Chapter-4 ,Poverty ,Indian Economics ,Completed

 Poverty refers to a situation in which an individual is unable to fulfill even the basic necessities of life.

The basic necessities of life are

1. Food

2. Clothing

3. Housing

4. Education

5. Health

 

Poor means an individual who is unable fulfill the basic necessities of life.

 

Poor in Urban Area :- People include vendors, cobbler, beggars etc.

They possess few assets. They reside in huts with walls of mud. The urban poor are largely the overflow or Rural poor who had migrated to urban areas in search of employment.

 

Poor in Rural Areas :- In rural areas, poor people include Landless farmers, cultivators with small land holdings I landless farmer  engaged in non- agricultural jobs.

Many of the rural people are Landless and even if they posses some land it is waste land.

Many rural people do not even have two time meal.

 

Common Characteristics of poor people

1.  Hungers, starvation and Malnutrition :- Starvation and Hunger are the basic problems of poor people. Malnutrition is alarming among the poor people.

2.  Poor Health :-They are generally physically weak due to health and disability. their children are less likely to survive.

3.  limited Economic opportunities:- They have very limited economic opportunities due to lack of literacy and skills. Thus, they face unstable employment

4.  Debt Trap :-They borrow money from money lenders who charge very higher rate of interest.

 

5.  Lack of facilities   :-  Most poor people have no acess to electricity , their primary cooking fuel  is very fire wood. They do not even have safe drinking water.

 

6.  Gender Inequality :- Gender inequality  prevails within the poor family in relation to employment and education

7.  Bigger Family:- The poor families are bigger.

in size which makes their economic condition ! worse..

 

Measurement of Poverty

 

Relative Poverty : It refers to poverty of people in comparison to other people, other regions or other nation .

 

if Ram has lower income in other comparison to Shyam than we can say that Ram is relatively poor.

It helps in understanding the relativity position of different segments  of the population

Limitation of Relativity Poverty :It only reflects the relative position of different segment of population according to income level but it does not concides. that whether the person is actually able to fulfill basic needs or not.

 

Absolute poverty :-  It refers to  total no. of people living below poverty line.

 According to absolute poverty measurement around 22% of the population of India is below poverty Line. -

The method of absolute poverty is relevant  for less developed countries like India where there is lot or poverty.

Absolute poverty does not differentiate between  very poor & Other Poor. It does not consider other social factor that are responsible for poverty.

 

Measurement India of Poverty in  Pre-Independent

 

In the pre-independent India , dada bhai Naoroji  was the first person to discuss the concept of poverty line. He  used jail cost of living method to calculate the poverty line

 

the used to menu for a prisoner and privilages prices to arrive at the cost consumption .

 

he divide the consumption into two parts 

 

1.   He assumed  that one third of total population consist of children of ie (one sixths ) half of them consumed very little & where as other half consumed half diet. 

2.   Two third consist of adult and they consumed full diet .

= 1/6 *Nil diet + 1/6 *Half diet + 2/3 * Full diet 

= 1/6*0 +1/6*1/2 +2/3 *1 =3/4

Conclusion

The average. poverty line will be 3/4 of adult

Jail cost of living.

 

 

Measurement of Poverty in post Independent India.

 In post independent India several  attempts have been made for the measurement of  poverty

 * In 1962 , the planning commission formed a study group

 * In 1979 task force on projection of minimum need and effective consumption demand was formed

* In 1989 expert group was constituted for the same purpose

Types of poor

1.   Chronic poor :-

It includes those who are always poor and those who are usually poor

Diagram

 

 

 

 

 

 

2.   Transient poor:-  : It includes the following

A.    Churning Poor :-People who regularly move in and out of poverty

 

 

 

 

 

 

 

 

 

 

 

 

B.    Occasional Poor:-  it includes the people who are rich most of the times and poor sometimes .

Diagram

 

 

 

 

 

 

3.   Non Poor :- It includes the people who are never poor .

   Diagram

 

 

 

 

 

 

 

Concept of poverty line :- 

 

Poverty line is a cutoff point on the line of distribution which usually divides the population of the country as poor and non-poor

1.   People having income below poverty line are caller Poor

2.   People with income above poverty line are called non

Poor Poverty line tries to capture the minimum standards of living which the society tries to fulfill

Determination of poverty line

 In India monthly per- capita expenditure method is used to determine the poverty line.

A. Minimum calories intake method: The planning commission has defined poverty line on the basis of recommended nutritional requirement of 2,400 calories for person per day for rural areas and 2100 calories per person per day in urban areas.

Higher calories intake is fixed for rural areas because the rural worker has to do greater physical work as compared to urban workers

B. Monetary value of minimum calories intake (Monthly per capita expenditure method) :- According to planning commission methodology) the monthly per capita consumption expenditure is  Rs 816 per person in rural areas and Rs 1000 per person in Urban  areas .

 

 

Criticism of poverty line

Or

 Criticism of Monthly per capita Expenditure method

1.  This method does not differentiate between  very poor and other poor

2.  This method is helpful in identifying the poor.

but it is very difficult to identify that poor who need govt. help the most.

3.  This method ignores various factors like education, health drinking water etc.

4.  This method does not consider social factors that are responsible for poverty.

 

Que:-Is there any decrease in poverty level

Ans:- According to the Govt, High rate of economic growth increase in agricultural output, providing employment in rural areas resulted in decline in poverty but

 

1.  Some Economist followed the methods to estimate the poverty but facts are manipulated to arrive at reduced figure of poverty.

 

2.  The poverty alleviation programs should aim to improve human life.

 

No. of poor in India :-

 

Head count ratio is calculated by dividing the no of people below Poverty :-

 

=            No of people below Poverty line

                       Total Population

 

The official data on poverty is made available to the public by planning commission. It is calculated on the basis of consumption expenditure data which is collected by NSSO( National sample survey organisation

No and roportion of people below poverty line

 

1.  No of people below poverty line : In 1973-to 1975 more than 320 million people were below poverty line. In 2011-12 270 million people are below poverty line

2.  Proportion of people below poverty line : In 1973-74 around 55% of total population was below poverty line and in 2011-12, 22% of total population is below poverty line

Conclusion: The ratio is declining much slower than the absolute no of poverty in India

 

Data of urban and rural poverty in India :-

1.  In 1973 - 1974 more than 80% of the poor resided in rural areas and even in 2011-12 , 75% of no. of

         poor residing in villages

2.  In 90's the absolute no of poor in rural areas

had decline. Whereas their no in urban counter parts had  increased

 

State  Level Poverty Data

1.  5 States i.e. UP, Bihar, Madhya Pradesh, West Bengal and Orissa accounted for 70% of poor in India. During 1973-74 half population of these states was living below poverty line

2.  6 states i.e. Tamil Naidu, UP, MP, West Bengal and

         Orissa contained a large section of poor in 1973-75

3.  Indian states like West Bengal and Tamil Nadu reduced the poverty to a great level.

BRITISH Rule as a main Reason Behind poverty in INDIA

 

There is no doubt that British rule had a. negative impact on the INDIAN Economy

1.  British govt. destroyed Indian Industries. The Primary motive behind de- Industrialisation was 2 fold :-

• To get raw material from India for a Britain Industries

• To sell finished goods to India at higher prices .

2.  More than 70% of Indians were engaged in agriculture

during British rule and Britisher increased lagan on the farmers .

3.  Under the British Rule India began to export food

grains and thus 26 million people died in Famines  between  1875 to 1900

Conclusion

So we can conclude that the main reason behind poverty was BRITISH rule

Agriculture the principal means of livelihood

 

 In India agriculture is the principal means of livelihood and land is the primary asset of rural people, but the condition of agriculture is worst due to following 3 reason

 

1.  Low success of land ceiling Policy:- The Govt opted

a land ceiling policy which means firing the specified limit of land which could be owned by an individual beyond that limit, all land would be taken over by the Govt and will be

allotted to small farmers,

Land ceiling policy was not successful because `

·        The farmers were not able to cultivate small land

holding due  to lack of funds

·        Most of the Indian states were failed to implement  this policy.

2.  Majority of small and marginal farmers:-  A large section of rural poor in India are the small farmers and the land they have is less fertile and they are mainly dependent on rainfall. Their Survival depends on subsistence farming i.e. farming for self consumption.

 

3.  Fragmentation  of land holding: With the rapid growth of population the per head availability of land has declined. The income from this land holding is not sufficient to fulfill even the family consumption.

4.  Distress Among Farmers : High production cost, low returns decline in market price, surplus of output in foreign market etc. All these problems lead to distress among farms i.e. suicides,

 

Cause of Poverty(Important)

 

1.  Population explosion: Rapid growth of population, particularly among the poor is responsible for poverty in India. When national income is spread over a large no of people the per capita income will be low.

2.  Low level of economic development: The Indian economy is underdeveloped due to backwardness of agriculture and Industries. There is lack of infrastructure and slow pace of development and thus 1/4 population of India is below poverty line.

3.  Poor state of Agriculture : Agriculture in India is backward  due to traditional method of production and small land holding with the farmers. As a result productivity is low and thus most of the farmers live below poverty line.

4.  High Rate of illiteracy: The weaker section of society have to opt low paid jobs due to lack of knowledge, Most members of the scheduled cast and schedule tribe are not able to participate in employment due to lack of knowledge and skills

5.  Unemployment:- A large section of urban poor in India are largely the overflow of rural poor who migrate to Urban areas in search of employment. Industries are not able to absorb all these people.

Most of the urban poor care either unemployed or casually employed. This poverty is closely related with unemployment

6.  Huge debt:- Unemployment influenced poor people to borrow money even at high rate of interest. It leads to extreme poverty in India

7.  Inequalities of Income: The unequal  distribution of income and assets lead to poverty in India.

8.  Inflation: The continuous rise in prices, particularly of essential good lead to poverty in India .Sharp rise in prices but negligible change in income has decreased the purchasing power of people and thus resulted in poverty

 

Measures to Remove Poverty

1.  Growth oriented approach

2.  Minimum needs programmes

3.  Poverty alleviation programmes

 

1.  Growth oriented approach: This approach was indicated

from first 5 year plan. This approach is based on expectation that the benefits of economic growth would spread to all the sections of society.

·        This approach was unsuccessful because population growth resulted in low per capita

 

·        Green revolution increased the disparities between small and large farmers

·        Failure of land ceiling policy .

 

Minimum needs programmes : This approach has been a indicated from 5^th  five year plan. It aims to provide basic need to the people

INDIA is of the view that the standard of living of people could be improved through expenditure on consumption needs i.e. food, education, health, water, supply and sanitation

3 Major programs were introduced to improve the

food and nutritional status of the poor

·       Public Distribution System

·       Integrated child development scheme

·        Mid day meal scheme

 

3) Poverty alleviation programmes:- Started from 3^rd  five years

·        Self employment Programs

·        Wage employment Programs

 

1.  Self employment programs:

 Some of the self employment programmes started by the govt. are as follows :-

A.  REGP (Rural Employment and generation programs) : This program was started by the governed to create self Employment in the rural areas and small towns,

·      It was implemented by the Khadi and the village Industries commission

Under this, one could get financial help in the form of bank loan to set up small scale industries.

 

B.  PMRY (Prime Minister Rozgar Yojana) :- Under this program the educated unemployed people from low income families in rural and urban areas were given financial help to set up any kind of enterprise that generates employment.  This programs attempted to generate Employment by

setting up 7 lacks micro enterprises during 1992-97 by 2003-2004,  3 million people got employment under this scheme

 

C.   (PMEGP): Prime Minister employment generation Program

The Indian Government merged REGP with PMRY and introduced a new scheme called PMEGP with effect from 1^st  April 2008.

The main objective of PMEGP are:-

1.    To generate employment in Rural and urban areas by

setting up new self employment venture

2.   To bring together traditional artist and

- Unemployed youth to give them self employment

at there place

 

D.  SJSRY (Swarna Jayanti Shahri rozgar Yojana)

It mainly aims at creating employent opportunity for  both self employment and wage employment in Urban areas

The programme provide gainful employment  by setting up  self  employment  ventures and provision  of wage employment also .

It is a centrally sponsored , scheme which is funded on  75:25 between the center and state

SGSY (Swarn Jayanti Gram Swarozgar Yojana):

It aims at promoting micro enterprises and to bring poor families above poverty line by orgnaising them into self  help groups

People who wish to get  benefit from this scheme are encourage to form self help groups. They are encourage to save money and lent among themselves as small loans

 

Bank and government  will decide to whom the loan is to be given for self employment activities  This scheme is again. created as national rural livelihood mission (NRLM)

 

Wage employment Programmes

1. SGRY (Sampoorna Grameen Rozgar Yojna) :-  This scheme  aims to provide additional  and supplementary wage

 Employment by undertaking labour intensive work and by providing food security and increase in nutritional levels

Wages were paid as a combination of food and cash. This scheme is open to all poor who need wage employment and desire to do unskilled manual work .

2. NFFWP( National Food for work programme).

This program was launched in 2004 with the objective of generation supplementary wags employment.

This programme was initially  implemented in 150 most backward district of the country  to provide additional resources apart from SGRY

This programme was implemented as 100% centrally sponsored Scheme.

This program was incorporated in mahatma Gandhi national rural employment guarantee act   (MGNREGA) in 2005  it aims at enhancing the livelihood securities of

people in rural areas by providing then 100 days of  guaranteed wage employment in a financial year to rural people who are willing to do manual unskilled work

By 2013-14,  5 Crores household get employment  under this scheme

3. NSAP National social assistance programme) or SSP

 Social Security program)

ASAP was initiated by the central govt. on 15 Aug 1995 to help few specific groups. Under  This program elderly people who do not have any one to care of them. Get pension to sustain themselves.  Poor women like  widow are also covered under this scheme

 

4. PMJDY (Pradhan Mantri Jan dhan yojana:

Indian government introduced few scheme to provide health insurance to poor people. From 2014 a scheme called Jan  dhan yojana is made in which people encourage to open bank account  All besides promoting savings habit this

scheme provides all the benefits like subsidies to the Account  holder. Each bank Account holder  also entitled for 1,00,000  accident insurance and 30,000  life insurance cover

Limitation or Criticism of Poverty alleviation Programs

·      The amount of resources allocated for these programs

were not sufficient

·      Due to unequal distribution of land and asset the benefit of poverty alleviation program have been appropriated by non- poor also

·      These programs depends mainly on govt. and bank for their implementation however corruption , lack of training , pressure from local leaders result in improper implementation of these programs

·      There was lack of infrastructure facilities like schools road, I.T., power , Telecom etc in most of the areas

·      High growth rate alone is not sufficient to reduce the poverty , there is a need for active participation of poor people implements these programs .but poor people did not actively  participate in this .

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