poverty refers to a state in which an individual is unable to fulfill even the basic necessities of life.
Poverty is the scarcity or the lack of a certain (variant) amount of material possessions or money. Poverty is a multifaceted concept, which may include social, economic, and political elements. Absolute poverty, extreme poverty, or destitution refers to the complete lack of the means necessary to meet basic personal needs such as food, clothing and shelter.
Measures to determine the extent of poverty
I. Relative poverty
II. Absolute poverty
I. Relative poverty:-
Relative poverty occurs when a person who lives in a given country does not enjoy a certain minimum level of “living standards” as compared to the rest of the population of that country.Therefore, the threshold at which relative poverty is defined varies from country to another, or from one society to another.
Relative poverty is the “most useful measure for ascertaining poverty rates in wealthy developed nations”. Relative poverty measure is used by the United Nations Development Program (UNDP), the United Nations Children’s Fund (UNICEF), the Organisation for Economic Co-operation and Development (OECD) and Canadian poverty researchers. In the European Union, the “relative poverty measure is the most prominent and most–quoted of the EU social inclusion indicators”
II. Absolute poverty:-
Extreme poverty, or destitution refers to the complete lack of the means necessary to meet basic personal needs such as food, clothing and shelter. The threshold at which absolute poverty is defined is considered to be about the same, independent of the person’s permanent location or era.
Absolute poverty refers to a set standard which is consistent over time and between countries. First introduced in 1990, the dollar a day poverty line measured absolute poverty by the standards of the world’s poorest countries. The World Bank defined the new international poverty line as $1.25 a day in 2008 for 2005 (equivalent to $1.00 a day in 1996 US prices). In October 2015, they reset it to $1.90 a day.
It depends not only on income but also on access to services.” The term ‘absolute poverty’, when used in this fashion, is usually synonymous with ‘extreme poverty’
The former president of the World Bank, described absolute or extreme poverty as, “a condition so limited by malnutrition, illiteracy, disease, squalid surroundings, high infant mortality, and low life expectancy as to be beneath any reasonable definition of human decency.
An absolute poverty line was calculated in Australia for the Henderson poverty inquiry in 1973. It was $62.70 a week, which was the disposable income required to support the basic needs of a family of two adults and two dependent children at the time. This poverty line has been updated regularly by the Melbourne Institute according to increases in average incomes; for a single employed person it was $391.85 per week (including housing costs) in March 2009. In Australia the OECD poverty would equate to a “disposable income of less than $358 per week for a single adult (higher for larger households to take account of their greater costs). in 2015 Australia implemented the Individual Deprivation Measure which address gender disparities in poverty.
Economic aspects of poverty focus on material needs, typically including the necessities of daily living, such as food, clothing, shelter, or safe drinking water. Poverty in this sense may be understood as a condition in which a person or community is lacking in the basic needs for a minimum standard of well-being and life, particularly as a result of a persistent lack of income. The increase in poverty runs parallel sides with unemployment, hunger, and higher crime rate.
Analysis of social aspects of poverty links conditions of scarcity to aspects of the distribution of resources and power in a society and recognizes that poverty may be a function of the diminished “capability” of people to live the kinds of lives they value. The social aspects of poverty may include lack of access to information, education, health care, social capital or political power.
The World Bank’s “Voices of the Poor,” based on research with over 20,000 poor people in 23 countries, identifies a range of factors which poor people identify as part of poverty. These include:
- Abuse by those in power
- Dis-empowering institutions
- Excluded locations
- Gender relationships
- Lack of security
- Limited capabilities
- Physical limitations
- Precarious livelihoods
- Problems in social relationships
- Weak community organizations
- ASSET POVERTY
- It is an economic and social condition that is more persistent and prevalent than income poverty. It can be defined as a household’s inability to access wealth resources that are enough to provide for basic needs for a period of three months. Basic needs refer to the minimum standards for consumption and acceptable needs.Wealth resources consist of home ownership, other real estate (second home, rented properties, etc.), net value of farm and business assets, stocks, checking and savings accounts, and other savings (money in savings bonds, life insurance policy cash values, etc.)
How to measure absolute poverty and Relative poverty
Relative poverty measusres :– when we compare the incomes of different people, & we find that some people are poorer than other , it is called relative poverty.
• Relative poverty does not consider, how poor the poor persons are or whether he is deprived of the basis minimum requirement of life or not.
• It compares the inequality of income & assets ownership. It helps in understanding the relative position of different segment of the populations.
• The defect in the relative measure of poverty is that it only reflect the relative position of different segment of the population in the income hierarchy.
Absolute poverty measures :- Poverty line is used as a measure.
• The people below poverty line are absolutely poor.
• Poverty line is a cutoff point on the line of distribution, which usually divides the population of the country as poor & non poor.
• People having income below the poverty line are called poor & people with income above poverty line are called non poor.
• The planning commission has defined poverty line on the basis of recommended nutritional requirement of 2400 calories per person in rural areas and 2100 for a person in urban areas.
• While fixing the poverty line, consumption of food is considered as the most important criteria.
• The consumption worth of Rs. 328 per person a month in rural area and for urban area it was Rs. 454 also considered for poverty line.
What is poverty line? How poverty line is constructed
Poverty line is the level of income to meet the minimum living conditions.
Poverty line is the amount of money needed for a person to meet his basic needs. It is defined as the money value of the goods and services needed to provide basic welfare to an individual.
Poverty line differs from one country to another, depending upon the idea of poverty
Poverty line changes from one country to another. In developed countries, where there is advanced standard of living and welfare concepts, poverty line is high as basic standard to live include higher consumption requirements and accessibility to many goods and services.
On the other hand, in many less developed countries, the basic requirements will be low and contains mostly essential consumption items needed to sustain life. This means that poverty line is set by the welfare standard in a particular society (economy).
Poverty is ‘relative’ and what poverty in the US or in an advanced West European country may not be poverty in Bangladesh.
Poverty line in India
India is having a well-designed poverty measurement mechanism under the erstwhile Planning Commission. The Planning Commission was the nodal agency for estimation of poverty. For setting poverty line and methodology of constructing it, the Planning Commission appointed Expert Groups from time to time. for example, the Rangarajan Committee is the latest among those Expert groups. Traditionally, the planning commission estimates the number of people below poverty line in states as well as the rural and urban areas based upon the prevailing poverty estimation methodology submitted by the expert groups.
Methodology for constructing the poverty line
The poverty estimation methodology was revised many times with new expert group/task force appointed by the Planning Commission to look into the matter. Each expert group/task force has devised certain methodology in determining the poverty line.
For measuring poverty, a poverty line is set. The poverty line is the level of income needed to meet the minimum standard of living. People who have an income less than this is considered as below poverty line.
The concept about minimum consumption standards and consumption levels were changed based upon recommendations of the various expert groups/task force. These expert groups use the NSS (National Sample Survey) estimate the consumption pattern of households from time to time. The NSS’s periodically makes extensive household surveys on expenditure. Here, from the consumption basket of the people, the expert groups pick up the most essential commodities. These commodities are placed under a poverty line basket (PLB).
Minimum standard of living is thus expressed as the basket of goods and services commonly used by the people. Based on this consumption pattern, the Expert Groups estimate the minimum consumption levels (and the income needed to buy these) and the income needed to obtain these goods and services in both rural and urban areas. This income level acts as the poverty line.
Poverty line methodology is changing in India
Extending from the first attempt to set a poverty line – the Working Group of 1962 to the Rangarajan Task Force (2014), poverty estimation methodology has undergone an evolution in India.
Poverty is measured in terms of the Head Count Poverty Ratio (HCPR) as in several other countries. The HCPR is the percentage of the population under the poverty line. This means that it is the absolute poverty that is estimated in India. Poverty ratio is measured in terms of per capita consumption expenditure over a month.
Criticism of the poverty line.
• This method does not differentiate between the very poor and the other poor.
• There are many factors, other than income & assets, which are associated with poverty, like accessibility to basic education, health care drinking water etc which have been ignored.
• This method does not consider social factors that generate & are responsible for poverty, like illiteracy, ill health, lack of access to resources discrimination or lack of resources discrimination or lack of civil & political freedom.
How to measure number of poor? (tools to measure poverty)
The simplest method to determine number of poor is the head count ratio (HCR). Head count ratio is calculated by dividing the number of people below the poverty line by line by the total population.
• Amartyasen a Noble Laureate developed Sen Index to measure poverty.
• Other tools to measure poverty are Gap Index and squared poverty gap.
• Official data of poverty is collected by NSSO.
Causes of poverty
Underdevelopment of the Indian economy:- the root cause of poverty is the under development of the Indian economy. The underdevelopment is manifested by the relative backwardness of agriculture & industrial sector.
Widespread infrastructural bottle necks are presented & as a result of slow pace of development nearly 20% of the population is still living below the poverty line. Population explosion:-Rapid growth of population, particularly among the poor, is responsible for the problem of poverty in the country.
High level of un-employment:- poverty is caused by unemployment or unemployment coupled with a low rates of wages. More than six decades economic planning has failed to generate adequate employment opportunities in the industrial & service sector & employment is stagnant sector. Employment & unemployment have resulted in low levels of income & a large share of population lies below the minimum subsistence levels.
Inequalities of income:- (an important cause of poverty in India is the existence of large inequalities in distribution of national income & concentration of economic power, both in rural & urban sectors of the economics) efforts to reduce inequalities have been ineffective. The benefits of growth have been appropriates by the rich section & have not reached the poorest of the poor. So the rich become richer as their income rise & assets expanded.
Social factors:- Joint family system, laws of inheritance, strong belief in destiny & fate are some social factors that have presented individuals from taking initiative & risk. In short narrows & pessimist attitude is responsible for inertia, lack of imitative & dynamism. People believe that their present state is due to their destiny & it keeps the individual in a vicious circle of poverty.
Political factors:-Before Independence, India was exploited under the British rule. After Independence other political factors have adversely affected economic progress. Economic policies are formulated to promote the interest of the richer section of the society & poor people are suffers in the process.
Inflation:- The steep & continuous rise in price, particularly of essential commodities has added to the miseries of the poor.
High illiteracy rate:-lower education result in lower income as there is a positive correlation between the two. Poor state of agriculture:-Labour & land productivity continue to be low in India. Consequently, most of the farmers live in a state of poverty.
Underutilization of resource:-Due to the un exploitation natural resources of the country, poverty spreads throughout the country.
How to remove poverty?
• Acceleration of economic growth:- the first & foremost measure needed to remove poverty is accelerating the rate of economic growth.
• Reducing inequalities of income:-if the high growth rate is accompanied with increased inequalities of income, then fruits of economic development will accrue only to rich section, whereas the poor will grow in numbers. Thus in equalities must be reduced if development is to benefit the poor.
• Population control:-High growth rate of population especially among the poor is one of the causes. So (in order to remove poverty, it is very essential that population growth rate be checked) poverty can be removed to a greater extent, if we intensify family planning campaign & reduce the increasing population among the poor.
• Agricultural development:- eradication of mass poverty in rural areas is possible only when due emphasis is given for agricultural development. so (there is a serious need to enhance the agriculture production & productivity) government should take steps to make provision for financial assistance to small & marginal farmers, high yielding varieties of seeds, irrigation facilities, fertilizers etc.
• More employment opportunities:-poverty can be eliminated by providing more employment opportunities. So that people are able to meet their basic needs.
• Land reforms:-by the imposition of ceilings on land holdings & their effective implementation a good amount of land can be acquired to be distributed among the landless laborer. On obtaining land, the landless laborers will be able to employ themselves & will produce subsistence for them.
Three Dimensional Approach to remove Poverty Growth oriented approach:-this approach is based on an expectation that effects of economic growth (rapid increase in GDP & per capital income) would speed to all sections of the society& will trickle down to the poor section also) it was felt that rapid industrial development& tr Ans.formation of agriculture through green revolution in selected regions & more backward sections of the community.
Poverty alleviation programmer:- This is the second approach has been initiated from the third five year plan & progressively enlarged since then(the government has introduced a variety of programmers for education of poverty)
Poverty alleviation programmers (PAP) in India:-
1. Prime minister’s Rozgar Yojana(PMRY) :- This program aims at creating selfemployment opportunities in rural areas & small towns. Under this program, educated unemployed from low-income families in rural & urban areas can get financial assistance in the form of bank lo Ans., to set up any kind of enterprise that generates employment. It attempted to generate employment by setting up seven lakh micro-enterprises during the eighth plan [1992-97]. By 2003-04, 3 million people got employment under the scheme of PMRY.
2. Swarna Jayanthi Shahri Rozgar Yojana (SJSRY):- (Urban self-employment program& the urban wage employment programs are two special schemes of SJSRY, initiated in December 1997) which replaced various programmers operated earlier, for urban poverty alleviation. SJRY mainly aims at creating employment opportunities for both selfemployment & wage-employment in urban areas.
3. Swarna Jayanthi Gram Swarozgar Yojana (SGSY):- SGSY is a self-employment program, launched with effect from April 1 199 as a result of restructuring & combining the earlier poverty eradication programmes like Integrated rural development programme (IRDP), development of women & children in rural areas (DWCRA), etc.
It aims at promoting micro enterprises & to bring the assisted poor families (Swarozagaris) above the poverty line, by organizing them into Self-Help Groups (SHGs). Under this programme, people who wish to benefit from this scheme are encouraged to form self-help groups (SHG).
Initially they are encouraged to save some money & land among themselves as small loAns.. Later, through banks, the govt. provides partial financial assistance to SHGs which then decide whom the loan is to be given for self-employment activities.
4. Sampoorna Grameen Rozgar Yojana (SGRY):- The scheme was launched with effect from September 2001. The schemes of Jawahar Gram Samridhi Yojana (JGSY)& employment assurance scheme (EAS) has been fully integrated with SGRY. The scheme aims at providing wage employment in rural areas & food security, along with the creation of durable community social & economic assets. The centre & the state on the cost sharing ratio of 87.5 : 12.5 [Including food grains components].
5. National Rural Employment Guarantee Act 2005:- The act was passed in 2005 & the scheme, i.e. National rural employment guarantee schemes or NREGS was launched in February 2006. The aim of the act is to provide guaranteed wages employment to every households. Under this programme, volunteer adults will be provided unskilled manual work for a minimum of 100 days in a year. Those cannot be employed employers under this scheme were given wages for those 100 ays.
6. Pradhan Mantri Gramodaya Yojana (PMGY):- This programme was introduced in 2000- 01, with the objective of focusing on village level development in five critical areas:- i.
ii. Primary Education
iii. Drinking water
iv. Housing & rural roads
v. Improving quality of life of people in rural areas.
PMGY includes these projects:-
a. Pradhan Mantri Gram Sadak (PMGSY)
b. Pradhan Mantri gramodya yojna [Gramin awas]
c. Pradhan Mantri gramodya yojna- Rural drinking water project.
7. National Social Assistance Programme (NSAP):- NSAP was introduced on 15th August 1995 for social assistance benefit to poor house hold affected by old age, death, primary bread earner & maternity care. The programme has three components
i. National old age pension scheme (NOAPS)
ii. National family benefits scheme (NFBS)
iii. National benefit scheme (NMBS).
Minimum Needs programmers:- The third approach is to provide minimum basic amenities to
the people. India was among the pioneers that it would visualize that through public expenditures on social consumption needs. (Food grains at subsidized rates, education, health, water supply& sanitation) people’s living standard could be improved. Programmers under this approach are expected to supplement the consumption of the poor. Create employments in health & education.
3 major programs that aims at improving the food & nutritional status of poor are:-
i. Public distribution system
ii. integrated child development scheme
Global prevalence :-
In 2012 it was estimated that, using a poverty line of $1.25 a day, 1.2 billion people lived in poverty. Given the current economic model, built on GDP, it would take 100 years to bring the world’s poorest up to the poverty line of $1.25 a day. UNICEF estimates half the world’s children (or 1.1 billion) live in poverty.
The World Bank forecasted in 2015 that 702.1 million people were living in extreme poverty, down from 1.75 billion in 1990. Extreme poverty is observed in all parts of the world, including developed economies. Of the 2015 population, about 347.1 million people (35.2%) lived in Sub-Saharan Africa and 231.3 million (13.5%) lived in South Asia. According to the World Bank, between 1990 and 2015, the percentage of the world’s population living in extreme poverty fell from 37.1% to 9.6%, falling below 10% for the first time. In public opinion around the world people surveyed tend to incorrectly think extreme poverty hasn’t decreased.
There is disagreement amongst expert as to what would be considered a realistic poverty rate with one considering it “an inaccurately measured and arbitrary cut off”. One estimate places the true scale of poverty much higher than the World Bank, with an estimated 4.3 billion people (59% of the world’s population) living with less than $5 a day and unable to meet basic needs adequately. It has been argued by some academics that the neoliberal policies promoted by global financial institutions such as the IMF and the World Bank are actually exacerbating both inequality and poverty.
INDIA POPULATION CHART
India is no longer home to the largest number of poor people in the world
India Unemployment Rate
Unemployment Rate in India increased to 3.52 percent in 2017 from 3.51 percent in 2016. Unemployment Rate in India averaged 4.05 percent from 1983 until 2017, reaching an all time high of 8.30 percent in 1983 and a record low of 3.41 percent in 2014.
Global Extreme Poverty
The Indian National Rural Employment Guarantee Act
The National Rural Employment Guarantee Act (NREGA) passed by the Indian parliament in September 2005. The act built on a previous initiative in one Indian state — the Maharashtra Rural Employment Guarantee Programme1 — to ensure that a minimum amount of paid work would be available to those in rural areas who need it. As an act of parliament, it confers statutory rights — unlike a project, which could be prone to short-term changes. In specified districts (now more than half of the districts in the country), NREGA offers up to 100 days of employment per rural household per year on public works, at the prevailing minimum unskilled wage rate. The aim of the act is to boost the rural economy and enhance overall economic growth.
“Every life deserves a certain amount of dignity, no matter how poor or damaged the shell that carries it.” “An empty stomach is not a good political adviser.” “Hungry for love, He looks at you. Thirsty for kindness, He begs of you.
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