UPSC Economics Poverty as a Challenge / एक चुनौती के रूप में गरीबी NCERT Extracts - Poverty as a Challenge

Introduction

• We see poverty all around us. In fact, every fourth person in India is poor. This means, roughly 270 million (or 27 crore) people in India live in poverty 2011-12.
• This also means that India has the largest single concentration of the poor in the world. This illustrates the seriousness of the challenge.
• Poverty means hunger and lack of shelter. It also is a situation in which parents are not able to send their children to school or a situation where sick people cannot afford treatment.
• Poverty also means lack of clean water and sanitation facilities. It also means lack of a regular job at a minimum decent level. Above all it means living with a sense of helplessness.
• Poor people are in a situation in which they are ill-treated at almost every place, in farms, factories, government offices, hospitals, railway stations etc.
• Obviously, nobody would like to live in poverty.
• One of the biggest challenges of independent India has been to bring millions of its people out of abject poverty.
• Mahatama Gandhi always insisted that India would be truly independent only when the poorest of its people become free of human suffering.

Poverty as seen by Social Scientists

• Since poverty has many facets, social scientists look at it through a variety of indicators. Usually the indicators used relate to the levels of income and consumption.
• But now poverty is looked through other social indicators like illiteracy level, lack of general resistance due to malnutrition, lack of access to healthcare, lack of job opportunities, lack of access to safe drinking water, sanitation etc.
• Analysis of poverty based on social exclusion and vulnerability is now becoming very common.

Social exclusion

• According to this concept, poverty must be seen in terms of the poor having to live only in a poor surrounding with other poor people, excluded from enjoying social equality of better-off people in better surroundings.
• Social exclusion can be both a cause as well as a consequence of poverty in the usual sense.
• Broadly, it is a process through which individuals or groups are excluded from facilities, benefits and opportunities that others (their "betters") enjoy.
• A typical example is the working of the caste system in India in which people belonging to certain castes are excluded from equal opportunities.
• Social exclusion thus may lead to, but can cause more damage than, having a very low income.                                

 Vulnerability

• Vulnerability to poverty is a measure, which describes the greater probability of certain communities (say, members of a backward caste) or individuals (such as a widow or a physically handicapped person) of becoming, or remaining, poor in the coming years.
• Vulnerability is determined by the options available to different communities for finding an alternative living in terms of assets, education, health and job opportunities
• Further, it is analysed on the basis of the greater risks these groups face at the time of natural disasters (earthquakes, tsunami), terrorism etc.
• Additional analysis is made of their social and economic ability to handle these risks; In fact, vulnerability describes the greater probability of being more adversely affected than other people when bad time comes for everybody, whether a flood or an earthquake or simply a fall in the availability of jobs!

How are Poor People Identified?

• If India is to solve the problem of poverty, it has to find viable and sustainable strategies to address the causes of poverty and design schemes to help the poor out of their situation.
• However, for these schemes to be implemented, the government needs to be able to identify who the poor are.
• For this there is need to develop a scale to measure poverty, and the factors that make up the criteria for this measurement or mechanism need to be carefully chosen.
• In pre-independent India, Dadabhai Naoroji was the first to discuss the concept of a Poverty Line.
• He used the menu for a prisoner and used appropriate prevailing prices to arrive at what may be called 'jail cost of living'.
• However, only adults stay in jail whereas, in an actual society, there are children too. He, therefore, appropriately adjusted this cost of living to arrive at the poverty line.
• For this adjustment, he assumed that one-third population consisted of children and half of them consumed very little while the other half consumed half of the adult diet. This is how he arrived at the factor of three-fourths; (l/6) (Nil) + (l/6)(Half) + (2/3)(Full) -(3/4) (Full).
• The weighted average of consumption of the three segments gives the average poverty line, which comes out to be three-fourth of the adult jail cost of living.
• In post-independent India, there have been several attempts to work out a mechanism to identify the number of poor in the country.
• For instance, in 1962, the Planning Commission formed a Study Group.
• In 1979, another body called the 'Task Force on Projections of Minimum Needs and Effective Consumption Demand' was formed.
• In 1989 and 2005, 'Expert Groups' were constituted for the same purpose.
• For the purpose of defining poverty we divide people into two categories; the poor and the non-poor and the poverty line separates the two.
• However, there are many kinds of poor; the absolutely poor, the very poor and the poor.
• Similarly there are various kinds of non-poor; the middle class, the upper middle class, the rich, the very rich and the absolutely rich.
• Think of this as a line or continuum from the very poor to the absolutely rich with the poverty line dividing the poor from the non-poor.

Categorising poverty

• There are many ways to categorise poverty. In one such way people who are always poor and those who are usually poor but who may sometimes have a little more money (example: casual workers) are grouped together as the chronic poor.
• Another group are the churning poor who regularly move in and out of poverty (example: small farmers and seasonal workers) and the occasionally poor who are rich most of the time but may sometimes have a patch of bad luck. They are called the transient poor. And then there are those who are never poor and they are the non-poor.

Poverty Line

• At the centre of the discussion on poverty is usually the concept of the "poverty line".
• A common method used to measure poverty is based on the income or consumption levels. A person is considered poor if his or her income or consumption level falls below a given "minimum level" necessary to fulfill basic needs.
• What is necessary to satisfy basic needs is different at different times and in different countries. Therefore, poverty line may vary with time and place. Each country uses an imaginary line that is considered appropriate for its existing level of development and its accepted minimum social norms.
• For example, a person not having a car in the United States may be considered poor. In India, owning of a car is still considered a luxury.
• While determining the poverty line in India, a minimum level of food requirement, clothing, footwear, fuel and light, educational and medical requirement etc. are determined for subsistence.
• These physical quantities are multiplied by their prices in rupees. The present formula for food requirement while estimating the poverty line is based on the desired calorie requirement.
• Food items such as cereals, pulses, vegetable, milk, oil, sugar etc. together provide these needed calories. The calorie needs vary depending on age, sex and the type of work that a person does.
• The accepted average calorie requirement in India is 2,400 calories per person per day in rural areas and 2,100 calories per person per day in urban areas.
• Since people living in rural areas engage themselves in more physical work, calorie requirements in rural areas are considered to be higher than urban areas.
• The monetary expenditure per capita needed for buying these calorie requirements in terms of food grains etc. is revised periodically taking into consideration the rise in prices.
• Poverty in India also has another aspect or dimension. The proportion of poor people is not the same in every state. Although state level poverty has witnessed a secular decline from the levels of early seventies, the success rate of reducing poverty varies from state to state.                               
• On the basis of these calculations, for the year 2011-12, the poverty line for a person was fixed at Rs. 816 per month for the rural areas and Rs. 1,000 for the urban areas.
• Despite less calorie requirement, the higher amount for urban areas has been fixed because of high prices of many essential products in urban centres.
• In this way in the year 2011-12, a family of five members living in rural areas and earning less than about Rs. 4,080 per month will be below the poverty line.
• A similar family in the urban areas would need a minimum of Rs. 5,000 per month to meet their basic requirements.                                
• The poverty line is estimated periodically (normally every five years) by conducting sample surveys. These surveys are carried out by the National Sample Survey Organisation (NSSO).
• However, for making comparisons between developing countries, many international organisations like the World Bank use a uniform standard for the poverty line: minimum availability of the equivalent of $ 1 per person per day.

Poverty Estimates

• When the number of poor is estimated as the proportion of people below the poverty line it is known as 'Head Count Ratio'.
• The official data on poverty is made available to the public by the Planning Commission It is estimated on the basis of consumption expenditure data collected by the National Sample Survey Organisation (NSSO).
• There is substantial decline in poverty ratios in India from about 45 per cent in 1993-9 to 37.2 per cent in 2004-05. The proportion of people below poverty line further cam down to about 21.9 per cent in 2011-12.
• If the trend continues, people below poverty line may come down to less than 20 per cent in the next few years.
• Although the percentage of people living under poverty declined in the earlier two decades (1973-1993), the number of poor declined from 407.1 million in 2004-05 to 269.: million in 2011-12 with an average annual decline of 2.2 percentage points during 2004-0 to 2011-12.
• In 1973-74, more than 80 per cent of the poor resided in rural areas and this situation has not changed even in 2011-12. This means that more than three-fourth of the poor in India still reside in villages.
• In the 1990s, the absolute number of poor in rural areas had declined whereas the number of their urban counterparts increased marginally. The poverty ratio declined continuously for both urban and rural areas.
• Six states - Tamil Nadu, Uttar Pradesh, Bihar, Madhya Pradesh, West Bengal and Orissa contained a large section of poor.

Vulnerable Groups

• The proportion of people below poverty line is also not same for all social groups and economic categories in India. Social groups which are most vulnerable to poverty are scheduled caste and scheduled tribe households.
• Similarly, among the economic groups, the most vulnerable groups are the rural agricultural labour households and the urban casual labour households.
• The following Graph shows the percentage of poor people in all these groups. Although the average for people below poverty line for all groups in India is 30, 48 out of 100 people belonging to scheduled tribes in rural areas are not able to meet their basic needs.
• Similarly, 47 per cent of casual workers in urban areas are below poverty line.
• About 50 per cent of landless agricultural workers and 43 per cent of scheduled castes are also poor.
• The double disadvantage, of being a landless casual wage labour household in the socially disadvantaged social groups of the scheduled caste or the scheduled tribe population highlights the seriousness of the problem.
• Some recent studies have shown that except for the scheduled tribe households, all the other three groups (i.e. scheduled castes, rural agricultural labourers and the urban casual labour households) have seen a decline in poverty in the 1990s.
• Apart from these social groups, there is also inequality of incomes within a family. In poor families all suffer, but some suffer more than others.
• Women, elderly people and female infants are systematically denied equal access to resources available to the family. Therefore women, children (especially the girl child) and old people are poorest of the poor.

Graph: Poverty in India 2011-12: Most Vulnerable Groups

Source:  Panagriya Arvind and Vishal More

Inter-State Disparities

• Poverty in India also has another aspect or dimension. The proportion of poor people is not the same in every state. Although state level poverty has witnessed a secular decline from the levels of early seventies, the success rate of reducing poverty varies from state to state.
• Recent estimates show while the all India HCR was 21.9 per cent in 2011-12 states like Madhya Pradesh, Assam, Uttar Pardesh, Bihar and Orissa had above all India poverty level.                            
• Bihar and Orissa continue to be the two poorest states with poverty ratios of 33.7 an 37.6 per cent respectively. Along with rural poverty, urban poverty is also high in Orissa Madhya Pradesh, Bihar and Uttar Pradesh.
• In comparison, there has been a significant decline in poverty in Kerala, Jammu am Kashmir, Andhra Pradesh, Tamil Nadu, Gujarat and West Bengal.
• States like Punjab and Haryana have traditionally succeeded in reducing poverty with the help of high agricultural growth rates.
• Kerala has focused more on human resource development. In West Bengal, land reform measures have helped in reducing poverty. In Andhra Pradesh and Tamil Nadu public distribution of food grains could have been responsible for the improvement.

Global Poverty Scenario

• The proportion of people in developing countries living in extreme economic poverty defined by the World Bank as living on less than $ 1.25 per day-has fallen from 43 per cent in 1990 to 22 per cent in 2008.
• Although there has been a substantial reduction in global poverty, it is marked with great regional differences. Poverty declined substantially in China and Southeast Asian countries as a result of rapid economic growth and massive investments in human resource development.
• Number of poors in China has come down from 85 per cent in 1981 to 14 per cent in 2008 to 6 per cent in 2011.
• In the countries of South Asia (India, Pakistan, Sri Lanka, Nepal, Bangladesh, Bhutan) the decline has not been as rapid.
• Despite decline in the percentage of the poor, the number of poor has declined marginally from 61 per cent in 1981 to 36 per cent in 2008.
• Because of different poverty line definition, poverty in India is also shown higher than the national estimates.
• In Sub-Saharan Africa, poverty in fact rose from 51 per cent in 1981 to 47 per cent in 2008. In Latin America, the ratio of poverty remained the same.
• It has declined from 11 per cent in 1981 to 6.4 per cent in 2008. Poverty has also
• Q It has declined from 11 per cent in 1981 to 6.4 per cent in 2008. Poverty has also resurfaced in some of the former socialist countries like Russia, where officially it was non-existent earlier.
• Table shows the proportion of people living under poverty in different countries as defined by the international poverty line (means population below $ 1 a day).

• The Millennium Development Goals of the United Nations calls for reducing the proportion of people living on less than $ 1 a day to half the 1990 level by 2015.

Causes of Poverty

• There were a number of causes for the widespread poverty in India. One historical reason is the low level of economic development under the British colonial administration.
• The policies of the colonial government ruined traditional handicrafts and discouraged development of industries like textiles.
• The low rate of growth persisted until the nineteen eighties. This resulted in less job opportunities and low growth rate of incomes. This was accompanied by a high growth rate of population.
• The two combined to make the growth rate of per capita income very low. The failure at both the fronts: promotion of economic growth and population control perpetuated the cycle of poverty.
• With the spread of irrigation and the Green revolution, many job opportunities were created in the agriculture sector. But the effects were limited to some parts of India.
• The industries, both in the public and the private sector, did provide some jobs. But these were not enough to absorb all the job seekers.
• Unable to find proper jobs in cities, many people started working as rickshaw pullers, vendors, construction workers, domestic servants etc.
• With irregular small incomes, these people could not afford expensive housing. They started living in slums on the outskirts of the cities and the problems of poverty, largely a rural phenomenon also became the feature of the urban sector.
• Another feature of high poverty rates has been the huge income inequalities. One of the major reasons for this is the unequal distribution of land and other resources.
• Despite many policies, we have not been able to tackle the issue in a meaningful manner. Major policy initiatives like land reforms which aimed at redistribution of assets in rural areas have not been implemented properly and effectively by most of the state governments.
• Since lack of land resources has been one of the major causes of poverty in India, proper implementation of policy could have improved the life of millions of rural poor.
• Many other socio-cultural and economic factors also are responsible for poverty. In order to fulfil social obligations and observe religious ceremonies, people in India, including the very poor, spend a lot of money.
• Small farmers need money to buy agricultural inputs like seeds, fertilizer, pesticides etc. Since poor people hardly have any savings, they borrow.
• Unable to repay because of poverty, they become victims of indebtedness. So the high level of indebtedness is both the cause and effect of poverty.

Distress Among Cotton Farmers

• Many small land owning farmers and farming households and weavers are descending into poverty due to globalisation related shock and lack of perceived income earning opportunities in relatively well performing states in India.
• Where households have been able to sell assets, or borrow, or generate income form alternative employment opportunities, the impact of such shocks may be transient.
• However, if the household has no assets to sell or no access to credit, or is able to bon only at exploitative rates of interest and gets into a severe debt trap, the shocks can have long duration ramification in terms of pushing households below the poverty line.' worst form of this crisis is suicides.
• India has the largest area under cotton cultivation in the world covering 8,300 hectares in 2002-03. The low yield of 300 kg per hectare pushes it into third position in product Q High production costs, low and unstable yields, decline in world prices, global glut production due to subsidies by the U.S.A. and other countries, and opening up of domestic market due to globalisation have increased the exposure of farmers and led agrarian distress and suicides especially in the cotton belt of Andhra Pradesh; Maharashtra.
• The issue is not one of profits and higher returns but that of the livelihood and survival of millions of small and marginal farmers who are dependent on agriculture.

Scholars cite several factors that have led farmers to commit suicides:

• the shift from traditional farming to the farming of high yielding commercial crops without adequate technical support combined with withdrawal of the state in the and of agricultural extension services in providing counselling on farm technologies, problems faced, immediate remedial steps and lack of timely advice to farmers,
• decline in public investment in agriculture in the last two decades,
• low rates of germination of seeds provided by large global firms, spurious seeds a pesticides by private agents,
• crop failure, pest attack and drought,
• debt at very high interest rate of 36 per cent to 120 per cent from private mon lenders,
• cheap imports leading to decline in pricing and profits, and
• Lack of access to water for crops which forced the farmers to borrow money exorbitant rates of interest to sink bore wells that failed.

Anti-Poverty Measures

• Removal of poverty has been one of the major objectives of Indian developmental strategy.
• The current anti-poverty strategy of the government is based broadly on two planks promotion of economic growth and targeted anti-poverty programmes.
• Over a period of thirty years lasting up to the early eighties, there were little per cap income growth and not much reduction in poverty. Official poverty estimates which were about 45 per cent in the early 1950s remained the same even in the early eighties.
• Since the eighties, India's economic growth has been one of the fastest in the world. The growth rate jumped from the average of about 3.5 per cent a year in the 1970s to about 6 per cent during the 1980s and 1990s.
• The higher growth rates have helped significantly in the reduction of poverty. Therefore is becoming clear that there is a strong link between economic growth and poverty reduction.
• Economic growth widens opportunities and provides the resources needed to invest in human development. This also encourages people to send their children, including the girl child, to schools in the hope of getting better economic returns from investing in education.
• However, the poor may not be able to take direct advantage from the opportunities created by economic growth. Moreover, growth in the agriculture sector is much below expectations.
• This has a direct bearing on poverty as a large number of poor people live in villages and are dependent on agriculture.
• In these circumstances, there is a clear need for targeted anti-poverty programmes. Although there are so many schemes which are formulated to affect poverty directly or indirectly, some of them are worth mentioning.
• Mahatma Gandhi National Rural Employment Guarantee Act, 2005 aims to provide 100 days of wage employment to every household to ensure livelihood security in rural areas.
• It also aimed at sustainable development to address the cause of draught, deforestation and soil erosion.
• One-third of the proposed jobs have been reserved for women.
• The scheme provided employment to 220 crores person days of employment to 4.78 crore households. The share of SC, ST, Women person days in the scheme are 23 per cent, 17 per cent and 53 per cent respectively. The average wage has increased from 65 in 2006-07 to 132 in 2013-14.
• Prime Minister Rozgar Yozana (PMRY) is another scheme which was started in 1993. The aim of the programme is to create self-employment opportunities for educated unemployed youth in rural areas and small towns.
• They are helped in setting up small business and industries. Rural Employment Generation Programme (REGP) was launched in 1995.
• The aim of the programme is to create self-employment opportunities in rural areas and small towns. A target for creating 25 lakh new jobs has been set for the programme under the Tenth Five Year plan.
• Swamajayanti Gram Swarozgar Yojana (SGSY) was launched in 1999. The programme aims at bringing the assisted poor families above the poverty line by organising them into self help groups through a mix of bank credit and government subsidy.
• Under the Pradhan Mantri Gramodaya Yozana (PMGY) launched in 2000, additional central assistance is given to states for basic services such as primary health, primary education, rural shelter, rural drinking water and rural electrification. Another important scheme is Antyodaya Anna Yozana (AAY).
• The results of these programmes have been mixed. One of the major reasons for less effectiveness is the lack of proper implementation and right targeting.
• Moreover, there has been a lot of overlapping of schemes. Despite good intentions, the benefits of these schemes are not fully reached to the deserving poor.
• Therefore, the major emphasis in recent years is on proper monitoring of all the poverty alleviation programmes.

Poverty Alleviation Programmes : A Critical Assessment

• Efforts at poverty alleviation have borne fruit in that for the first time since independence the percentage of absolute poor in some states is now well below the national averge.
• Despite various strategies to alleviate poverty, hunger, malnourishment, illiteracy and lack of basic amenities continue to be a common feature in many parts of India.
• Though the policy towards poverty alleviation has evolved in a progressive manner, over the last five and a half decades, it has not undergone any radical transformation.
• However, none resulted in any radical change in the ownership of assets, process of production and improvement of basic amenities to the needy.
• Scholars, while assessing these programmes, state three major areas of concern which prevent their successful implementation.                                
• Due to unequal distribution of land and other assets, the benefits from direct poverty alleviation programmes have been appropriated by the non-poor.
• Compared to the magnitude of poverty, the amount of resources allocated for these programmes is not sufficient.
• Moreover, these programmes depend mainly on government and bank officials for their implementation. Since such officials are ill motivated, inadequately trained, corrupt prone and vulnerable to pressure from a variety of local elites, the resources are inefficiently used and wasted.
• There is also non-participation of local level institutions in programme implementation.
• Government policies have also failed to address the vast majority of vulnerable people who are living on or just above the poverty line.
• It also reveals that high growth alone is not sufficient to reduce poverty. Without active participation of the poor, successful implementation of any programme is not possible
• Poverty can effectively be eradicated only when the poor start contributing to growth their active involvement in the growth process.
• This is possible through a process of social mobilisation, encouraging poor people participate and get them empowered.
• This will also help create employment opportunities which may lead to increase in levels of income, skill development, health and literacy.
• Moreover, it is necessary to identify poverty stricken areas and provide infrastructure such as schools, roads, power, telecom, IT services, training institutions etc.

The Challenges Ahead

• Poverty has certainly declined in India. But despite the progress, poverty reduction remains India's most compelling challenge.
• Wide disparities in poverty are visible between rural and urban areas and among different states. Certain social and economic groups are more vulnerable to poverty.
• Poverty reduction is expected to make better progress in the next ten to fifteen years.
• This would be possible mainly due to higher economic growth, increasing stress on universal free elementary education, declining population growth, increasing empowerment of the women and the economically weaker sections of society.
• The official definition of poverty, however, captures only a limited part of what poverty really means to people. It is about a "minimum" subsistence level of living rather than a "reasonable" level of living.
• Many scholars advocate that we must broaden the concept into human poverty. A large number of people may have been able to feed themselves. But do they have education?
• Or shelter? Or health care? Or job security? Or self-confidence?
• Are they free from caste and gender discrimination? Is the practice of child labour still common?
• Worldwide experience shows that with development, the definition of what constitutes poverty also changes. Eradication of poverty is always a moving target.
• Hopefully we will be able to provide the minimum "necessary" in terms of only income to all people by the end of the next decade.
• But the target will move on for many of the bigger challenges that still remain: providing health care, education and job security for all, and achieving gender equality and dignity for the poor. These will be even bigger tasks.

Summary

• Poverty has many dimensions. Normally, this is measured through the concept of "poverty line".
• Through this concept we analysed main global and national trends in poverty. But in recent years, analysis of poverty is becoming rich through a variety of new concepts like social exclusion.
• Similarly, the challenge is becoming bigger as scholars are broadening the concept into human poverty.