many countries in
till India
"

ing."

which
Started with
wi similar poverty levels in the 1940s have
started

progressed
Asa.

ne of
of them
some
them natically. Eradication of poverty and hunger remains
taster,
achieved,in India even now.
e only during
the Fourth Five Year Plan (1974-1979) that
poverty
h w a s

tion was m e n t i o n e oned as the explicit objective of economic planning.

the first
two and a ia half decade of plan period, problem of poverty and
During
and wealth were dealt with indirectly by initiating land
alities ofincome
mms, abolition intermediaries, giving owner ship rights to the tillers of
olition of inter
reforms,

rent control measures and fixation of land ceilings. However, all these
nd, rent control.

anasures were vulnerable to socio political factors, legal hurdles in the

luke-warm and insensitive attitude of State
ementation of land reforms,
implementation«

most ot these retorms proved exercise in futility.

gOvernments. Consequenty,
gOver

Erom the Fifth Five Year Plan onwards, various specific steps were initiated to
alleviate poverty. To promote wage employment and self employment
prOgrammes, schemes
of Integrated Rural Development Programme (IRDP),
Desert Development Programe (DDP)
DroughtProne Areas Programme (DPAP),
plus the public distribution system
was implemented vigorously to ensure food
security.
Aseries of employment schemes were initiated by
the Government to eradicate
like Sampoorna Grameen
poverty, (for detail see Section 9.9 of Chapter 9)
Samridhi Yojana (JGSY),
Rozgar Yojna (SGRY), Jawahar Grameen
Promotion of Self Help
waranjayanti Grameen Swarozgar Yojna (SGSY), Swarna
and
Groups (SHGs), National Rural Livelihood Mission (NRLM)
flagship programme called
Jayanti Sharhri Rozgar Yojna (SJSRY). The latestGuarantee Act (MGNREGA)
ahatma Gandhi National Rural Employment 7.9 of the Chapter 7 on
Salso been discussed in details in Section
Unemployment in India.
S6 CONCLUSION
GDP and
There is no denying the fact that there has been a consistent rise inEconomic
New
per capita GDP Further after the adoption of
during 1950-1990.
capita GDP have
been quite
Policy 1991,
in
, thethe growth
s rate of GDP and
per Year Plan
later half of XI Five
npressive, some
except:down in the slowing is feared to
2007-2012).
extren GTOwth rate of GDP in
2012-2013 and
2013-2014

extremely
On the
low around 5 percent.
1991-2010, economic
basis of Some impressive achieved during
ei growth ratio declining
from
ersanddm politicians have tried to show case poverty

percent in 2004-2 to 29.8 in

2009-10.
 5.8
Business Environme
Very serious questions have been raised on the methodology
ogy of estime
of estimation
poverty adopted by Planning Commission. Here, when Planning
ing Con
Commissin
says he who spends 32 on himself a day is not poor. Is 32 a day eno
eradicate poverty? It appears we are mocking the poor. Unlike
Sureesh D
Tendulkar and Montek Singh Ahluwalia, economists including
Abhiit Sen
Jayanti Ghosh and B.S. Minhas feel and contest that the actual
should be much higher than the official estimates. ra
povertyratio
If we forget about the on
going debate between official claims of poverty t a
and those of other experts in the
field, can a common man be convinced ratio th
poverty has been eroded. Whatever growth has been achieved
67 years, it has failed to trickle
down to the poorest people
during the la
paradoxical that those who grow food grains for the entireof the society. Iti
themselves among the lowest income population find
Pradesh and Maharashtra have group. Nearly 100 farmers of
committed suicide due to vulnerable Andha
poverty and indebtedness. Poverty and lack of burden oi
robbed them of every stitch of sustainable alternative have
India guaranteed to them. fundamental rights which the Constitution of
as
bounty or mercy by the Employment to
unemployed never be considered
can
government of the day.

=Check Your Progress:

1. Explain the terms of absolute and relative
of poverty. poverty and assess the
2. management
Explain the nature and causes of
to poverty in India. Discuss
alleviate poverty that have been
3. intiated by the important measures
"Poverty and unemployment are government.
programme should aim at solvinginseparable
the
twins. An
effective anti-poverty
4. The benefit of
higher economic unemployment problem. Elucidate.
poor people:"
Do you growth during recent years is
agree with the statement? not
5. Discuss the
nature and causes ot Give reasons. reaching the
suggest to deal with the poverty in India. What
6. problem. measures can you
Suggest measures to reduce
Explain the causes of poverty and unemployment
in India.
poverty in India.
government to reduce poverty ? What measures
8.
have been taken by the
Write short notes on:
) Poverty Line
(i) Trickle down
effect