Society UPSC, Economics UPSC, Social Justice UPSC.
Table of Contents
1. Poverty (Comes under Social Economic Issue in UPSC Mains Syllabus)
- Poverty
- Types of Poverty
- Estimation of Poverty in India or Poverty Line in India
- International Poverty Line
- Measurement of Poverty
- Cause and Government’s Measures of reduced Poverty
1.1 Poverty UPSC
It is a situation in which an individual or section of society is unable to meet even basic necessities of life.
Poverty is a state or condition in which a person or community lacks the financial resources and essentials for a minimum standard of living.
It means that the income level is so low that basic human needs can’t be met.
Amartya Sen Definition: Poverty refers to deprivation of basic capabilities of life rather than mere lowness of income.
1.2 Types of Poverty UPSC
Absolute Poverty-
Deprivation from basic amenities.
Defined as lacking the basic means to survive. i.e., food, safe drinking water, Sanitation facilities, health, shelter, education and information.
Poverty line (PL) is used to measure absolute poverty. Mostly found in Developing Country.
In General, poverty means Absolute Poverty.
Relative Poverty-
When people in a country do not enjoy a certain minimum level of living standards as compared to the rest of the population. It is expressed in terms of differences in income/expenditure level of various section of society.
It is closely related with issues of inequality.
Gini- coefficient is used to measure relative poverty.
Mostly found in Developed Country.
Multidimensional Poverty-
It is made up of multiple factors such as poor health, lack of education, inadequate living standard etc.
Poverty refers to deprivation of basic capabilities of life rather than mere lowness of income.
It is measured by MPI.
Situational Poverty-
Poverty caused because of adversities such as earthquakes, floods, illness etc.
Generational Poverty-
Poverty handed over to individuals from their generations.
Vicious Circle of Poverty/Poverty Trap
Economist Prof. Ragnar Nurkse in his book “Problems of capital formation in underdeveloped countries” described the Vicious Circle of Poverty.
He argues that underdeveloped countries are poor because they are trapped in a vicious circle of poverty. a vicious circle of poverty through both the demand and supply side forces, discourages the investment capacity of the country.
The vicious circle of poverty implies that poverty is in itself the one cause of poverty. A poor person, in order to repay his existing debt, will borrow some more, thereby adding to his debt. Further, he will also incur interest payment obligations. This will only increase his total amount of debt. He is also likely to pass on this debt to his children, who will remain caught in this poverty trap. Poor people tend to remain poor and pass on the poverty situation to the future generations.
Cultural Poverty
The idea of cultural poverty (culture of poverty) was given by American anthropologist Oscar Lewis. He described the culture of poverty as a way of life, clusters of traits of some poor people, that develop as an adaptation to living in a capitalist society, and from then are passed through generations.
1.3 Estimation of Poverty in India or Poverty Line in India
| Need of Poverty Estimation in India To assess the level of Economic Development. (Developed or UDC) To assess the improvement in social welfare. i.e., effectiveness of development programs. |
Pre-Independence Poverty Estimation
Dadabhai Naoroji ‘Poverty and Un-British Rule in India’-> Formulated poverty line ranging from Rs. 16 to Rs. 35 per capita per year based on 1867-68 prices. Used cost of subsistence diet consisting of rice, vegetables, mutton and oil.
National Planning Committee (1938): Estimated poverty line between Rs. 15 to Rs. 20 per capita per month. Also formulated poverty line based on minimum standard of living.
Bombay Plan (1944): Poverty line of Rs. 75 per capita per year.
Post-Independence Poverty Estimation
Presently in India, poverty is estimated by Planning Commission/NITI Aayog on the basis of the Consumption Expenditure (Income) data collected by NSO.
(NSSO + CSO = NSO)
Data – NSO
National Statistic Organisation (NSO) – Under MoSPI
Poverty Estimation – NITI Aayog
Which data is more relevant for poverty estimation?
Income Data or Expenditure Data
Expenditure Data – Shows standard of living.
Note- Poverty is estimated by NITI Aayog on the basis of a methodology suggested by the expert committee and on the basis of data collected by NSO.
Expert Committees on Poverty Estimates
Alagh Committee (1979): In India, the first official rural and urban poverty lines at the national level were introduced in 1979 by Y. K. Alagh Committee and official poverty counts began for the first time.
Poverty line defined as people consuming less than 2100 calories (Not Kcal) in the urban areas or less than 2400 calories in the rural areas.
Lakdawala Committee (1993): Recommended that consumption expenditure be calculated based on calorie consumption.
Suggested a different poverty line for each state, prescribed a different basket of commodities containing food items and measured poverty in states.
It defined the poverty line on the basis of minimum recommended nutritional requirements. (Recommended by ICMR)
It defined the poverty line on the basis of expenditure required to purchase food having 2100 calories per person per day in the urban areas or less than 2400 calories per person per day in the rural areas.
It uses Uniform Recall Period (URP) data. i.e., 30 days recall/reference for all expenditure on all items.
According to this committee-
- 1973-74 – 55% poverty
- 1993-94 – 36% poverty
Prof. Suresh Tendulkar Committee (2009): it defines poverty line on the basis of expenditure on a basket of commodities, containing food and selected non-food items.
Shift away from calorie consumption-based poverty estimation.
It uses Mixed Recall Period (MRP) data.
i.e., 365 days recall/reference for expenditure on 5 items. (Durable goods, clothing, footwear, institutional medical expanse, educational expenses) and
30 days recall/reference for expenditure on other items.
Incorporation of private expenditure on health and education.
It suggested a uniform/same poverty line basket for Rural & Urban Area. (But poverty line varies in rural and urban area due price difference of commodity)
It estimates the poverty line as RS. 32.40 per person per day for Urban areas at 2011-12 price.
It estimates the poverty line as RS. 27 per person per day for Rural areas at 2011-12 price.
Consumer Price Index {CPI} is used for adjusting inflation. (Not WPI)
| Is this Poverty Line ridiculously Low? It is low but we cannot say that it is ridiculously Low because- It was higher than the world bank’s estimated PL at that time. Government also expands huge amounts in social welfare (food, education, health, shelter etc). Families can afford the minimum basic necessities with this. It is slightly low because the government wants to help the poorest among the poor first on a priority basis. Consumer Price Index {CPI} is used for adjusting inflation. |
| 1973-74 | 1993-94 | 2011-12 | |
| Lakdawala Committee (1993) | 55% | 36% | |
| Suresh Tendulkar Committee (2009) | 45.8% | National – 21.9% (26.90 crores people) Urban – 13.7%, Rural – 25.7% Poverty rate is almost double in Rural areas. Concentration of poverty is higher in rural area. |
The Planning Commission uses Suresh Tendulkar Committee’s poverty estimation for the poverty line.
NITI Aayog also use Suresh Tendulkar Committee’s poverty estimation for the poverty line.
Rangarajan Committee (2012): it also defines poverty line in terms of expenditure on a basket of commodities, containing food and selected non-food items. The poverty line had two components-
- Expenditure on food items to purchase goods items containing minimum nutritional requirements of energy (Calories, Protein, Fat).
- Expenditure on selected non-food items like clothing, rest, educational expenses etc. to purchase goods items containing minimum nutritional requirements of energy (Calories, Protein, Fat).
Nutritional requirements
Calories: 2090 calories per capita per day in urban areas and 2155 calories per capita per day in rural areas.
Protein: 48gm for rural areas and 50gm for Urban areas.
Fat: 28gm for rural areas and 26gm for urban areas.
It used the Modified Mixed Reference Period (MMRP).
i.e., 365 days recall/reference for expenditure on 5 items. (Durable goods, clothing, footwear, institutional medical expanse, educational expenses) and
7 days recall/reference for expenditure on selected items like fruits & vegetables, fish & meat, spices, edible oils, beverages, intoxicants, etc.
30 days recall/reference for expenditure on other items.
Consumer Price Index {CPI} is used for adjusting inflation.
It reverted back to the practice of different poverty line baskets for Rural & Urban Areas. (Food items – same, non-food items -different)
Same for all Urban areas of the country. Same for all Rural areas of the country. (Not vary from state to state)
It estimates the poverty line as RS. 47 per person per day for Urban areas at 2011-12 price.
It estimates the poverty line as RS. 32 per person per day for Rural areas at 2011-12 price.
| 1993-94 | 2011-12 | |
| Lakdawala Committee (1993) | 36% | |
| Suresh Tendulkar Committee (2009) | 45.8% | 21.9% (U – 13.7%, R – 25.7%) 21.9% (26.90 crores people) Poverty rate is almost double in Rural areas. |
| Rangarajan Committee (2012) | 29.5% |
| Parameters | Tendulkar Committee (2009) | Rangarajan Committee (2012) |
| Poverty Estimation Method | Per Capita Expenditure Monthly | Monthly expenditure of family of five members |
| Urban Poverty Line | Rs 32/day/person | Rs 47/day/person |
| Rural Poverty Line | Rs 27/day/person | Rs 32/day/person |
| BPL in crores | 27 crores | 37 crores |
| Food/Calorie Expenditure | Measures only calorific value in expenditure | Calories, Protein and Fats |
| Non-Food/Focus areas | Expenditure on food, health, clothing and education | Food, healthcare, clothing, rent, transport and non-food items such as education. |
| Calories in rural areas | 2400 cal | 2155 cal |
| Calories in Urban areas | 2100 cal | 2090 cal |
| Commodity basket | Same for Rural and Urban Area. | Different for Rural and Urban Area. |
Official Poverty Line
Based on Planning Commission’s (Now NITI Aayog) data derived from the Tendulkar Committee methodology.
The Indian government has not given any number for poverty since 2011 (Census 2011) — it was 21.9% (265 million people) as per the Tendulkar poverty line.
Note –
- Estimation of poverty in India is based on the consumption expenditure of the household. if the consumption expenditure of a household (per person per day) falls below a given minimum level, then the household is said to be Below the Poverty Line (BPL).
- i.e., poverty is measured at household level, with the help of per member expenditure criteria.
- At present the Household Consumption Expenditure method is used to estimate poverty in India. (Per Capita Consumption Expenditure) (
Per Capita Income: PCI) - BPL Census is conducted by the Ministry of Rural Development (along with the partnership of state), in order to identify the poor households.
1.4 International Poverty Line UPSC
World Bank poverty line or international poverty line.
International poverty line is the average of the national poverty line of selected poorest 15 countries.
$2.15 per person per day (in terms of PPP) (revised in 2022, earlier $1.90 per person per day)
| 1993-94 | 2011-12 | |
| Lakdawala Committee (1993) | 36% | |
| Suresh Tendulkar Committee (2009) | 45.8% | 21.9% (U – 13.7%, R – 25.7%) Poverty rate is almost double in Rural areas. |
| Rangarajan Committee (2012) | 29.5% | |
| International Poverty Line | 21.3% | |
| Multi-Poverty Index (MPI) 2021 | 27.9% India is 62nd among 109 countries. |
Asian Development Bank (ADB): $1.51 per day.
1.5 Measurement of Poverty UPSC
1. Poverty Ration or Head Count Ratio (HCR) –
It shows the extent or magnitude/incidence of poverty.
Head Count Ratio H=Total no. of poorTotal population
2. Poverty Gap Index (PGI) –
It measures the extent of poverty in poor people, that is, how much poorer they are.
It shows the severity or intensity of poverty.
Poverty Gap Index (PGI)=Poverty Line-Average Income of PoorsPoverty Line
Low Average Income of Poor – More Poverty Gap – More Intensity of Poverty
3. Squared Poverty Gap Index (SPGI) –
It is the mean of squared individual poverty gaps.
It measures the severity of poverty by taking into account inequality among the poor people.
Squared Poverty Gap Index (SPGI)=PL-YP1 PL2+ PL-YP1 PL2+ PL-YP1 PL2+… No. of Total Poors
4. Sen Index of Poverty (SIP) –
It is the composite index of poverty which measures magnitude of poverty, intensity of poverty by taking into account inequality among the people.
It is given by Prof Amartya Kumar Sen.
S = H [ I + (1-I) G]
H – Headcount ratio/extent
I – PGI/Severity
G – Gini coefficient/Inequality
5. Multidimensional Poverty Index (MPI) or Global Multidimensional Poverty Index (GMPI) –
It was developed by UNDP. Published in HDR report.
Developed in 2010 by the Oxford Poverty and Human Development Initiative (OPHI) and UNDP.
According to Global MPI 2021, India is 62nd among 109 countries.
27.91% of the Indian population lived below the poverty line.
| Other Index | MPI |
| Mainly, Quantitative measurement of poverty. | Qualitative measurement of poverty. |
| Monetary Measurement | Monetary as well as Qualitative Measurement. |
MPI measures poverty on the basis of deprivation of the household in respect of various basic amenities.
HDI (3 dimension, 4 indicators)
GMPI (same 3 dimension, 10 indicators)
| Dimension | Indicator | Weight | Deprived if | Related SDG |
| Health (1/3) | Nutrition | 1/6 | Any adult under 70 years of age or any child for whom there is nutritional information is undernourished. | SDG 2 – Zero Hunger |
| Child mortality | 1/6 | Any child under the age of 18 years has died in the family in the five-year period preceding the survey. | SDG 3 – Health and Well-being | |
| Education (1/3) | Years of schooling | 1/6 | No household member aged ‘school entrance age + six years or older have completed six years of schooling. | SDG 4 – Quality Education |
| School attendance | 1/6 | Any school-aged child is not attending school up to the age at which he/she would complete class eight. | SDG 4 – Quality Education | |
Standard of living (1/3) (i.e., PPP at Household Level. | Cooking Fuel | 1/18 | The household cooks with dung, wood, charcoal or coal. | SDG 7 – Affordable and Clean Energy |
| Sanitation | 1/18 | The household’s sanitation facility is not improved (according to SDG guidelines) or it is improved but shared with other households. | SDG 6 – Clean Water and Sanitation | |
| Drinking-Water | 1/18 | The household does not have access to improved drinking water (according to SDG guidelines) or improved drinking water is at least a 30-minute walk from home, round trip. | SDG 6 – Clean Water and Sanitation | |
| Electricity | 1/18 | The household has no electricity. | SDG 7 – Affordable and Clean Energy | |
| Housing | 1/18 | At least one of the three housing materials for roof, walls and floor are inadequate: the floor is of natural materials and/or the roof and/or walls are of natural or rudimentary materials. | SDG 11 – Sustainable Cities and Communities | |
| Assets | 1/18 | The household does not own more than one of these assets: radio, television, telephone, computer, animal cart, bicycle, motorbike or refrigerator, and does not own a car or truck. | SDG 1 – No Poverty |
The MPI ranges from 0 to 1, and higher values imply higher multidimensional poverty.
According to Global MPI 2021, India’s rank is 66 out of 109 countries.
According to the Global Multidimensional Poverty Index 2022, about 41.5 crore people exited poverty in India during the 15-year period between 2005-06 and 2019-21, out of which two-third exited in the first 10 years, and one-third in the next five years.
The incidence of poverty fell from 55.1% in 2005-06 to 16.4% in 2019-21 in the country.
The deprivations in all 10 MPI indicators saw significant reductions as a result of which the MPI value and incidence of poverty more than halved.
| Suresh Tendulkar Committee (2009) | GMPI |
| Poverty is a lack of Money. | Poverty is deprivation of basic amenities. |
| Based on assumption that money will ensure all basic amenities. | Outcome based approach. It is based on actual access to basic amenities. |
| Unidimensional | Multidimensional |
| Quantitative measurement | Qualitative measurement |
National Multidimensional Poverty Index (NMPI)
Recently, NITI Aayog has released the Multidimensional Poverty Index (MPI).
This baseline report of the national MPI measure is based on the reference period of 2015-16 of the National Family Health Survey (NFHS-4).
- HDI (3 dimension, 4 indicators)
- GMPI (same 3 dimension, 10 indicators)
- NMPI (same 3 dimension, 12 indicators)
| Dimension | Indicator GMPI | Weight | Indicator NMPI | Weight |
| Health (1/3) | Nutrition | 1/6 | Nutrition | 1/6 |
| Child mortality | 1/6 | Child and Adolescent mortality | 1/12 | |
| Antenatal Care | 1/12 | |||
| Education (1/3) | Years of schooling | 1/6 | Years of schooling | 1/6 |
| School attendance | 1/6 | School attendance | 1/6 | |
| Standard of living (1/3) (i.e., PPP at Household Level) ( | Cooking Fuel | 1/18 | Cooking Fuel | 1/21 |
| Sanitation | 1/18 | Sanitation | 1/21 | |
| Drinking-Water | 1/18 | Drinking-Water | 1/21 | |
| Electricity | 1/18 | Electricity | 1/21 | |
| Housing | 1/18 | Housing | 1/21 | |
| Assets | 1/18 | Assets | 1/21 | |
| Bank Account | 1/21 |
Bihar has the highest proportion of people of the state’s population followed by Jharkhand and Uttar Pradesh who are multidimensionally poor.
Kerala registered the lowest population poverty levels, followed by Puducherry, Lakshadweep, Goa and Sikkim.
Bihar also has the highest number of malnourished people followed by Jharkhand, Madhya Pradesh, Uttar Pradesh, and Chhattisgarh.
Significance of the NMPI:
- Contribution towards Instituting Public Policy Tool
- Presents Overall Picture of Poverty
- Help Achieving SDGs Goals
Average Annual Decline in Poverty (By NSSO/NSO)
| 1983 to 1993-94 | ~ 0.2% |
| 1993-94 to 2004-05 | ~ 0.74% (government focus more on developmental reforms) |
| 2004-05 to 2011-12 | ~ 2.15% (government focus more on developmental reforms) |
During 1973-2012, there has been a decline in the number of poor and their proportion but the nature of decline in the two parameters is not encouraging. The ratio is declining much slower than the absolute number of poor in the country. You will also notice that the gap between the absolute number of poor in rural and urban areas got reduced whereas in the case of ratio the gap has remained the same until 1999-2000 and has widened in 2011-12.
1.6 Cause of Poverty and Government Measures to Reduce Poverty
| Cause of Poverty | Government Measures | |
| Institutional Factor | Lack of education | |
| Lack of skill | Skill Development programs (Skill India Mission, Pradhan Mantri Kaushal Vikas Yojana (PMKVY)) | |
| Denial of healthcare services > lack of drinking water and sanitisation | ||
| Economic Factor | Income Inequalities | Progressive Taxation |
| High population growth >>> 1. scarcity of resources 2. Low per capita income 3. increase Labour supply >> low wages 4. Shrinking land holdings Incidence of poverty increase | The Self-Help Group (SHG) Bank Linkage Programme (SBLP), which is India’s own innovation, has proved to be one of the most effective poverty alleviation and women empowerment programmes. Micro-Finance as an anti-poverty vaccine, is aimed at asset creation and income security of the rural poor in India. | |
| Lack of Entrepreneurship | Entrepreneurship Development programs – (Start-up India, Stand-up India) | |
| Lack of infrastructure | PPP Modal | |
| Low capital formation | Promotion of Investment | |
| Poor quality jobs (Maximum jobs are in Informal Sector (near about 90%)) | Formalisation of Economy. | |
| Capital Intensive Industrialisation | Labour Intensive Support to MSME | |
| Service sector led growth | More focus on Industry especially labour-intensive industry and Export Promotion | |
| Inefficient Resource utilisation | ||
| Low Rate of Economic Development (Especially in the first 40 years of independence before the LPG reforms in 1991.) High rate of population growth | ||
| High Vulnerability Low Bargaining Power High Chance of Exploitation | Food security programmes (TPDS, NFSA) Aayushmana bharat Yojna Social security programs (Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), and Atal Pension Yojana (APY)) and Other welfare schemes. | |
| Indebtedness | Micro finance, SHG | |
| Lack of social welfare net | ||
| Unequal Distribution of Income and Asset | ||
| Nature of employment | Unemployment Underemployment Disguise employment Rural migrant Causal labourers | Employment generation programs a. Wage employment programs – MGNREGA, 2006 b. Self-employment programs – (DAY-NRLM, DAY-NULM) |
| Low Agricultural productivity | Subdivided and fragmented holdings, Under-utilization of resources Low labour productivity > Disguised unemployment Lack of investable capital, Lack of credit availability Use of traditional methods of cultivation illiteracy about new technologies in farming | Agricultural Reform Minimum Support Price Animal Rearing Food Processing Industry |
| High Inflation | High Inflation (Especially in the first 40 years of independence before the LPG reforms in 1991.) | |
| Social Factors | Laws of inheritance Caste system Certain traditions Religious practices Lack of Social Capital | |
| Political factors | Communal tensions short-term solutions to satisfy Vote bank politics Various development plans are being guided by political interests | |
| Historical Factor | Colonial Exploitation The British colonisation and rule over India for about two centuries de-industrialised India by ruining its traditional handicrafts and textile industries. Colonial Policies transformed India to a mere raw-material producer for European industries. | |
| Climatic Factors | Most of India’s poor belong to the states of Bihar, UP, MP, Chhattisgarh, Odisha, Jharkhand, etc. Natural calamities such as frequent floods, disasters, earthquakes and cyclones cause heavy damage to agriculture in these states. Dependence of agriculture on Monsoon and irregularity in Monsoon rain | |
| Ethical factors | Corruption in implementation of welfare scheme | CVC, CBI |
| Leakage of welfare subsidies | DBT, BAPU | |
| Unprecedented factors | Covid GST impacted small traditional workers Free Trade Agreement with any country |
1.7 Effects of poverty UPSC
Effects on Health:
- low life expectancy
- High infant mortality
- High Child mortality
- Child Wasting and stunting
- malnutrition
- mental stress
Effects on society as a whole:
- Risen inequalities led to social tensions and threatens to divide a nation
- Naxalism
- Regionalism
- Terrorism > unemployed poor youth become soft target of terrorist organisation to use him against country > stone throwing in J&K
- Increment in crimes
Effects on children
- lack of education
- malnutrition
- violence at home and outside
- child molestation
- child labor
- child trafficking
- diseases of all kinds, transmitted by the family or through the environment.
Poverty will stick with society across generations and the vicious cycle of poverty continues.
Effect on Economy
- Impact growth > refer growth cycle
- High unemployment rate
- Resources underutilized
Feminization of poverty:
Poverty affects a greater number of women than men.
Feminization of poverty is the phenomenon in which the total of poor women outnumbers the total population of poor men.
Feminization of poverty is not only a consequence of lack of income, but also of lack of opportunities due to gender biases and fixed gender roles in some societies.
The feminization of poverty, among many other factors, may be caused by changes in:
Family composition
dissolution of marital unions, constitution of families without these unions, higher male mortality.
Family organization
Gender division of labor and consumption within the household, gender roles regulating the control over household resources.
Inequality in the access to public services or in their quality
Barriers to education of girls, educational segregation by sex, lack of women specific health attention.
Inequality in social protection
Contributory pensions systems reproducing previous labor market inequalities, lower access to pensions and social assistance by women, inequality in benefit concession or in benefit values in targeted policies
Labor market inequalities
Occupational segregation, intra-career mobility, differential levels of employment in paid work, wage discrimination, duration of work shifts.
Legal, paralegal and cultural constraints in public life
Property rights, discrimination in the judiciary system, constraints in community and political life, etc.
Women face a higher intensity of poverty than men in all nations.
| Several factors that have led farmers to commit suicides (i) 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 area of agricultural extension services in providing counselling on farm technologies, problems faced, immediate remedial steps and lack of timely advice to farmers (ii) decline in public investment in agriculture in the last two decades (iii) low rates of germination of seeds provided by large global firms, spurious seeds and pesticides by private agents (iv) crop failure, pest attack and drought (v) debt at very high interest rate of 36 per cent to 120 per cent from private money lenders (vi) cheap imports leading to decline in pricing and profits (vii) lack of access to water for crops which forced the farmers to borrow money at exorbitant rates of interest to sink borewells that failed. |
Policies and programs towards poverty alleviation
The pattern of development that the government planning envisaged laid emphasis on the upliftment of the poorest of the poor (Antyodaya), integrating the poor into the mainstream and achieving a minimum standard of living for all.
The Indian Constitution state social justice as the primary objective of the developmental strategies of the government.
SDG goal 1: end to poverty in all its manifestations by 2030
The government’s approach to poverty reduction was of three dimensions:
- growth oriented development,
- specific poverty alleviation programmes and
- meeting the minimum needs of the poor.
The first one is growth-oriented approach. It is based on the expectation that the effects of economic growth — rapid increase in gross domestic product and per capita income — would spread to all sections of society and will trickle down to the poor sections also.
- rapid industrial development
- transformation of agriculture through green revolution
It was seen that the benefits of economic growth have not trickled down to the poor. Policy makers started thinking that incomes and employment for the poor could be raised through the creation of additional assets and by means of work generation. This could be achieved through specific 2018-19 poverty alleviation programmes.
This second approach has been initiated from the Third Five Year Plan (1961-66) and progressively enlarged since then. Expanding self-employment programmes and wage employment programmes are being considered as the major ways of addressing poverty.
- 1970s > Food for Work Program
- Rural Employment Generation Programme (REGP),
- Prime Minister’s Rozgar Yojana (PMRY)
- Swarna Jayanti Shahari Rozgar Yojana (SJSRY) > one can get financial assistance in the form of bank loans to set up small industries.
- Earlier, under self-employment programmes, financial assistance was given to families or individuals. Since the 1990s, this approach has been changed. Now those who wish to benefit from these programmes are encouraged to form self-help groups.
- Through banks, the government provides partial financial assistance to SHGs which then decide whom the loan is to be given to for self-employment activities. Swarnajayanti Gram Swarozgar Yojana (SGSY) is one such programme. This has now been restructured as National Rural Livelihoods Mission (NRLM).
- A similar programme called National Urban Livelihoods Mission has also been in place for urban poor.
- In August 2005, the Parliament passed a new Act to provide guaranteed wage employment to every rural household whose adult volunteer is to do unskilled manual work for a minimum of 100 days in a year. This Act is known as Mahatma Gandhi National Rural Employment Guarantee Act. Under this Act all those among the poor who are ready to work at the minimum wage can report for work in areas where this programme is implemented
- Programmes under this approach are expected to supplement the consumption of the poor, create employment opportunities and bring about improvements in health and education.
Even with expanded employment opportunities, the poor will not be able to buy for themselves all the essential goods and services. They have to be supplemented up to at least certain minimum standards by social consumption and investment in the form of essential food grains, education, health, nutrition, drinking water, housing, communications and electricity.
- Public Distribution System,
- Integrated Child Development Scheme
- Midday Meal Scheme
- National Food Security Act 2013
| Growth | Employment generation | Social Welfare |
| Promote labour intensive industries | PLI Scheme in various sectors | Food |
| Infrastructure development PM Gatishakti yojana, National Infrastructure Pipeline | National Food Security Act, 2013 | |
| Skill India Mission PM Kaushal Vikas Yojana | PM Garib kalyan Yojna during Covid 19 | |
| MGNREGA | Education | |
| PMEGP | Right of Children to Free and Compulsory Education Act, 2009 | |
| Health | ||
| Aayushman Bharat Scheme |
Mahatama Gandhi always insisted that India would be truly independent only when the poorest of its people become free of human suffering.
Why government poverty alleviation programs are not so effective?
- There are 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.
- Issue of right targeting
- Overlapping of schemes
- Moreover, these programmes depend mainly on government and bank officials for their implementation. Since such officials are ill motivated, inadequately trained, corruption 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. Locals are more known about their needs.
- Government policies have also failed to address the vast majority of vulnerable people who are living on or just above the poverty line.
- Absence of any monitoring mechanism for the efficacy of such schemes or to know the end result.
- There is no systematic attempt to identify people who are in poverty, determine their needs, address them and enable them to move above the poverty line.
- Without the 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 by their active involvement in the growth process. This is possible through a process of social mobilisation, encouraging poor people to 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. (Aspirational district program)
Human Poverty
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 “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.
Role of self-Help groups in poverty alleviation:
NABARD defines Self Help Groups as a small homogeneous group of poor households consisting of 20 or less people from a homogenous class who are willing to come together for addressing their common problems.
They make regular savings and use the pooled savings to give interest-bearing loans to their members.
The process helps them imbibe the essentials of financial intermediation including prioritization of needs, setting self-determined terms for repayment
They help in poverty reduction in following ways:
- With financial inclusion credit facility to poor is increased.
- It also saves them from moneylenders.
- Opportunities for self-employment through setting of micro-enterprise.
- Skill development program undertaken by SHGs improves employability of members involved.
- As a result of increased jobs there is rise in income which enhances access to food, health services and overall rise in living standards.
- And with more women participation and their enhanced status address issues such as nutrition poverty and low literacy rate
MGNREGA and Poverty alleviation
MGNREGA provides employment > purchasing capacity increase > improve living standards
MGNREGA provides employment > bargaining power increase > improve wages in rural job market
MGNREGA creates durable assets in rural areas > strengthening the livelihood resource base of the rural poor
MGNREGA provides employment > social dignity maintained > psychological effect > improve productivity
MGNREGA provide employment opportunities to women labourers > increase in household income
(Provides more employment to women than man)
Women in MGNREGA > substantial increase in women’s control over resources — including cash in hand and the likelihood of having a bank account > improvement in women’s ability to make independent decisions about their health > increase standard of living
MGNREGA protects the poor from further poverty during natural calamities
(As it is seen during COVID)
MGNREGA: Future suggestion by Economic Survey-19
Big Data Analytics: Real time monitoring of demand for work under MGNREGA at district level.
If more work demand by villagers = proof of rural distress. Then correlate with weather data etc. then display flash alert on policymaker’s dashboard. So he can take corrective actions. e.g. Timely release of crop insurance claims, distribution of more loans, additional allocation of foodgrains in PDS Shops etc.
Financial Inclusion: Deepening MGNREGA workers’ financial inclusion through microinsurance, micro-pensions, microcredit schemes.
Upskilling the MGNREGA Workers: Convergence of MGNREGA with Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDUGKY). So, they can eventually find gainful employment, and don’t have to demand ‘unskilled’ MGNREGA work all the time.
Role of Financial inclusion in Poverty Alleviation
- Reduce dependence on informal sources like moneylenders in times of need. Rates charged are high making the poor enter into a vicious cycle of indebtedness.
- Empowering women who, with a credit line, could undertake labor activities unthinkable without economic aid; increase consumption and investment, and thus grow revenues; and increase spending on other social aspects, such as preventive health.
- Promotes the habit of savings which eventually helps in capital investment.
- Financial inclusion boosts confidence of the poor as it brings them the feeling of being part of the mainstream.
- The risk-taking ability also increases. This overall promotes entrepreneurship.
1.8 Universal Basic Income (UBI) UPSC
Having the potential to almost eliminate poverty with immediate effect but has some issues.
Under the UBI government transfer basic income or minimum amount in account of all citizens unconditionally.
Basic income or minimum amount – Usually equal to poverty line
Prof. Suresh Tendulkar poverty line for 2011-12 = Rs. 32.40 per person per day (inflation adjusted, 2022 – Rs. 50)
Economic Survey 2016 – If it covers 75%, then expenditure requires 4.9% of GDP.
Advantage of UBI-
- It will immediately eliminate poverty in India.
- It will reduce the psychological vulnerability of the poor. (It will restore human dignity.)
- It will improve the quality of jobs for the poor because it will enhance their bargaining power.
- Advantages of DBT.
Disadvantages of UBI-
- It will reduce willingness to work. (Amount is not significant)
- It is not morally correct to accept unearned money.
- It will create Inflation. (In short term, finally scope of economic activities will increase.)
- Misuse of money.
Prerequisites UBI –
- JAM Trinity
- Funding {divert money (from developmental expenditure cost to UBI, it will have opportunity cost), printing money (leads inflation)}
Suggestion-
- Cover 75% population
- give@75% of poverty line
Challenges-
- Data of Income
- Poverty data change frequently
- Enhanced Corruption
| Negative Income Tax Government transfer subsidies/welfare payment in account of people who are earning below a specified limit. It is a type of poverty alleviation program. UBI vs Negative Income Tax UBI is like a negative income tax. |
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