POVERTY

In fact, two types of standards are common in economic literature, viz., absolute and relative.
Accordingly, we can indicate two aspects of poverty: (a) Absolute poverty and (b) Relative
poverty.
Absolute poverty : In the case of absolute poverty or absolute deprivation, a minimum
physical quantity of cereals, pulses, milk, butter, etc., are determined, which are supposed to be
necessary for maintaining a subsistence level of living. Then the price quotations convert these
physical quantities into monetary terms. (i.e., the physical quantities are multiplied by the per unit
prices of the respective goods). Aggregating all these price quotations, a figure expressing Per
Capita Consumption Expenditure (PCE) per month is determined. Now those persons whose PCE
remains below that fixed cut off level, are considered to be below the poverty lone. In this case,
the magnitude of poverty is generally expressed in terms of the absolute number of poor persons
in a society.
Relative poverty: In the case of relative poverty, income distribution of the people in
different fractile groups is estimated. A comparison of the levels of living of the top 5-10 per cent
(i.e., the richer section) with the bottom 5-10 per cent (i.e., poorer section) of the population reflects
this relative deprivation. Thus, it indicates the relative position of different segments of the
population in the income hierarchy. Such relative deprivation is also found in affluent societies or
developed countries of the world. However, the less-developed countries like India are more
concerned with absolute poverty.

Human Poverty
According to some development economists, the traditional concept of poverty is only concerned
with the deprivation of any individual in terms of income earnings. But poverty also manifests
itself in the form of denial of a long and healthy life, freedom of choice, dignity, self-respect and
a decent standard of living. In this sense, human poverty can be defined as a denial of choices and
opportunities for living a tolerable life.
While measuring the human poverty, the Human Development Report (Prepared by the UNDP)
focuses on the deprivation of the following three elements of human life:
(a) Deprivation relating to survival : It shows the vulnerability to death before 40
years of age.
(b) Deprivation relating to knowledge : It is measured by the incidence of adult
illiteracy in a society.
(c) Deprivation relating to a decent standard of living : This aspect of human life is
measured by two variables: (i) the percentage of population without adequate
access to improved water resources, and (ii) the percentage of children (under 5
years of age) who are under-weight.

Government measures to curb income inequalities in India

The Government of India has undertaken various measures to curb (control) the extent of income
inequalities during the plan periods. One of the principal objectives of the five year plans was to
reduce income inequalities. These measures can be put into two broad groups :
(a) Measures which intended to level down the income of rich people and
(b) Measures which intended to raise the income of poor people.
Let us now give a brief description of these policy measures and try to assess their efficacy
(effectiveness):
(1) Control over monopolies and restrictive trade practices : In 1969, Government had passed
the Monopolies and Restrictive Trade Practices (MRTP) Act to check the monopoly or oligopoly
power of large business houses and to prohibit restrictive trade practices. Under this Act, a
permanent statutory commission, called the MRTP Commission, was set up to investigate several
cases of such restrictive trade practices and to recommend corrective measures.
However, in practice this Act was proved to be ineffective in checking the concentration of
monopoly power in the hands of large industrial houses. Hence, different economists say that,
monopoly power would be accentuated and this would lead to a further increase in income
inequalities.

(2) Tax Policies: The Government of India, through a progressive direct tax, has also attempted to
reduce the disposable income of rich people. This tax policy also allowed tax exemption for the
people in the low income groups. However, it was observed that only a small portion of the Indian
population (less than 5 per cent) came under the purview of income tax. Further, there was also a
large scale tax evasion (avoidance) by the people in the higher income group, giving birth to black
money and an underground or parallel economy (based on black money) over which the
Government had virtually no control. So, the tax policy of the Government could not also make a
serious dent in reducing the income inequalities.

(3) Redistribution of agricultural land: We know that the land reform policies of the
Government of India aimed at reducing the inequalities in the distribution of agricultural land.
However, land reform policies could not be effectively implemented in India except in a few states
like West Bengal, Karnataka and Kerala.

(4) Introduction of different employment programmes: Government of India introduced

different programmes during the plan periods to generate employment opportunities among the
rural and urban poor. Schemes like Nehru Rozgar Yojana (NRY), Self-employment Programme
for Urban Poor (SEPUP), Self-employment to the Educated Unemployed Youth (SEEUY), Prime
Minister’s Rozgar Youjana (PMRY), The Swrna Jayanti Shahari Rozgar Yojana (SJSRY), and the
Prime Minister’s Integrated Urban Poverty Eradication Programme (PMIUPEP) were introduced
to create more employment and income opportunities among the urban poor. On the other hand,
Integrated Rural Development Programme (IRDP), National Rural Employment Programme
(NREP), Jawahar Rozgar Yojana (JRY), Employment Assurance Scheme (EAS), Training of
Rural Youth for Self-Employment (TRYSEM), National Rural Employment Guarantee
Programme (NREG Act was passed in 2005) etc. were introduced for generating more
employment and income opportunities among the rural poor.
However, in view of the growing population pressure, all these short-term measures could
only touch the fringe of the problem.

(5) Implementation of Minimum Wages Act: In 1948, the Minimum Wages Act was passed to
ensure minimum acceptable wages for the working class, so that they could maintain a minimum
acceptable standard of living. However, the role of this statutory minimum wages in improving
the economic condition of the poor is limited in our country, because provisions of this Act are
effective particularly with the organized sector. Hardly 10 per cent of the Indian work force is
engaged in the organized sector.
(6) Implementation of social security measures: One part of the task of reducing social and
economic inequalities in India involves the expansion of social security provisions. Some of the
important social security measures, particularly for protecting industrial workers at the time
accidents, sickness, retirement, etc. are:
(a) Workmen’s Compensation Act (1923) which aimed at compensating industrial workers
in case of sudden accidents or injury resulting in temporary or permanent disablement or death
while on duty.
(b) The Maternity Benefit Act (1961) aimed at giving benefits to female workers for the
periods before and after child birth.
(c) Employees’ Provident Funds and Miscellaneous Provision Act (1952) gave the benefit
of provident funds to industrial workers.
(d) Employees’ State Insurance Act (1948) which entitles the insured industrial workers to
medical benefits, disability benefits, sickness benefits, maternity benefits, etc.
(e) Employee’s Family Pension Scheme (1971) and Coal Mines Family Pension Scheme
(1971) were introduced to provide long-term financial security to the families of industrial workers
in the event of their premature death.
During the Eighth Five Year Plan, the Government of India has also implemented a multi-
dimensional National Social Assistance Programme (NSAP) particularly for the poor people. The
NSAP consists of the following three components:
(a) National Old-Age Pension Scheme (NOAPS) for providing a pension of Rs. 75
per month to destitute and poor persons above 65 years of age.
(b) National Family Benefit Scheme (NFBS) which provides for a benefit of Rs.
5,000 in case of natural death and Rs. 10,000 in case of accidental death of the
primary bread-winner of the bereaved household.
(c) National Maternity Benefit Scheme (NMBS) which provides for a cash benefit
of Rs. 300 per pregnancy up to the first two live births.
Further, during the Eighth Plan, to promote social insurance in the rural areas, the Government of
India has launched the Rural Group Life Insurance Scheme (RGLIS) on 15th August, 1995. It also
aimed at alleviating the distress caused by the death of the bread-winner among the rural poor. It
is administered by the Life Insurance Corporation of India and implemented by the Panchayats in
the rural areas for the age group of 20-60 years. A life cover of Rs. 5,000 is provided under this
scheme for an annual premium of Rs. 60-70 depending upon the age of entry.
(7) Introduction of Common Minimum Programme (CMP): The CMP, announced by the
Government in June, 1996, has shown strong commitment to the development of social sectors for
achieving distributive justice. It aimed at (a) 100 per cent coverage of provision of safe drinking
water in rural and urban areas, (b) 100 per cent coverage of primary health service facilities in
rural and urban areas, (c) universalisation of primary education, (d) provision of public housing
assistance to all shelterless poor families, etc.

(8) Steps to reduce gender-based inequalities: With a view to make women economically
independent and self-reliant, a number of interventions have been launched by the Government
during the plan periods. Some of these measures are as follows:
(a) Support to Training and Employment Programme (STEP) which was launched in 1987.
It seeks to train women for employment in the traditional sectors of agriculture, animal husbandry,
dairy, handlooms and handicrafts etc.
 (b) Rashtriya Mahila Kosh (RMK) was set up in March 1993 for meeting the credit needs
of poor women, particularly for those in the unorganized sector.
(c) Mahila Samriddhi Yojana (MSY) was launched in October, 1993 to inculcate the habit
of thrift amongst rural women as well as to give them possession and control over their household
resources.

(9) Microfinance programme for Self-Help Groups (SHGs): One of the most celebrated rural
development schemes that helped in fostering the process of rural development and reduction in
inequalities in income distribution in India is supposed to be the formation of SHGs under
Sampoorna Grameen Swarozgar Yojana (SGSY) programme since 1999 that aimed at poverty
eradication along with the generation of employment and income opportunities in rural India.