Economics - Poverty

Poverty

13.1 Poverty

People unable to reach the minimum level of consumption standard are regarded as poor. So, poverty can be defined as a situation where people cannot attain minimum level of consumption standard.

According to the Planning Commission of India, A person, living in rural area, is earning less than Rs.225 per month and Rs.265 per capita per month, in urban area is considered below the poverty line.

 Poverty Metrics in India

In urban areas some people are earning very high while income of some peoples are very low.

The 10^th Plan aimed to reduce poverty to the level of 11% by 2012.

The ‘garibi hatao’ (eradicate poverty) slogan was coined during the Fourth plan.

a.Types of Poverty

There exists two types of poverty – ‘Absolute Poverty’ & ‘Relative Poverty’.

Relative Poverty : In the case of ‘Relative Poverty’, income distribution of the people in different groups is estimated & a comparison of the levels of living of the top 5 – 10% with the bottom 5 – 10% population reflects the relative deprivation.

Concept of relative poverty is more applicable to developed country because there are maldistribution of income resulting in some people are very rich, some are very poor. Though in developed country there are huge income generating resources, inappropriate distribution of income among different classes bring relative poverty to few classes.

Gini coefficient is used to measure Relative poverty.

Absolute poverty : Absolute poverty is different from relative poverty. A person is absolutely poor if his income is less than the minimum level of income (known as Poverty line), while he is relatively poor, if he belongs to a bottom income group (such as poorest 10%). In India, the concept of poverty has been taken mainly in absolute sense.

Concept of absolute poverty is mostly applicable to less developed country because most of their people cannot meet their basic requirements due to extreme low income.

b.Poverty line

Poverty line is identified in terms of per-capita consumption expenditure required to get the minimum calorie-intake.

Poverty Line in India

As per Indian planning Commission, poverty line is drawn on the basis of barest minimum desirable nutritional standards of 2400 calories per person per day in rural area & 2100 calories for urban areas. In money terms, as per 2005 estimates Rs.368 per capita per month for rural area & Rs.599 per capita per month for urban areas.

-         In India poverty line has been defined in line of Consumption data.

-         Dadabhai Naorji was perhaps the first to employ the idea of poverty line in India

-         As measured in tenth plan, 26% of population living below the poverty line.

-         As per the Planning Commission, average 2100 calories daily, per person defines the poverty line in urban areas.

-         In 2004-05, 22% of population of India was below poverty line.

 13.2 Reasons of poverty

i.      Under utilization of natural resources: If the natural resources of a country remain underutilized, the country cannot generate adequate income for its people. It brings poverty to the country.

ii.    Unemployment and under employment: Unemployment is the situation were people willing to work cannot get employment. Unemployment and under employment is major cause of rampant poverty in India. There also exists disguised unemployment in the agricultural sector.

iii.   Rapid growth of population: The rapid growth of population, coupled with slow growth of development, adversely affects the per capita income and consumption.

iv.   Defective planning: Poverty in our country is also the effect of our poor economic policy. Our economic policy failed to achieve to proper distribution of national income. As a result, some people became richer and majority remained poor. Our economic policy also failed to generate adequate employment opportunities.

The best measure to eradicate poverty is to make economic policy in such a way that it will reduce unemployment problem, reduce income inequality and make optimum utilization of available resources.

13.3 Steps to alleviate the property

The Government has initiated various specific programmes to control the problem of poverty and unemployment.

i.      National Scheme of Training of Rural youth for self employment (TRYSEM): Its main thrust in on equipping rural youths in the age group of 18-35 years with necessary skills and technology to take up vocations of self employment in agriculture and allied industries. TRYSEM is a very measure to generate self employment opportunities in rural areas.

ii.    Self-Employment Programmes for Urban poor (SEPUP): This programme launched on September 1, 1986. The objective of this programme was to provide self-employment opportunities to the poor people in the urban area like rickshaw pullars, cobblers, washer man, newspaper sellers, vendors, cycle and scooter mechanics etc. As in rural area, unemployment is also rampant in urban area. SETUP is a very effective measures to create employment opportunities for urban poor.

iii.   Jawahar Rozgar Yojna (JRY): This scheme was launched on April 28, 1989 in the Lok Sabha. The Yojna seeks to provide employment to at least one member of each rural poor family for 50 to 100 days in a year. The Yojna is implemented through the Gram Panchayat.

iv.   Nehru Rozgar Yojna (NRY): It was started on October 11, 1989. It is the counterpart of J.RY in the Urban Sector. The main target of this scheme is to create at opportunities for self-employment as well as creates wage employment for urban poor living below the poverty line.

v.     Prime Minister’s Integrated Urban Poverty eradiation programme (PMIUPEP): The PMIUPEP was started during 1995-96. The main target of these scheme is to achieve social sector goals, community empowerment, and employment generation skill up gradation and environment improvement under a long-term strategy.

vi.   Employment Assurance Scheme (EAS): EAS started on 2^nd Oct 1993. The main target of this scheme is to provide 100 days of manual work of unskilled nature to rural poor seeking employment. Especially during agricultural season. This scheme has tried to reduce the unemployment problem to some extent.

vii.  Jawahar Gram Smridhi Yojna (JGSY): The main thrust of Jawahar gram smridhi yojna is to create additional employment opportunities to the rural families. So, that it can help rural families to increase their standard of living and quality of life.  

viii. Rural Works Programmes: During the fourth five year plan, Govt of India introduced this programme, involving construction work in rural areas. It was expected that these programmes would create employment opportunities in rural areas.

ix.   Intergrated Rural Development Programme (IRDP): The IRDP came to force in 1980, to alleviate rural poverty. This programme is implemented at grass roots levels (through block development offices). The main objective of IRDP is to raise the families (the identified target group) above the poverty line & create substantial opportunities of self-employment in the rural sector.

x.     Small Farmers Development Agency (SFDA): The Govt, under the recommendations of Bhagwati Committee, undertook this scheme during the Fifth Five year plan to provide adequate credit to small farmers, to enable them to adopt the latest techniques of cultivation & diversify their activities.

xi.   Marginal Farmers & agricultural labour Development Agencies (MFAL): It is undertaken to help marginal farmers with subsidised credit for undertaking dairy, poultry, fishery, piggery & horizontal activities.

xii.  Drought Prone Areas Programme (DPAP): It was undertaken during the Fifth plan, to create gainful employment among the general people of drought prone areas.

xiii. Development of Women and Children in Rural Area (DWACRA): This project aims to improve the condition of rural women through the creation of income generating activities in selected districts with low literacy rate & high infant mortality rate.

xiv. Swarna Jayanti Gram Swarozgar Joyjana (SJGSY)

It is launched on april, 1999, which integrates the self employment programmes, IRDP, TRYSEM, DWACRA etc. It aims at providing employment. Opportunities to rural poor, establishing large number of small enterprise & forming self-help gropus.