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Poverty In India Sample Assignment

Poverty  in India

The concept of poverty is associated with a minimum level of living or minimum consumption requirements of food, clothing, housing, health etc. poverty is defined as inability to achieve the minimum requirements of life, health and efficiency due to very low income or insufficient assets. Poverty is thus seen as a state of absolute deprivation. It is defined in terms of a certain normative minimum level of living operationally measured by consumption expenditure that is necessary to ensure that minimum desirable level of living. All those people who fail to secure income or assets to have access to even these minimum consumption requirements are classified as “poor”.

According to vidyanathan in India, there is broad consensus that the minimum should include :

1) A nutritionally satisfactory diet, a reasonable standard of clothing, housing and other essentials.

2) Access to a minimum level of education, health care, clean water supply and sanitary facilities.

The income necessary for people to afford the elements constituting the first category define the poverty line. Problem of poverty exists more in rural areas as compared to urban areas in India.

 Types of poverty

 The problem of poverty can be viewed in relative or absolute terms.

Relative poverty refers to the income or assets position of one class of  people compared to others. Thus we have the rich and poor the affluent and not so affluent people in the society. The essential point here is that poverty of one is the relative to the richness of the other. Thus we can say that some people or a class of people who have relatively lower income than other group are relatively poor, even when they may be enjoying reasonably good living standards.

On the other hand absolute poverty is a situation where person do not have access to bare minimum consumption requirements to maintain its health and work efficiency. It manifests itself in denial of minimum human requirements of food, clothing, shelter, education, health, nutrition and other basic needs. Absolute poverty can be seen in its most naked form in many parts of India among millions of semi-starved, undernourished, ill, shelterless, impoverished people suffering from ill health with n o access to medical and health care facilities.

 

Poverty line defined:

Extent of poverty in a country is measured by number of people who live below the poverty line and their ratio to the total population is known as poverty ratio. Poverty line is drawn on the basis of expenditure that is necessary to secure the minimum acceptable living standard for work and efficiency. Since food is the most basic of all our basic requirements as it provides nutrition for living and working , poverty line is drawn on the basis of minimum nutritional standards expressed in terms of intake of calories. In India minimum necessary calorie intake of a person should be 2400 calorie per day in rural area and 2100 in urban area.  The minimum calorie intake has been kept higher than that in urban areas because rural people have to put in more physical strength than those living and working in urban areas. Those who fail to secure the prescribed calorie intake levels, falls below the poverty line and are defined as poor.

To convert this calorie intake based poverty line into a monetary measure of poverty, the cost of minimum consumption requirements of food that would prescribe this essential calorie intake i.e. 2400 in rural areas and 2100 in urban areas is calculated at prevailing price. The planning commission has worked this cost at Rs 356 in rural areas and Rs538 in urban area. It may be seen that even for a higher calorie intake the required expenditure is lower in rural areas as compared to urban areas as food is cheaper in the countryside than in the towns and cities.

 

Poverty ratio: Magnitude of poverty in India

 

Years	Poverty ratio(%)	Number(CR)
1973-74 1977-78 1983-84 1987-88 1993-94 1999-2000	54.9 51.3 44.5 38.9 36 26	32.1 32.9 32.3 30.7 32 26

Source: economic survey 2002-03 and planning commission.

It may be observed from the table that over half (55%) of india’s population lived below poverty line in 1973-74. this rate came down to little over one third (36%) in  1993-94. but the absolute number of poor people remained at the same figure of 32 crores. This is because the total number of population of India increased by about 30 crore people in these twenty years. Thus even when some people crossed the poverty line many were added to the poverty groups. In 2005 world bank estimated that 41.6% of Indian population falls below the international poverty line.

 

Rural Urban breakup of poverty

An important feature of poverty in India is that its incidence is far greater in rural areas than the urban areas.  The table shows the breakup of rural urban poverty in  different states of India. In 1973-74 over 56% rural population was below the poverty line as against 49% in urban areas. Even in 1999-2000, the rural poverty ratio of over 27.1%  was higher than 23.6% in urban areas. In 1973-74 over 26 crore people lived below the poverty line in rural areas as against 6 crores in urban areas. While this number declined to 19.3 crores persons in 1999-2000 in rural areas, it increased to 6.7 crores in urban areas. This rise in the number of urban poor is the direct outcome of migration of rural people to towns and cities in search of more remunerative employment. However ailing to secure gainful employment they add to the urban poverty groups and thus cause increase in number of urban poor. The decline in the number of rural poor from around 26 crore to around19 crore between 1973-74 and 1999-2000 inspite of rapid increase in population has been caused partly due to large number of anti poverty schemes which has enabled many people to cross poverty line and partly by the process of urbanization under which a lot of rural people have moved to urban areas in search of better avenues of employment.

 

Causes of poverty

Poverty in India has taken deep roots due to two major factors i.e. low level o economic development and wide inequalities in income distribution and asset ownership. Added to these two factors there is a third factor that has perpetuated poverty is the high growth rate of population since 1951. thus to look for causes of poverty we have to analyse the impact of economic inequalities as well as the ill effects of rapid population growth on income, consumption and levels of living of poor masses.

 

1)      Underdeveloped nature of Indian economy:  India is an underdeveloped country it has very low per capita income compared to other countries. Its rate of growth is low. Unemployment is widespread. Agriculture is still backward and industry too is not much developed. All these factors have combined to keep Indians poor. The major factors are:

a)      Low level of per capita income: India is an underdeveloped country. Its current per capita income is among the lowest in the world. Compared to Switzerland and Japan with per capita income of around US $35000 or USA and western European nations with per capita income of around US $20000. India with its per capita income of US $ 1040 in 2008 stands nowhere. Even after half a century of independence India continues to be underdeveloped.

b)      Low rate of growth:  Before independence our economy was stagnating under heavy burden of extremely backward agriculture and under developed lop sided industrial structure. Efforts were made to put the economy under rapid growth in 5 year plans. Huge investments have been made in agriculture, industry and infrastructure. Yet, the growth rate of the economy has been extremely slow as the national income has gone up only 8 times over the past 5 decades. Per capita income has gone up less than three times during this period. Thus the average India seems to have not become much better of due to slow pace of development which could neither boost income nor remove unemployment.

c)      Inflation: Rising prices or inflation have also contributed to poverty of people. Prices have been continuously rising since independence. Rising prices reduce purchasing power of money and thus reduce the real value of money income. The fixed income groups are the worst hit as they can purchase small amount of goods and services with the given income. The unorganised labourers, casual workers, low paid employees etc are therefore compelled to reduce their consumption and thus move below the poverty line. This adds to the number of poor people in the country.

 

2) Inequalities in Income and Asset ownership:  Along with the slow pace of development and other important factors contributing to poverty is the growing inequality in income distribution and ownership of income yielding assets. Development process opens up new avenues of profitability and new channels of investment. Those who have resources take advantage of these new opportunities to make profits. So the rich become richer and their income rises and assets expand. Of course more labour gets absorbed as more employment opportunities are created. So the poor workers also get benefit. But this has not happened in reality. Use of modern technologies has increased output without much increase in employment. Thus, Most of the gains of the development have accrued only to the rich capitalist and business classes while the poor have largely been untouched by the growth process. The share of the rich in national income has increased the inequalities in income distribution and have widened the gap between rich and poor. Rising prices and inflationary pressure that have accompanied the developments process have further aggravated these inequalities. Higher prices means more profit to the business classes but low purchasing power and low real income to the poor. According to the world bank report of 2001-2002, the top 20% of the people in India have 46% share of national income while the bottom 20% population gets less than 8% share. The distribution of wealth and income yielding assets is also concentrated in few hands that further increases their income and inequality. The result of these wide inequalities in income and wealth distribution is that much of increase in income during the plans has gone to the richer sections. The poor have remained largely ignored by the development process. Poverty has thus grown along with the economic development of the country.

 

3)Rapid increase in population: rapidly increasing population has also been a major factor contributing to poverty in India. Between 1951 and 2001 over 66 crore people were added to India’s population which in March 2001 estimated at 102 crore which was 36 crore in 1951. Fast growing population needs high growth rate of GNP to sustain the growing number of people and sustain them even at the minimum living standards. But increasing population reduces national savings and adversely affects capital formation thereby limiting the GNP growth rate. Consequently slow rate of growth of GNP and high high growth rate of population depress the growth rate of per capita income. In a situation of widespread income inequality the slow growth of national and per capita income would mean a larger share of even this small income growth goes to the rich with virtually no gain to the poor. It is also observed that highest growth rate of population is observed in case of poorer sections of society, bot in rural as well as urban areas. Thus the poverty groups among which population breeds fast but income growth is negligible, are further pushed down below the poverty line and move from the category of poor to very poor and those slightly above the poverty line are pushed below it due to increasing number in these families.

 

 

 

 

Measures to reduce poverty.

 

Since poverty in India is essentially a consequence of low rate of economic development, inequality in income distribution and rapid population growth the remedy lies in accelerating the tempo of economic development, reducing income inequalities, controlling the growth rate of population. These are some of the measures to reduce poverty and can be summarized as follows:

 

1)      Accelerating the growth rate: a major cause of poverty in India is extremely slow growth rate of economy. A fast growing economy turns out increasingly large amount of goods and services every year, generates higher income and provides greater employment opportunities. If income distribution remains unaltered, the poor too will share this increased income through greater employment and job opportunities. Thus there will be some improvement in the lot of the poor masses and incidence of poverty will be reduced. This what India needs to do urgently is to step up the tempo of its development. The growth rate achieved so far has not been able to make any significant dent into the poverty. We must aim at much higher growth rate of atleast above 10% p.a.  the areas on which India should give emphasis for removal of poverty are:

a)      Increase in the rate of  investment: though India has considerably increased its saving and investment rate since independence, yet this is not adequate enough to give such high rate of growth that is needed to eradicate poverty. Thus more efforts should be made to increase domestic savings and expand inflow of foreign resources for further increasing the rate of investment.

b)      Emphasis on development of agriculture: since the greater incidence of poverty is found in the rural areas, greater emphasis should be placed on rapid development of agriculture. Larger income in the rural sector will not only remove rural poverty but by creating more demand of industrial goods it will help in inducing more production and income in urban areas as well thereby reducing urban poverty.

c)      Increase in production of consumer goods and mass consumption: industry should be expanded and greater priority should be given to production of consumer goods for the masses. Greater availability of such goods as cotton, sugar, edible oil, etc. will help the poor to increase their consumption level.

d)     Change in industrial technology: most of the modern technology has been developed in the western countries and does not create much employment. Efforts should be made to develop and adopt an appropriate technology that uses more labour and thus creates more employment and income for the unemployed labour class. This will help reduce industrial unemployment and urban poverty.

e)      Development of village and small scale industries: village industries like handloom and khadi , coir goods, sericulture, bee keeping, handicrafts, etc. can help create employment and income for the rural poor. Small scale industries using improved but labour intensive technology should be set up in the urban areas. Such industries create more employment with given amount of capital and are thus extremely helpful in reducing poverty among the urban poor.

f)       Price stability: rising prices reduce purchasing power of given money income and thus enable people to consume smaller amount of goods and services than before. Therefore government must adopt policies and measures that are aimed directly at controlling inflation and bringing about price stability. This would substantially contribute to removal of poverty.

g)      Direct attack on poverty: policies and programmes should  be evolved which are aimed directly at poor people for helping them to cross the poverty line. Thus programmes should be made for providing minimum needs of the poor such as food, drinking water, shelter, elementary education, healthcare etc. poor should be provided with some income yielding assets so that they could start earning their living and move above the poverty line.

2)      Reducing inequalities in income distribution: a high growth rate of GNP is accompanied with increased inequalities of income, the fruits of development will go only to the rich whereas the poor will grow in numbers. Thus inequalities must be reduced if development is to benefit the poor. Special care of the poor must also be taken to make them better off. Some steps in this direction are as follows:

a)      Low paid workers in agriculture and unorganised sector should be enabled to secure higher wages consistent with their productivity through labour legislation or minimum wage laws.

b)      Taxes should not be imposed on wage goods i.e. goods mainly consumed by poor masses. On the other hand goods consumed by the rich and upper middle class people may be taxed to raise government revenues.

c)      Necessary goods must be available to the poor at subsidised rate through public distribution system.

d)     Free health and education facilities should be provided to the poor.

e)      Efforts should be made to ensure that supply of wages goods increases in accordance with their growing demand so that the supply demand imbalances does not cause their prices to rise.

f)       Poor families which do not have any earning member should be provided employment for atleast one person through programmes that are financed by the government.

3)      Limiting growth rate of population: Along with securing high growth rate of national income and reduction in inequalities, serious efforts must be made to reduce the growth rate of population. When national income income increases substantially and population grows slowly, per capita income will grow fast. And since inequalities have been reduced, the increasing per capita income would ensure better living standards for all, including the poor people. Increase in per capita income will also ensure greater savings, more capital formation, and rapid economic development. This would secure further reduction in poverty. Hence population control assumes a great significance in any programme that seeks to reduce poverty. Urgent steps including propagation and adoption of effective birth control measure must be taken to initiate rapid growth rate of population to make a dent in poverty.

 

 

EVOLUTION OF ANTI-POVERTY POLICY

 

Current development literature has come to sharply focus on eradication of poverty as the central concern of economic policy. Earlier focus used to be on the rate and pattern of growth and inequalities in income distribution. Though these still continue to be important areas of concern, attention has come to be centered around the people whole economic growth and development of the past many decade failed to provide even the basic minimum requirement of life. Now the focus is on the poor, the deprived, the malnourished and the hungry millions that comprise the sprawling poverty groups. The idea of targeting the poverty groups for fulfilling their basic needs is not new, though it has caught the undivided attention of the policy makers and planners since 1980s. The constitutional provisions on the directive principle of state policy specifically enjoined the government to ensure adequate livelihood and employment, health and nutrition, education and security to citizens. However it took a long time for the government to define its development objectives and policies with reference to these principles. The earlier 5 year plans relied heavily on the assumption that sustained high growth rate of the economy would, through the trickle down effect, automatically alleviate poverty. But these plans not only failed to achieve the envisaged growth rate, they also performed miserably on distributive front, Thus, a vast majority of people continued to live in poverty, malnourishment, ill-health, illiteracy and deprivation. In view of these set backs and failures to make much visible impact of poverty of the masses during the early attempts at development, the economist came to form a firm view that economic growth even when it is reasonable and sustained is by itself not able to make any significant dent in poverty. Therefore programmes on direct attack on poverty came to accepted, formulated and implemented as the only means effective of addressing the problems of widespread poverty and taking care of the needs of the poor and the deprived. The evolution of policies and programmes to tackle the problem of poverty has been haphazard and in some respect incoherent as well. However following distinct group of policy measure and programmes have been implemented in this sphere.

 

(i)                 Reservation for schedule caste/tribes and backward classes in jobs, educational institutions etc.

(ii)               Programme to help poor people to acquire income yielding assets so as to raise them above poverty line on a lasting basis through self employment schemes.

(iii)             Programme to provide wage employment to the poor to ensure minimum income & nutritional standards through schemes like food for work.

(iv)             Schemes to ensure access to poor to minimum standard of education, health facilities, roads, drinking water etc

(v)               Special programmes to tackle problems of poor in hilly areas, deserts and draught prone areas.

 

Special programmes on poverty removal and employment generation.

 

In view of growing magnitude of poverty and unemployment inspite of a reasonable, though not high, growth rate achieved during the first three decades of planning, special programmes were designed and implemented to make a direct attack on poverty. These programmes included self employment and income generative schemes for the poor like Integrated rural development programme (IRDP), training rural youth for self employment etc( TRYSEM) etc. some of the major programmes are:

1)          Swarnajayanti gram swarozgar yojna (SGSY): this a self employment programme which include the earlier anti poverty programme like the IRDP, TRYSEM, development of women and children in rural areas (DWCRA) and million wells scheme(MWS). The IRDP aimed at providing income assets to the identified poor families through a scheme of concessional loans and subsidies so as to enable them to move above the poverty line on lasting basis. TRYSEM was designed to train rural youth in technical skills and provide them with loans to set up rural industries and business activities and thus become self employed persons. The DWCRA sought to improve the socio economic status of the poor women in rural areas through creation of income generating activities for women groups. The MWS aimed at providing open irrigation wells free of cost to the rural poor, small farmers, freed bonded labour in rural areas and the farmers belonging to SC and ST classes. All of the above self employment generating programmes have now been redesigned and restructured to improve their effectiveness and merged into single programme called Swarnajayanti gram swarozgar yojna from april 1999. the objective of SGSY is to help poor families to cross the poverty line by providing them income yielding assets such as sewing machines, pair of bullocks to plough land etc.

2)          Jawahar gram samridhi yojna(JGSY): the objective of JGSY are creation of village infrastructure and durable assets like roads, dams, wells, irrigation channels etc, to enable the rural poor to get sustained employment and provide supplementary employment to underemployed poor persons.

3)          The employment assurance scheme: the employment assurance scheme was launched in October 1993 but the scheme was restructured in 1999. the EAS is now being implemented in all 5448 rural blocks. The main objective of EAS is to create additional wage employment opportunities through manual work for the people below poverty line.

4)           Samporna grameen rozgar yojna(SGRY): launched in 2001 the scheme aims at providing wage employment in rural areas. It seeks to ensure food security to the poor. The scheme is being implemented on cost sharing basis of 75:25 between centre and state government.

5)          The National Social Assistance Programme: The NSAP recognizes the responsibility of the government for providing social assistance to the poor in case of maternity, old age and death of the bread earner. It is centrally sponsored scheme for which the entire funds are provided by the central government under the 3 components, i.e. National Old Age Pension Scheme, National Family Benefit Scheme, National Maternity Benefit Scheme.

6)          Pradhan Mantri Gramodaya Yojana (PMGY): A new scheme for removal of rural poverty was introduced in budget 2000-2001 for which an allocation of Rs.5000 crore was made. The PNGY focuses on village level development in 5 critical areas that is health, primary education, drinking water, housing and road development.

7)          Indra Awaas Yojana (IAY): This is a major scheme for construction of houses to be given to the poor free of cost & construction of new houses, conversion of kuchcha houses into puccaa houses.

8)          Samagra Awas Yojana (SAY): This has been launched as a comprehensive housing scheme in 1999-2000 on a pilot project basis in 1 block each of 25 districts in 24 states. The aim of the scheme to ensure integrated provision of shelter, sanitation and drinking water.

9)          Food and Work Programme : This programme was launched in 2001 with the aim of augmenting food security through wage employment in the draught affected rural areas in 8 states. The centre supplies food grains for this scheme free of cost to the states. The wages by the state government can be paid partly in kind, i.e. upto 5 kg of food grains per day for one days work by one person and partly in cash.

10)      Prime Minister Rojgar Yojana (PMRY) : The PMRY was launched in urban areas in 1993-1994 and extended to rural areas in 1994-1995. This scheme aims at providing self employment to the educated unemployed youth by giving them loans to set up micro enterprises.

11)      Swarn Jayanti Shahri Rojgar Yojana (SJSRY) : SJSRY came into operation in 1997 and has merged it in  3 earlier urban anti=poverty and employment generation programmes that is Nehru Rojgar Yojna, urban basic services for the poor, prime minister integrated urban poverty alleviation programme.

12)      Valmiki Ambedkar Awas Yojana (VAMBAY) : This scheme was launched in 2001 with the aim of ameliorating the conditions of urban slum dwellers living below the poverty line who do not possess adequate shelter. The primary objective of VAMBAY is to facilitate the construction  and up gradation of dwelling units for slum dwellers and provide a healthy urban environment.

 

Flaws and shortcomings in the anti poverty programme.

 

The anti poverty programme of the government suffer from some shortcomings that hamper the progress of various schemes aimed at lifting the poor above the poverty line. For example the identification of the poor or the target groups on which various anti poverty programmes need to focus their efforts are mostly faulty. The beneficiaries of the programme like IRDP are not the people who really deserve assistance but the one who have connections, influence or political backing. Thus most of the assistance i.e. subsidies, loans, grants, etc flow to persons who are wrongly projected as poor rather than the genuine poverty groups who have neither social backing nor political attraction for the party in power as well as the institutions and organisations engaged in the implementing these programmes. Further, most of the programmes suffer from inadequate funding. In many cases the financial limits sanctioned by the central and the state government have no relevance to and invariably fall short of the actual amount of investment funds needed for schemes and projects. And then even out of these meagre funds, quite a substantial amount is spent on paper work, drawing and discussing plans, expenses on meetings, entertainment, conveyance bills etc. of the officials responsible implementing the projects. Thus not much of the funds are available for transmitting direct benefit to the poor people. It was in this context that late shri Rajiv Gandhi, former prime minister of India once said that out of every expenditure of a rupee on the anti poverty programme only about 15 paisa reach the actual beneficiary.

The shortcoming and flaws in the working of anti poverty programmes has summed up as follows:

Official claim of the number of beneficiaries, works carried out, additions to productive assets and employment generated are unreliable and exaggerated. Poor targeting is reflected in the high proportion of non poor and other non-eligible persons among the beneficiaries. Leakages due to inappropriate works, inefficient implementation, and corruption are high. Quality of assets provided under these programmes is poor and their impact on income level of beneficiaries dubious. Assets and schemes are frequently not appropriate to the needs and potentials of particular regions and groups. There is a little consultation, not to speak of involvement of local communities generally and target groups in particular, in deciding and implementing schemes. Lack of accountability remains a major problem. The selection of beneficiaries, the distribution of loans and subsidies and the recovery of loans offer much sources of patronage and corruption at the political and the bureaucratic level. These weaknesses and deficiencies have given a bad name to poverty alleviation programmes. In view of many observers and critics, the effective contribution of anti poverty schemes to improving the lot of poor has not been commensurate with the financial and material resources spent on these programmes. There is an urgent need for improving the effectiveness of these programmes through better targeting, reducing wastage, eliminating corruption, making schemes more responsive to the local needs, creating mechanisms for poor people involvement and cutting down political and bureaucratic interferences. Public accountability for ensuring proper choice of beneficiaries and proper use of funds should be effectively enforced.

Thus what is needed is not the mere expansion of the anti poverty programmes or adding a few more schemes for the year after year, but a more faithful and non political approach to this human problem. Efforts should be made to weed out corruption, improve efficiency of the implementing agencies, proper selection of target groups so that maximum benefits reach those people for whom they are sought to be provided for.

 

Conclusion

 

The success of the anti poverty strategy is reflected in the decline in overall poverty ratio from 55% in 1973-74 to 36% in 1993-94, a nearly 20% fall in two decades. During the next five years, 1993-94 and 1999-2000, the poverty ratio further declined by 10% to the level of 26%. Thus within a period of 25 years, poverty ratio declined by 30%, which is surely a significant achievement, especially in the view of the fact that country’s population had risen sharply during this period. The absolute number of poor declined from 32 crores persons in 1973-74 to 26 crore in 1999-2000. this figure further has gone up in 2006 when planning commission of India estimated that 28% of the total population of India is poor. According to recent Indian government committee 38% (380 million) of india’s population is poor.

Other Sample Assignments in Economics Homework Assignment :

Manufacturer Production Function	Price Elasticity Of Supply
Equalization Of Wages	Equilibrium Price Of Commodity
Poverty In India	Gross National Product
Consumption At Different Levels	Gross Domestic Product
Investment Decision	Expected Raturn
Level Of Income	Saving Equation
Equilibrium Level of Income	Equilibrium Level of National
Equilibrium GDP	Equilibrium level of GDP
Autonomous Investment	Calculate The Equilibrium GDP
Government Expenditure	Equilibrium Gdp Of Economy
Hypothetical Information	Equilibrium GDP Government
Equilibrium Level Of Inceome	Equation For Monetary Equilibrium
Calculate Saving Function	Equilibrim Level Of Income
Regardless Of The Level Of Income

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