POVERTY, INEQUALITY AND UNEMPLOYMENT IN INDIA

1. Define poverty line.

Ans: In simple terms, the poverty line is the monetary income that one must have to afford
the basic amenities of life. Depending upon the country’s social and economic status required
to attain the basic needs, the poverty line may vary from one country to another.
In India, the poverty line lies at 1,286 rupees per month for urban areas and 1,059.42 rupees
per month for rural areas.

2. What are the causes of poverty in India? Write some poverty alleviation programmes
in India.

Ans: India is a developing country. Even if there is growth in its economy, the nation faces
many challenges that act as an impediment in its development process. One such challenge is
the existence of widespread poverty in India. Although there is a reduction in the percentage
of people residing below the poverty line, the digits aren’t favourable after that either.
Following are some of the causes of poverty in India:

1. Rapidly Rising Population: India’s population has steadily increased through the
years. During the past 45 years, it has risen at a rate of 2.2% per year, which means,
on average, about 17 million people are added to the country’s population each year.
This also increases the demand for consumption goods tremendously.
2. Low Productivity in Agriculture: A major reason for poverty is low productivity in
the agriculture sector. The reason for low productivity is manifold. Chiefly, it is
because of fragmented and subdivided landholdings, lack of capital, illiteracy about
new technologies in farming, the use of traditional methods of cultivation, wastage
during storage, etc. Read, Agriculture Product Market Committee – APMC for
relevant details.
3. Underutilized Resources: There is underemployment and disguised unemployment
in the country, particularly in the farming sector. This has resulted in low agricultural
output and also led to a dip in the standard of living.
4. Low Rate of Economic Development: Economic development has been low in
India. There is a gap between the requirement and the availability of goods and
services.
5. Price Rise: Price rise has been steady in the country and this has added to the burden
the poor carry. Although a few people have benefited from this, the lower-income
groups have suffered because of it, and are not even able to satisfy their basic
minimum wants.
6. Unemployment: Unemployment is another factor causing poverty in India. The ever-
increasing population has led to a higher number of job-seekers. However, there is not
enough expansion in opportunities to match this demand for employment.
7. Shortage of Capital and Able Entrepreneurship: The shortage of capital and
entrepreneurship is making it harder to increase production.
 8. Social Factors: Apart from economic and commercial, there are also social factors
hindering the eradication of poverty in India. Some of the hindrances in this regard
are the laws of inheritance, caste system, certain traditions, etc.

Poverty alleviation is described as the set of ways framed by the government to deal with the
issue of poverty. The main intention is to hoist people out of the grasps of poverty. Various
schemes have been undertaken by the government to eliminate this evil of poverty from our
country. Moreover, due to the lack of infrastructure and other basic facilities in the rural
areas, the extent of poverty in rural households is more than the metropolitan ones. Some of
the poverty alleviation programmes launched by the Indian government are:
1. Integrated Rural Development Programme (IRDP)
IRDP is one of the driving schemes of poverty alleviation programmes that has bestowed a
lot in ridding the evil of deprivation to some extent. Introduced in 1978-79, the major
objective of the scheme stands as providing self-employment to the target audience that exists
below the poverty line. This target group includes agricultural labourers, small and marginal
farmers and rural artisans. In addition, inclusions are compelled where 50% is allotted to the
scheduled castes and tribes.
2. Jawahar Gram Samridhi Yojana
The above scheme is the reformation of the Jawahar Rozgar Yojana. Currently, this
programme is known by the name of Sampoorna Grameen Rozgar Yojana. Under this, the
matter of fact is generating demand-driven communities in the rural areas with the rationale
of employing the people. Employment is provided to those living below the poverty line
defined by the government. Furthermore, 3% has been allocated to providing barrier-free
infrastructure to those people who are disabled.
3. Pradhan Mantri Grameen Awaas Yojana
Launched in the year 2015, the above programme is one of the most flourishing schemes
under the poverty alleviation programmes initiated by the government. The main aim is to
provide free houses for the people living in the rural areas that are considered BPL. Here, the
advancement is made through the subsidy process, involvement of the private sector and
reasonable housing to the people at subsidized rates.
4. National Social Assistance Programme (NSAP)
The programme was launched in the year 1995, with its main objective of giving social
security to the neglected categories of the society i.e., widows, disabled persons, aged persons
belonging to the BPL section of the society. There are three schemes under this particular
programme:
i. National Old Age Pension Scheme
This provides pensions to the people who are contemplated as destitute. The main purpose of
this scheme is to bestow social security to the eligible beneficiaries. In this, the beneficiaries
don’t have to contribute at the first phase to receive this pension under the National Old Age
Pension Scheme.
ii. National Maternity Benefit Scheme
The government provides funds under this scheme to the women for their prenatal and
postnatal sustenance. This financial grant is given to those women belonging to families that
aren’t well financially. The person gets cash-based aid directly from the government.
iii. National Family Benefit Scheme
The funds are provided to those families whose main wage earner dies due to any reason.
Under this, a sum of 10,000 is provided to the household.
5. Annapurna
The scheme had its initial enactment in 1999-2000 where its main aim has always been to
provide a nutritional diet to the senior citizens who are unable to do that for themselves. This
scheme under the poverty alleviation programme provides 10 kg of free nutritional diet every
month for the aged citizens of the above classification.

3. Write a note on the pattern of income distribution in India.

Ans: The pattern of income distribution in India is characterized by pronounced disparities,

which have significant implications for economic and social stability. According to data from
the World Inequality Report 2022, the top 10% of India's population holds approximately
57% of the total national income, while the bottom 50% accounts for only about 13%. This
stark concentration of wealth highlights a growing divide between the affluent and the
economically disadvantaged.

The rural-urban divide is another critical aspect of income distribution. Urban areas,
benefiting from better access to employment opportunities and services, tend to have higher
average incomes. For instance, data from the 2021 census indicates that urban households
earn about three times more than their rural counterparts. While the average monthly income
for urban households is estimated at around ₹30,000, rural households earn approximately
₹10,000. This disparity is exacerbated by the reliance of rural populations on agriculture,
which is often vulnerable to fluctuations and lower productivity.
Caste and class structures further complicate the income distribution landscape. According to
the National Sample Survey (NSS) data, marginalized communities, including Scheduled
Castes and Scheduled Tribes, continue to face significant income gaps. For example, the
average monthly income for Scheduled Castes is roughly 40% lower than that of higher caste
groups, reflecting systemic barriers to economic advancement.
Regional inequalities also play a significant role in shaping income distribution. States like
Maharashtra and Delhi exhibit higher per capita incomes—approximately ₹2.5 lakh and ₹2.3
lakh, respectively—while states like Bihar and Uttar Pradesh have per capita incomes below
₹1 lakh. This disparity in economic performance highlights the uneven development across
the country.

Despite rapid economic growth, poverty remains a pressing issue. As per the World Bank,
around 224 million people in India lived below the national poverty line in 2019, representing
about 17% of the population. The COVID-19 pandemic further exacerbated these
inequalities, with estimates suggesting that millions were pushed back into poverty due to job
losses and reduced incomes.

In summary, while India has experienced notable economic progress, the pattern of income
distribution reveals deep-seated inequalities that necessitate targeted policies aimed at
fostering inclusive growth and addressing the needs of the most vulnerable populations.

4. What is income inequality? What are the causes of income inequality in India? What
are the remedial measures to reduce inequality in India? Suggest some government
policy measures to reduce inequality in income in India.

Ans: Income inequality in India refers to the unequal distribution of wealth and income
among its citizens. Rising inequality and unemployment are creating ruptures in the fragile
fabric of our society.
Several factors are responsible for income inequality and poverty in India. Some important
causes are explained below:

1. Rapid Growth of Population: Rapid growth of population is one of the major causes
of poverty and inequality in India. High population growth is the root cause of all
other problems. Population grew rapidly after independence. Population in India
which was 36 crores during the year 1951 increased to 121.08 crores in 2011 census.
Demand for consumption goods increases with the rapid growth of population. For
the country as a whole, extremely large part of resources is absorbed by production of
consumer goods. Only a limited amount of money is left for development works,
capital formation and future investment. This leads to slower economic growth, which
perpetuates poverty and inequality.
2. Inadequate Employment Opportunities: There is a dearth of employment
opportunities in India. Even after 70 years of planning, unemployment problem
continues to be one of the major problems in India. The rate of growth of population
is more than the rate of growth of employment. So it is evident that unemployment
and hence poverty will increase.
3. Rising Prices: Price rise is always beneficial to the rich and harmful to the poor. In
fact, inflation is often called a 'burden' on the poor. During the Plan Period the prices
have increased rapidly. The main cause of price rise is the adoption of deficit
financing by the government. Besides it, other causes like wrong policies of the
government, increases in the oil prices, black money and hoarding etc. are responsible
for price rise. When prices rise (and, as is customary), wages do not rise or rise less,
the real purchasing power of the already poor falls. Many more join the ranks of those
below poverty line and it results into more income inequalities.
4. Neglect of Agriculture: Even in 2021-22, 47.9 per cent of the total population was
dependent on agriculture and allied activities. Economic planning did not have a good
effect on rural areas because of the neglect of agriculture. It widened the gap between
 the rural and the urban areas. Out of total expenditure of all plans only 12 to 15 per
cent was spent on agriculture, while it was 22 to 25 per cent on industries.
5. Neglect of Small Scale and Cottage Industries: It was said that small scale and
cottage industries would be developed fast during the Plan period but actually not
much attention was paid to them. Under the 1956 Industrial Policy, the government
laid emphasis on big industries. As a result, small scale and cottage industries could
not develop. Most of the population lives in villages where only such industries can
be set up. So the neglect of small scale and cottage industries has caused poverty and
income inequality in India.
6. Inequitable Distribution of Income and Wealth: The main objective of planning in
India is growth with social justice. It is essential that all small businesses/ industries
share the benefits of development equally. But it has not happened. According to a
survey, 20 per cent rich enjoy 53 per cent of the total national income while 50 per
cent bottom poor people get only 19 per cent of the total national income. This
inequality has increased during the plan period instead of being reduced. In fact,
inability to minimize economic inequalities has worsened the poverty situation.
7. Shortage of Capital: The development of country depends on the capital. Shortage
of capital is the main hindrance in the way of economic development. India faces
severe shortage of capital. Industry does not develop properly due to shortage of
capital. Overall economic expansion remained limited due to capital deficiency.
Hence, output could not expand considerably. This not only causes poverty but also
prices-rise and further bigger gap between the rich and the poor.
8. Failure to Implement Land Reforms Effectively: Different State governments have
passed laws to remove poverty and inequality in agriculture. But the pity is that these
could not be implemented fully. Many social and political factors are responsible for
it. As a result, poverty in rural areas could not be removed.
9. Under Utilization of Natural Resources: Nature has been very kind to India. In
other words, India is full of natural resources but we have been unable to make the
best use of these resources because of the lack of capital and technical knowledge etc.
Sh. K T. Shah's comment that 'India is a rich country but the Indians are poor', proves
it.
10. Conservative Social Structure: Our social structure is responsible for the problem of
poverty and inequality in India. Indian farmer is orthodox by nature, he is not ready to
change his methods and remove the hindrances in his way. Fatalism has crippled us,
especially the villages. Most of us leave everything to fate and God. They also lack
mobility spirit of enterprises and scientific attributes. Hence unprogressive way of
thing and backward social setup also cause poverty and perpetuate it. Social
institutions like joint family system and inferior states to women are also responsible
for this.

Measures to reduce Inequalities in income:

1. Promotion of Labour Intensive Manufacturing: The failure to promote labour-intensive
manufacturing like; Construction, Textile, Clothing, Footwear etc. is the single most reason
of rising inequalities. The Labour-intensive manufacturing has the potential to absorb
millions of people who are leaving farming. The proportion of the labour force in agriculture
has come down, but the workers who have left farms have not got jobs in modern factories or
offices. Most are stuck in tiny informal enterprises with abysmal productivity levels. If India
could somehow reverse this trend and promote labour-intensive manufacturing than
inequality could fall.
2. More Inclusive Growth: The promotion and adoption of an Inclusive Growth Agenda is
the only solution to rising inequality problem. Economic growth which is not inclusive will
only exacerbate inequality.
3. Skill Development: The development of advanced skills among the youth is a prerequisite
if India wants to make use of its demographic dividend. The skilling of youth by increasing
investment in education is the only way we can reduce inequality. India needs to become a
Skill-led economy.
4. Progressive Taxation: Higher taxes on the Rich and the luxuries will help reduce income
inequalities.
5. Equal Opportunity for all: The Government may devise and set up some sort of
machinery which may provide equal opportunities to all rich and poor in getting employment
or getting a start in trade and industry. In other words, something may be done to eliminate
the family influence in the matter of choice of a profession. For example, the government
may institute a system of liberal stipends and scholarships, so that even the poorest in the
land can acquire the highest education and technical skill.

5. Define unemployment. Explain the nature and types of unemployment in India.

Ans: Unemployment refers to the situation in which individuals who are capable of working
and actively seeking employment are unable to find jobs. It is often measured as a percentage
of the total labor force and can result from various factors, including economic conditions,
skill mismatches, and structural changes in the economy. Unemployment is typically
classified into several types, including cyclical, structural, frictional, and seasonal
unemployment.

Nature of unemployment:
Nature of unemployment in IndiaIn India unemployment is widespread. Unemployment is
found both in its rural and urban areas. There is seasonal and disguised unemployment in its
rural areas. People here are dependent on agriculture. Certain months do not provide much
work to the people depending upon agriculture. In urban areas educated unemployment has
become a serious problem. Many educated youths are not able to find jobs. Unemployment
among graduates and post-graduates has increased faster than among the matriculates.

Types of unemployment:
The types of unemployment are discussed below:
1. Disguised Unemployment: This is a type of unemployment where people employed are
more than actually needed. Disguised unemployment is generally traced in unorganised
sectors or the agricultural sectors.
2. Structural Unemployment: This unemployment arises when there is a mismatch between
the worker’s skills and availability of jobs in the market. Many people in India do not get job
matching to their skills or due to lack of required skills they do not get jobs and because of
poor education level, it becomes important to provide them related training.
3. Seasonal Unemployment: That situation of unemployment when people do not have work
during certain seasons of the year such as labourers in India rarely have occupation
throughout the year.
4. Vulnerable Unemployment: People are deemed unemployed under this unemployment.
People are employed but informally i.e. without proper job contracts and thus records of their
work are never maintained. It is one of the main types of unemployment in India.
5. Technological Unemployment: the situation when people lose their jobs due to
advancement in technologies. In 2016, the data of the World Bank predicted that the
proportion of jobs threatened by automation in India is 69% year-on-year.
6. Cyclical Unemployment: unemployment caused due to the business cycle, where the
number of unemployed heads rises during recessions and declines with the growth of the
economy. Cyclical unemployment figures in India are negligible.
7. Frictional Unemployment: this is a situation when people are unemployed for a short
span of time while searching for a new job or switching between jobs. Frictional
Unemployment also called Search Unemployment, is the time lag between the jobs.
Frictional unemployment is considered as voluntary unemployment because the reason for
unemployment is not a shortage of jobs, but in fact, the workers themselves quit their jobs in
search of better opportunities.

6. What are the causes of unemployment in India. Suggest some measures to remove
unemployment in India. Write a note on the rural employment schemes undertaken by
the government of India to remove unemployment in India.

Ans: Causes of Unemployment in India

Measures to Remove Unemployment in India
1. The Caste System: A Social Barrier to Employment
The caste system, deeply ingrained in Indian society, is a significant contributor to
unemployment. It is a structure of social stratification that can potentially pervade virtually
every aspect of life in India. In some regions, certain types of work are prohibited for
members of particular castes. This leads to situations where jobs are often given to
individuals from a specific community, rather than to those who genuinely possess the
requisite skills. As a result, there is a higher prevalence of unemployment among those who
deserve employment opportunities but are denied due to their caste.
2. Inadequate Economic Growth
India's economy, though steadily growing, faces challenges related to its pace of
development. The role of economic growth in generating employment is crucial, and the
current rate of growth is inadequate to provide sufficient job opportunities to the burgeoning
population. As the population continues to increase, the economy struggles to keep up with
the demands for employment. Consequently, a growing number of people find themselves
unable to secure
3. Increase in Population
India's population is on track to exceed that of China by the year 2024, making it the most
populous country in the 21st century. However, the country's economic growth rate is not
commensurate with its population growth. This imbalance results in a larger percentage of the
population being unemployed, as the job market cannot absorb the growing workforce
effectively.
4. Agriculture: A Seasonal Occupation
Agriculture, a primary occupation in India, offers employment to a substantial segment of the
population. However, it is primarily seasonal, with work available for only a few months
each year. This seasonal nature of agricultural work leaves many agricultural labourers
without employment and income for a significant portion of the year.
5. Loss of Small-Scale/Cottage Industries
Industrialization and the rise of large-scale mass production have made small-scale and
cottage industries less economically attractive. The demand for cost-effective, mass-produced
goods often overshadows the appreciation for handcrafted, skill-intensive products.
Consequently, cottage and small-scale industries have suffered, leading to the unemployment
of skilled artisans.
6. Low Rates of Saving and Investment
India faces a shortage of capital and low rates of savings and investment. Investment, which
relies on savings, remains insufficient to create new job opportunities and stimulate economic
growth. Moreover, there is a notable lack of investment in rural areas and tier 2 and tier 3
cities, leaving untapped employment potential unexplored.
7. Ineffective Economic Planning
One of the critical issues exacerbating unemployment in India is the absence of
comprehensive national plans to bridge the significant gap between labour supply (abundant)
and labour demand (lower). A well-balanced labour market is essential to ensure that those
seeking jobs can secure them. Without such planning, the job market becomes highly
competitive, with numerous individuals vying for a limited number of positions.
8. Labor Immobility
Cultural values that prioritize maintaining proximity to family play a significant role in
labour immobility in India. Many individuals avoid long-distance travel for employment, as
attachment to family is a top priority. Language, religion, and climate also contribute to the
low mobility of labour. When potential job seekers are unable to relocate for work,
unemployment rates rise.
9. Job Specialization and Skilling
In today's globalized economy, jobs have become highly specialized. However, India's
education system often falls short in providing the necessary training and specialization
required for these roles. As a result, many willing workers become unemployable due to a
lack of essential skills. A study has shown that 33% of educated youth in India are
unemployed because they lack the skills demanded by the job market. This highlights the
urgent need for educational reforms and skill development programs.

Solutions to Remove Causes of Unemployment: Solving the issue of unemployment in

India is a complex challenge that requires a multifaceted approach. Here are some detailed
solutions to combat unemployment in the country:
 1. Skill Development Programs: Invest in comprehensive skill development programs
to equip the workforce with the skills needed for the job market. Collaborate with
industries to identify skill gaps and tailor training accordingly.
2. Education Reforms: Revamp the education system to align with the demands of the
job market. Introduce practical and vocational training that prepares students for real-
world employment opportunities.
3. Promote Entrepreneurship: Encourage entrepreneurship by providing financial
incentives, reducing bureaucratic hurdles, and offering mentorship programs. Startups
and small businesses can be significant sources of job creation.
4. Invest in Infrastructure: Infrastructure projects such as roads, railways, and urban
development not only boost economic growth but also generate employment in
construction and related sectors.
5. Industrial Diversification: Promote the diversification of industries to create a more
balanced job market. Encourage the growth of sectors beyond traditional areas like
agriculture and IT.
6. Labour Market Information: Establish platforms or agencies that provide up-to-
date information on job vacancies, skill requirements, and market trends. This helps
job seekers make informed choices.
7. Flexible Labor Laws: Reform labour laws to strike a balance between workers'
rights and industry needs. Creating a more flexible labour market can encourage job
creation.
8. Public Sector Jobs: Increase opportunities in the public sector by filling vacant
government positions. This can provide stable employment options for a significant
portion of the population.
9. Incentivize Foreign Investment: Attract foreign investment by improving the ease of
doing business, offering tax incentives, and ensuring a stable regulatory environment.
Foreign companies can bring in new job opportunities.
10. Rural Development: Invest in rural development projects to reduce the urban-rural
gap. Providing employment opportunities in rural areas can alleviate migration to
overcrowded cities.
11. Entrepreneurial Education: Incorporate entrepreneurial education in schools and
colleges to instil a culture of innovation and self-employment.

Unemployment in India is a multifaceted problem driven by various interconnected factors,

including the caste system, economic growth challenges, population growth, seasonal
agriculture, declining small-scale industries, low savings and investment rates, ineffective
economic planning, labour immobility, and inadequate skilling. Addressing this issue
requires an integrated approach that combines economic reforms, education enhancement,
and policies aimed at bridging the gap between labour supply and demand.

Rural Employment Schemes in India

The Indian government has implemented several rural employment schemes to combat
unemployment and improve livelihoods:
1. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA):
Launched in 2005, this scheme guarantees 100 days of unskilled wage employment in a
financial year to every rural household. It aims to enhance livelihood security and create
durable assets in rural areas.
2. Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (DAY-NRLM): This
program focuses on promoting self-employment and organization of rural poor into self-help
groups (SHGs) to enhance their income through skill training and access to financial services.
3. Pradhan Mantri Gram Sadak Yojana (PMGSY): While primarily focused on rural
infrastructure, this scheme indirectly generates employment by creating jobs in road
construction and maintenance, improving access to markets and services.
4. National Rural Livelihoods Mission (NRLM): This initiative aims to reduce poverty by
promoting self-employment and providing skill development and vocational training to rural
populations.
5. Swarnjayanti Gram Swarozgar Yojana (SGSY): This scheme promotes self-
employment among rural poor through the formation of self-help groups, providing them
with training and financial assistance to start their own enterprises.
These initiatives reflect the government's commitment to addressing unemployment in rural
areas by enhancing livelihoods and creating sustainable job opportunities.