Poverty AS A Challenge Notes Class 9 Economics

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1. Introduction

• Poverty is one of India’s most daunting challenges.
• This chapter delves into the multidimensional nature of poverty.
• It explores how poverty is perceived in social sciences.
• Highlights poverty trends in India and globally using the concept of the poverty line.
• Discusses the root causes of poverty and government initiatives to combat it.
• Concludes by expanding the official concept of poverty into human poverty.

The Gravity of Poverty in India

• Approximately one-fifth of India’s population lives in poverty (around 270 million people as of 2011-12).
• India holds the dubious distinction of having the world’s largest concentration of impoverished individuals.
• Underscores the gravity and urgency of addressing this challenge.

Two Typical Cases of Poverty

Urban Case – Ram Saran’s Struggles

• Ram Saran, a 33-year-old daily-wage labourer in Jharkhand.
• Erratic income, earning about Rs 1,500 per month.
• Supports a family of six, including elderly parents in a nearby village.
• Lives in a one-room rented house in a crowded basti.
• Wife Santa Devi works as a part-time maid for additional income.
• The family’s diet is meagre, consisting mainly of dal and rice.
• Children are deprived of education, and their clothing is scarce.
• Healthcare is inaccessible, and malnutrition plagues the younger children.

Rural Case – Lakha Singh’s Struggles

• Lakha Singh, residing in a village near Meerut, Uttar Pradesh.
• His family lacks land and depends on odd jobs for large farmers.
• Income is uncertain, with remuneration often in kind.
• Eight-member family struggles to afford two square meals daily.
• The family resides in a kuchha hut on the village outskirts.
• Women in the family gather fodder and firewood.
• Father succumbed to TB due to a lack of medication, and his mother now suffers from the same ailment.
• Despite a nearby primary school, Lakha never received an education.
• Basic necessities such as new clothes, soap, and oil are rare luxuries.

Dimensions of Poverty

• Poverty encompasses various aspects:
• Hunger and inadequate shelter.
• Inability to send children to school.
• Lack of access to healthcare.
• Absence of clean water and sanitation.
• Unemployment or underemployment.
• A pervasive sense of helplessness.
• The impoverished often face mistreatment in various facets of life, from farms to government offices.

Gandhi’s Vision

• Mahatma Gandhi emphasized that true independence for India can only be achieved when the poorest citizens are free from human suffering.
• The challenge of uplifting millions from poverty remains one of independent India’s paramount goals.

2. Poverty as Seen by Social Scientists

Indicators of Poverty

• Social scientists analyse poverty using a variety of indicators due to its multifaceted nature.
• Traditional indicators often relate to income and consumption levels.
• Contemporary approaches consider additional social indicators such as:
• Illiteracy rates.
• General resistance to diseases and malnutrition.
• Lack of access to healthcare.
• Limited job opportunities.
• Absence of safe drinking water.
• Poor sanitation.
• Analysis of poverty increasingly incorporates the concepts of social exclusion and vulnerability.

Social Exclusion

• Poverty is viewed in terms of social exclusion, where the impoverished are confined to deprived environments, surrounded by others facing similar challenges.
• Social exclusion can result from poverty or exacerbate it.
• It involves the denial of facilities, benefits, and opportunities enjoyed by more privileged individuals.
• Examples include India’s caste system, which restricts certain castes from equal opportunities.
• Social exclusion can be more damaging than low income, as it affects overall quality of life.

Vulnerability

• Vulnerability to poverty measures the heightened likelihood of certain communities or individuals falling into or remaining in poverty.
• Factors influencing vulnerability include:
• Availability of assets.
• Access to education.
• Health conditions.
• Job prospects.
• Vulnerability also considers the increased risks faced by these groups during natural disasters (e.g., earthquakes, tsunamis), terrorism, and other crises.
• It assesses their social and economic capacity to cope with these risks.
• Vulnerability implies a greater susceptibility to adverse consequences during times of adversity, affecting individuals and communities disproportionately.

3. Poverty Line: Measuring Poverty

• The concept of the “poverty line” is central to discussions on poverty measurement.
• Poverty is often assessed based on income or consumption levels.
• Individuals are deemed poor if their income or consumption falls below a defined “minimum level” required to meet basic needs.
• The definition of basic needs varies across time and countries, reflecting differing social norms and economic development levels.

Regional Variations

• Each country establishes its own poverty line according to its specific level of development and societal norms.
• What may be considered a necessity in one country could be seen as a luxury in another.
• For example, not owning a car in the United States might signify poverty, while in India, car ownership is often seen as a luxury.

Determining the Poverty Line in India

• In India, the poverty line is determined based on minimum requirements for subsistence, including:
• Food
• Clothing
• Footwear
• Fuel and light
• Educational and medical needs
• Physical quantities of these items are multiplied by their respective rupee prices.
• The food requirement calculation is based on desired calorie intake, varying by age, sex, and occupation type.
• The accepted average calorie requirement is 2400 calories per person per day in rural areas and 2100 calories per person per day in urban areas.
• Rural areas have higher calorie requirements due to more physical work.
• The monetary expenditure needed to purchase these calorie requirements is periodically adjusted to account for rising prices.

Poverty Line in 2011-12

• In 2011-12, the poverty line was set at Rs 816 per month for rural areas and Rs 1000 for urban areas in India.
• Urban areas had a higher poverty line due to the increased cost of essential products.
• Thus, a family of five in rural areas earning less than about Rs 4,080 per month was considered below the poverty line, while a similar urban family required a minimum of Rs 5,000 per month to meet their basic needs.
• The poverty line is periodically revised through sample surveys conducted by the National Sample Survey Organisation (NSSO).

International Poverty Line

• International organizations like the World Bank use a uniform standard for the poverty line to facilitate comparisons between developing countries.
• This standard sets the poverty line at the minimum availability of the equivalent of $1.90 per person per day (2011, purchasing power parity or ppp).

4. Poverty Estimates in India

Overview

• Poverty ratios in India have shown a significant decline over the years, indicating progress in poverty reduction efforts.
• The poverty estimates are based on the Tendulkar Methodology.

Historical Trends

• In 1993-94, approximately 45% of the population in India lived below the poverty line.
• By 2004-05, there was a notable reduction, with the poverty ratio dropping to 37.2%.
• The trend continued, and in 2011-12, only about 22% of the population was below the poverty line.

Future Projections

• The trend suggests that if current efforts persist, the proportion of people below the poverty line in India may decrease to less than 20% in the coming years.

Decline in the Number of Poor

• It’s not only the poverty ratio that has improved, but also the actual number of people living in poverty.
• In 2004-05, there were an estimated 407 million poor individuals in India.
• However, by 2011-12, this number had decreased significantly to 270 million.
• The average annual decline in the number of poor individuals during the period from 2004-05 to 2011-12 was approximately 2.2 percentage points.

Poverty Estimates (Tendulkar Methodology)

The following table presents the poverty ratios and the number of poor individuals in rural, urban, and combined areas of India for various years:

Source: India in figures, 2018, Government of India Central Statistics office. niti.gov.in/statestatistics (accessed on Nov. 15, 2021)

5. Vulnerable Groups in India

Social and Economic Disparities

• Poverty is not evenly distributed among all social groups and economic categories in India.
• Vulnerable groups include Scheduled Caste and Scheduled Tribe households, as well as specific economic categories such as rural agricultural labour households and urban casual labour households.

Vulnerability by Social Groups

• Scheduled Tribes: Among all social groups, Scheduled Tribes are the most vulnerable to poverty.
• Approximately 43 out of every 100 individuals belonging to Scheduled Tribes live below the poverty line.
• Scheduled Castes: Around 29% of Scheduled Castes are living in poverty.
• The combination of being a landless casual wage labor household within these socially disadvantaged social groups, such as Scheduled Castes and Scheduled Tribes, exacerbates the severity of the issue.

Economic Vulnerability

• Rural Agricultural Labor Households: About 34% of rural agricultural labor households are living below the poverty line.
• Urban Casual Labor Households: In urban areas, 34% of casual workers are considered poor.

Changes Over Time

• Some studies indicate that except for Scheduled Tribe households, the other vulnerable groups (Scheduled Castes, rural agricultural laborers, and urban casual labor households) have experienced a decline in poverty during the 1990s.

Inequality Within Families

• Poverty within a family is not uniform, and some family members suffer more than others.
• In impoverished families, women, elderly individuals, and female infants often face unequal access to available resources.

Story of Sivaraman

• Sivaraman, a resident of a Tamil Nadu village near Karur town, exemplifies the challenges faced by vulnerable groups.
• He works as an agricultural labourer for part of the year, earning Rs 160 per day.
• His wife, Sasikala, also works, but her income is lower than his.
• Their family comprises eight members, including Sivaraman’s elderly mother, an unmarried sister, and four children.
• None of the girls in the family go to school due to financial constraints.
• Sivaraman’s mother is unwell and dependent on the family for support.
• His sister and elder daughter manage household chores.
• Sivaraman plans to send his son to school in the future, but educational expenses are a challenge.
• The family struggles to afford two meals a day, and even basic necessities are scarce.
• This story highlights the complex dynamics of poverty within vulnerable households, where multiple factors contribute to their challenges.

6. Inter-State Disparities in Poverty in India

Regional Variations

• Poverty in India exhibits significant regional disparities, with varying proportions of poor people across states.
• While there has been a consistent decline in poverty at the national level since the early 1970s, the success in poverty reduction varies from one state to another.

State-Level Poverty Rates (2011-12)

• In 2011-12, the national Head Count Ratio (HCR), which measures the proportion of people living below the poverty line, stood at 21.9%.
• However, certain states continued to have poverty rates higher than the national average.
• States like Madhya Pradesh, Assam, Uttar Pradesh, Bihar, and Odisha had poverty rates above the national average.

Poorest States

• Bihar and Odisha were identified as the two poorest states, with poverty rates of 33.7% and 32.6%, respectively.
• These states not only faced high rural poverty but also had elevated levels of urban poverty.

Successful Poverty Reduction

• Some states in India have made significant progress in reducing poverty:
• Kerala: Focused on human resource development.
• Maharashtra: Witnessed a decline in poverty.
• Andhra Pradesh: Improved through public distribution of food grains.
• Tamil Nadu: Also benefited from public distribution programs.
• Gujarat: Achieved a noteworthy reduction in poverty.
• West Bengal: Implemented land reform measures, contributing to poverty reduction.
• Punjab and Haryana: Reduced poverty with high agricultural growth rates.

Diverse Strategies

• These states’ successes in poverty reduction are often attributed to various strategies, such as human resource development, land reforms, and effective public distribution systems.
• Regional variations in economic growth, development priorities, and policies contribute to the differing poverty rates across states in India.

7. Global Poverty Scenario

Decline in Extreme Economic Poverty

• The proportion of people worldwide living in extreme economic poverty, defined by the World Bank as living on less than $1.90 per day, has shown a significant decline.
• In 1990, approximately 36% of the global population lived in extreme poverty.
• By 2015, this proportion had dropped to around 10%.

Regional Variations

• Despite substantial progress in reducing global poverty, there are significant regional differences in poverty rates.

Success Stories

• China and Southeast Asia: Rapid economic growth and substantial investments in human resource development led to a substantial reduction in poverty in China and Southeast Asian countries.
• China’s poverty rate decreased from 88.3% in 1981 to 0.6% in 2019.
• South Asia: Countries in South Asia, including India, Pakistan, Sri Lanka, Nepal, Bangladesh, and Bhutan, also experienced rapid poverty reduction.
• The percentage of people living in poverty declined from 34% in 2005 to 15.2% in 2014.
• The number of poor people decreased significantly from 510.4 million in 2005 to 274.5 million in 2013.

Challenges and Regional Variations

• In Sub-Saharan Africa, poverty declined from 51% in 2005 to 40.2% in 2018.
• In Latin America, the poverty ratio decreased from 10% in 2005 to 4% in 2018.
• However, poverty has resurfaced in some former socialist countries, including Russia, where it was previously officially non-existent.

Sustainable Development Goals

• The United Nations (UN) has set new sustainable development goals aiming to end all types of poverty by 2030.

International Poverty Line

• Table 3.2 provides a snapshot of the proportion of people living below the international poverty line, defined as those with a daily income of less than $1.90.

Note: The reduction in poverty is an encouraging global trend, but regional disparities persist, and various challenges remain in the fight against poverty worldwide.

8. Causes of Poverty in India

Historical Factors

• British Colonial Administration: Historical factors contribute to the widespread poverty in India. One such reason is the low level of economic development under British colonial rule. The colonial policies negatively impacted traditional handicrafts and discouraged the development of industries like textiles.
• Low Economic Growth: The low rate of economic growth persisted even after independence until the 1980s. This resulted in limited job opportunities and low-income growth.
• High Population Growth: High population growth compounded the problem of low per capita income, perpetuating the cycle of poverty.

Limited Impact of Agricultural Growth

• Green Revolution: The spread of irrigation and the Green Revolution created job opportunities in agriculture, but these effects were limited to certain regions of India.
• Urban Migration: Unable to find suitable jobs in cities, many people turned to occupations such as rickshaw pulling, vending, construction work, and domestic service. Their irregular, small incomes made it difficult for them to afford proper housing, leading to the growth of urban slums.

Income Inequality

• Unequal Distribution of Resources: Income inequality is a major issue contributing to poverty. The unequal distribution of land and other resources has played a significant role in income disparities.
• Land Reforms: Although policies like land reforms aimed at redistributing assets in rural areas, they have not been effectively implemented by many state governments. Lack of access to land resources remains a major cause of poverty in India.

Socio-Cultural and Economic Factors

• Social Obligations: People in India, including the very poor, spend significant amounts of money on fulfilling social obligations and observing religious ceremonies.
• Debt Trap: Small farmers often need money to purchase agricultural inputs like seeds, fertilizer, and pesticides. Lack of savings forces them to borrow, and their inability to repay due to poverty results in indebtedness.
• Cycle of Indebtedness: The high level of indebtedness is both a cause and an effect of poverty, creating a cycle that is difficult to break.

Note: Poverty in India is influenced by a complex interplay of historical, economic, social, and cultural factors. Addressing poverty requires a multi-faceted approach that includes economic development, job creation, social reforms, and effective policy implementation.

9. Anti-Poverty Measures in India

India has pursued a multifaceted approach to alleviate poverty, focusing on economic growth and targeted anti-poverty programs. Here are some of the key strategies and programs:

Economic Growth and Poverty Reduction

• Economic Growth: India’s economic growth has accelerated since the 1980s, contributing significantly to poverty reduction. Higher economic growth widens opportunities and provides resources for human development.
• Investment in Human Development: Economic growth encourages people to invest in education, including the education of girls, with the expectation of better economic returns.

Targeted Anti-Poverty Programs

1. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA):

• Aims to provide 100 days of wage employment to every rural household for livelihood security.
• Focuses on sustainable development to address issues like drought, deforestation, and soil erosion.
• One-third of jobs are reserved for women.
• Provides employment opportunities and has increased average wages over the years.

2. Prime Minister Rozgar Yozana (PMRY):

• Started in 1993 to create self-employment opportunities for educated unemployed youth in rural areas and small towns.
• Assists in setting up small businesses and industries.

3. Rural Employment Generation Programme (REGP):

• Launched in 1995 to create self-employment opportunities in rural areas and small towns.
• Aims to create 25 lakh new jobs during the Tenth Five-Year Plan.

4. Swarnajayanti Gram Swarozgar Yojana (SGSY):

• Launched in 1999 with the goal of bringing assisted poor families above the poverty line.
• Organizes them into self-help groups through a combination of bank credit and government subsidy.

5. Pradhan Mantri Gramodaya Yojana (PMGY):

• Started in 2000, providing additional central assistance to states for basic services such as primary health, primary education, rural shelter, rural drinking water, and rural electrification.

6. Antyodaya Anna Yojana (AAY):

• Provides subsidized food grains to the poorest of the poor.
• Ensures food security for vulnerable households.

Challenges in Implementation

• Proper Implementation: Effectiveness of these programs is often hampered by inadequate implementation and targeting issues.
• Overlapping Schemes: There is a significant overlap among various poverty alleviation schemes.
• Lack of Full Coverage: Despite good intentions, the benefits of these programs may not fully reach deserving individuals.

Emphasis on Monitoring

Recent efforts have focused on proper monitoring of all poverty alleviation programs to ensure that the benefits are reaching the intended recipients.

Addressing poverty in India requires a comprehensive approach that combines economic growth with targeted interventions to uplift the lives of the poor and marginalized.

10. Challenges Ahead in Poverty Reduction

Despite significant progress, poverty reduction remains one of India’s most pressing challenges. Several key challenges lie ahead:

1. Disparities in Poverty: Wide disparities in poverty levels persist between rural and urban areas and among different states. Addressing these regional inequalities is essential.
2. Vulnerable Groups: Certain social and economic groups, such as Scheduled Castes, Scheduled Tribes, and economically weaker sections of society, remain more vulnerable to poverty. Special attention is needed to uplift these marginalized communities.
3. Continued Progress: While poverty reduction is expected to make further progress in the coming years, sustained efforts are required to ensure that the gains are not reversed.
4. Higher Economic Growth: Continued higher economic growth will be crucial in reducing poverty rates further. Economic development widens opportunities and resources for poverty alleviation.
5. Universal Education: Increased emphasis on universal free elementary education will play a significant role in poverty reduction by improving human capital development.
6. Population Growth: Slowing population growth will help in managing resources more effectively and ensuring better living standards for all.
7. Empowerment of Women: Empowering women economically and socially is essential for reducing poverty and achieving gender equality.
8. Broadening the Concept of Poverty: Poverty is not just about income; it’s also about access to education, healthcare, shelter, job security, self-confidence, and freedom from discrimination. The concept of poverty should be broadened to include these aspects.
9. Moving Target: Eradicating poverty is a moving target. As development progresses, the definition of poverty changes, and new challenges emerge.
10. Bigger Challenges: Achieving universal access to healthcare, education, and job security, as well as promoting gender equality and dignity for the poor, will be even greater tasks.

In conclusion, while India has made significant strides in reducing poverty, it must continue its efforts to address the complex and evolving nature of poverty. Economic growth, social empowerment, and a holistic approach that considers multiple dimensions of poverty are key to making further progress in improving the lives of all its citizens.