Understanding the concept and definitions of poverty in various contexts.
Identifying the different types of poverty and methods used for measuring poverty levels.
Exploring the status of poverty in India and related statistics.
Recognizing the forms of unemployment and its associated implications in India.
Reviewing major poverty eradication and employment schemes introduced by the government.
Poverty
Poverty is a social condition where individuals lack sufficient income to meet their basic needs. The UN Human Rights Council defines poverty as a chronic deprivation of necessary resources, limiting an individual’s ability to enjoy an adequate living standard and other social and economic rights.
Key Global Trends: In 1990, 1.9 billion people lived on less than $1.25 per day, which decreased to 836 million by 2015. The World Bank updated the international poverty line to $1.90 per day in October 2015.
Types of Poverty
Absolute Poverty: Occurs when an individual’s income or consumption level is below the minimum necessary to meet basic needs. It is measured using a poverty line defined by criteria such as calorie intake and minimum consumption expenditure. For example:
Calorie Criteria: In India, an individual in rural areas should receive 2400 kilocalories, while in urban areas, 2100 kilocalories per day.
Minimum Consumption Expenditure: An expert committee established a benchmark where individuals with a monthly expenditure below ₹368 (rural) and ₹559 (urban) in 2004 were considered below the poverty line (BPL).
Relative Poverty: Defined by comparing the per capita income of countries. Nations with substantially lower per capita income compared to others are deemed relatively poor. Within poor nations, populations at the lowest income strata are unable to fulfill basic necessities.
Poverty in India
India has seen a decline in poverty ratios from about 45% in 1993-94 to 21.9% in 2011-12. However, poverty line assessments vary by state due to differing price levels.
Categories of Poor:
Chronic Poor: Always in poverty.
Transient Poor: Occasionally fall into poverty.
Non-Poor: Never experience poverty.
Poverty Line
The poverty line represents the minimum purchasing power needed to meet essential requirements. It divides the population into Above Poverty Line (APL) and Below Poverty Line (BPL) groups. According to the Asian Development Bank, the new poverty threshold is $1.35 per day. The Tendulkar Committee Report indicated that Odisha had 57.2% of its population living below this line.
Measures of Poverty
Head Count Ratio: Proportion of people living below the poverty line, calculated as the number of poor divided by the total population.
Poverty Gap Index (PGI): Difference between the poverty line and the average income of BPL households, expressed as a percentage of the poverty line. It measures the depth of poverty.
Squared Poverty Gap Index: Mean of squared individual poverty gaps, indicating the severity of poverty and inequality.
Sen Index: Incorporates headcount ratio, poverty gap index, and the Gini coefficient to assess poverty comprehensively.
Multi-Dimensional Poverty Index (MPI): Developed in 2010 by the Oxford Poverty and Human Development Initiative and the UNDP, this index uses factors such as education, health outcomes, and standard of living.
Human Poverty Index (HPI): Previously used by the UNDP to measure poverty, replaced by the MPI since 2010.
Important Note: The Fisher Price Index (FPI) updates the poverty line based on actual consumption data, giving 60% weightage to food. The Tendulkar Committee moved away from calorie benchmarks to a more inclusive definition of poverty that includes expenditures on health, education, and clothing.
Expert Groups for Estimating Poverty
Lakdawala Committee (1989): Recommended state-specific poverty lines based on caloric consumption, updated using CPI for workers.
Tendulkar Committee (2009): Broadened poverty definition beyond calorie intake to include other basic expenditures. Raised the poverty line to ₹447/month in rural areas and ₹579/month in urban areas for 2004-05.
NC Saxena Committee: Suggested a census-based approach for identifying BPL families, emphasizing inclusion of deprived segments.
SR Hashim Committee: For urban BPL families, proposed a three-stage approach: automatic exclusion, inclusion, and scoring index based on vulnerabilities.
Rangarajan Committee (2014): Revised the poverty line to ₹972/month in rural areas and ₹1407/month in urban areas, contesting previous estimates.
State-Wise Poverty Estimates (2004-05 to 2011-12)
States
2004-05 (%)
2011-12 (%)
Decrease (%)
Andhra Pradesh
29.9
9.2
20.7
Bihar
54.4
33.7
20.7
Odisha
57.2
32.6
24.6
All India
37.2
21.9
15.3
UN Report: As per the UNDP, eight Indian states have more poor individuals than the 26 poorest African nations. The World Bank estimated one-third of the world’s poor reside in India.
Inequality
Inequality refers to the income disparity between rich and poor. It stems from factors like access to assets, education, and social conditions. In India, Gini coefficient increased, indicating growing income gaps. Urban-centric growth has led to migration-related social frictions.
Gini Coefficient: Ranges from 0 (perfect equality) to 1 (maximum inequality). India saw its Gini coefficient rise from 0.27 to 0.28 (rural) and 0.35 to 0.39 (urban) from 2004-05 to 2009-10.
Employment and Unemployment
Employment
Refers to the ability of workers to engage in productive activities. There are self-employed, casual wage, and regular wage employees.
Unemployment
A situation where individuals willing and able to work at prevailing wages cannot find employment. The unemployment rate is the number of unemployed persons per 1000 in the labor force.
Types of Unemployment
Voluntary: When individuals choose not to work.
Involuntary: Willing workers cannot find jobs.
Frictional: Temporary job changes due to labor immobility or raw material shortages.
Structural: Mismatch between skills and job requirements due to economic shifts.
Cyclical: Related to economic cycles of boom and depression.
Seasonal: Jobs available only during certain seasons, e.g., agriculture.
Technical: Workers replaced by machines in technologically advanced industries.
Educated: Unemployment among the educated due to mismatch in job availability and qualifications.
Disguised: More people employed than necessary for the job.
Estimates and Measures of Unemployment in India
Usual Principal and Subsidiary Status (UPSS): Employment measured over 365 days.
Current Weekly Status (CWS): At least one hour of work in the preceding week.
Current Daily Status (CDS): Measures unemployment on a daily basis.
Recent Changes (NSSO 66th Round)
Labor Force Participation Rate: Increased youth enrollment in education led to a decline in workforce size.
Job Creation: 18 million jobs created between 2004-05 and 2009-10.
Unemployment Rate: Reduced from 8.28% in 2004-05 to 6.60% in 2009-10.
Important Note: There is a significant increase in casual employment, mainly in the construction sector.
Poverty Eradication and Employment Programs
Skill Development Programs
Prime Minister’s National Council on Skill Development: Aims to create 500 million skilled individuals by 2022.
Skill Loan Scheme: Provides loans ranging from ₹5000 to ₹1.5 lakh for skill development programs.
Pradhan Mantri Kaushal Vikas Yojana (PMKVY): Offers monetary rewards for completing skill training, targeting class 10 and 12 dropouts.
Employment Guarantee Schemes
Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS): Guarantees 100 days of wage employment to rural households, with a focus on unskilled manual work.
**National Rural Livelihood Mission (
NRLM)**: Encourages the formation of Self Help Groups (SHGs) to support poor rural households in managing their livelihoods.
National Urban Livelihood Mission (NULM): Targets urban poor, focusing on skill enhancement and establishment of SHGs.
Concept: The NRLM was previously known as the Swarna Jayanti Grameen Swarojgar Yojana (SGSY).
Multiple-Choice Question (MCQ)
Q: What is the main goal of the Pradhan Mantri Kaushal Vikas Yojana (PMKVY)?
To provide guaranteed employment to rural households.
To create 500 million skilled workers by 2022.
To skill train and certify dropouts from class 10 and 12.
To provide cash transfers to the urban poor. Answer: 3. To skill train and certify dropouts from class 10 and 12.