9 Economics Chapter 3 Poverty as a Challenge

Chapter Notes and Summary
Poverty When a person is unable to fulfill his basic needs of food, clothing and shelter, then he is said to be living in poverty.
One of biggest challenges of independent India has been to bring millions of its people out of abject poverty.
Poverty as Seen by Social Scientists
1. Now poverty is looked through other social indicators like illiteracy level, lack of general resistance due to malnutrition, lack of access to healthcare, lack of job opportunities lack of access to safe drinking water, sanitation etc.
2. Analysis of poverty based on social exclusion and vulnerability is now becoming very common.
Poverty Line
1. A common method used to measure poverty is based on income or consumption levels.
2. A person is considered poor if his or her income or consumption level falls below a given ‘minimum level’
necessary to fulfill basic needs.
Determination of Poverty Line
1. While determining poverty line in India a minimum level of food requirement, clothing, footwear, fuel and light, educational and medical requirement are determined for subsistence.
These physical quantities are multiplied by their prices in rupees.
2. Poverty line is based on desired calorie requirement.
Food like cereals, pulses, milk, vegetables etc together provide these calories.
These calories are calculated and converted into rupees and added to value of other needs like clothing, footwear fuel, etc.
3. accepted average calorie requirement in India
2,400 calories per person per day in rural areas and
2,100 calories per person per day in urban areas.
4. calorie requirement of people in rural areas is more than that of people in urban areas because they do more physical work as compared to people in urban areas.
5. Though calorie requirement is lower in urban areas as compared to rural areas, amount fixed as poverty line for urban areas is higher because cost of essential goods is higher in urban areas.
6. Poverty line is updated periodically (normally every
5 years) by conducting sample surveys carried out by National Sample Survey Organisation (NSSO).
Poverty Estimates There is a substantial decline in poverty rates in India from about 55% in 1973 to 36% in 1993. proportion of people below poverty line further came down to about 26% in 2000.
Vulnerability Vulnerability to poverty is a measure which describes greater probability of certain communities of becoming or remaining poor in coming years.
Vulnerable Groups
1. Poverty line is not same for all social groups and economic categories in India.
2. Social groups which are most vulnerable to poverty are scheduled caste and scheduled tribe households.
3. Among economic groups, most vulnerable groups are rural agricultural labour households and urban casual labour households.
4. average percentage for people below poverty line for all groups is 26.
5. 51 out of 100 people belonging to scheduled tribes are not able to meet their basic needs. Similarly 50% of casual
workers in urban areas are below poverty line. About 50%
of landless agricultural workers and 43% of scheduled castes are also poor.
6. Apart from these social groups, women, elderly people and female infants are systematically denied equal access to resources available to family. This group is poorest of poor.
Inter State Disparities
1. proportion of poor is not same in every state.
2. State level poverty has declined but success rate of reducing poverty varies from state to state.
3. In 20 states and union territories, poverty ratio is less than national average.
4. Poverty is still a serious problem in Orissa, Bihar, Assam, Tripura and Uttar Pradesh. Orissa and Bihar continue to be two poorest states with poverty ratios of 47 and 43
per cent respectively.
5. Urban poverty is also high in Orissa, Madhya Pradesh, Bihar and Uttar Pradesh.
6. There has been a significant decline in poverty in Kerala, Jammu and Kashmir, Andhra Pradesh, Tamil Nadu, Gujarat and West Bengal.
7. States like Punjab and Haryana have traditionally succeeded in reducing poverty with help of high agricultural growth rates.
Global Scenario
1. Extreme economic poverty-defined by World Bank as living on less than $ 1 perday-has fallen from 28% in 1990
to 21% in 2001.
2. Global poverty has declined but it is marked with regional differences.
3. Poverty declined in China and South-East Asian countries as a result of rapid economic growth and massive investment in human resource development.
4. In countries of South Asia (India, Pakistan, Sri Lanka, Nepal, Bangladesh and Bhutan) decline has not been rapid.
5. In sub Saharan Africa poverty rose from 41% in 1981 to
46% in 2001.
6. In Latin America ratio of poverty remained same.
7. Poverty has also resurfaced in some of former socialist countries like Russia where it was non-existent earlier.
8. International poverty line means population living below
$ 1 a day.
9. Millennium Development Goals of United Nations calls for reducing proportion of people living on less than $ 1 a day to half 1990 level by 2015.
Causes of Poverty
1. One historical reason is low level of economic development under British colonial administration.
2. policies of colonial government ruined traditional handicrafts and discouraged development of industries like textiles.
3. Low rate of growth persisted, leading to less jobs and low incomes.
4. High growth rate of population and less availability of jobs led to unemployment leading to poverty.
5. Lack of land resources has been one of major cause of poverty in India.
6. To fulfill social obligations and observe religious ceremonies people in India including poor spend a lot of money and have to take loans which they are unable to repay and fall into a debt trap leading to extreme poverty.
7. Small farmers need money to buy agricultural inputs like seeds fertilisers, pesticides etc. Since they hardly have any svings they have to take loans which they are unable to repay and fall into a debt trap leading to extreme poverty.
Anti-Poverty Measures
1. current anti-poverty strategy of government is based broadly on two plans
(a) Promotion of economic growth.
(b) Targeted anti-poverty programmes.
2. Economic growth has increased and helped significantly in reduction of poverty. But it is not enough and is comparatively a slow process.
3. Growth in agriculture sector is much below expectations and a large number of people are dependent on agriculture.
Targeted Anti-Poverty Programmes Because of slow reduction of poverty there was a need for targeted anti-poverty programmes some of them are
1. National Rural Employment Guarantee Act (NREGA)
(a) act provides 100 days assured employment every year to every rural household in 200 districts. Later, scheme will be extended to 600 districts.
(b) 1/3rd of proposed jobs would be reserved for women.
(c) central government will also establish National Employment Guarantee Funds. State Governments will establish State Employment Guarantee Funds for implementation of scheme.
(d) If an applicant is not provided employment within 15
days he/she will be entitled to a daily unemployment allowance.
2. National Food for Work Programme (NFWP) 2004
(a) This scheme was launched in 2004 in 150 most backward districts of country.
(b) It is open to all who want to do manual unskilled labour.
(c) It is implemented as a 100 % centrally sponsored scheme and foodgrains are provided free of cost to states.
3. Prime Minister Rozgar Yojana (PMRY) 1993
(a) This scheme was started in 1993 to create self-employment opportunities for educated unemployed youth in rural areas and small towns.
(b) These unemployed youth are helped in setting up small business and industries.
4. Rural Employment Generation Programme (REGP)
1995 aim of programme is to create self-employment opportunities in rural areas and small towns.
5. Swarnajayanti Gram Swarozgar Yojana (SGSY) 1999
The programme aims at bringing assisted poor families above poverty line by organising them into self help groups through a mix of bank credit and government subsidy.
6. Pradhanmantri Gramodaya Yojana (PMGY)
primary education, rural shelter, rural drinking water and rural electrification.
7. Antyodaya Anna Yozana (AAY) Under this scheme poorest of poor were identified and 25 kg of foodgrains were made available at a highly subsidised rate of ` 2 per kg for wheat and ` 3 for rice.
Challenges Ahead
1. Poverty has declined in India but not upto desired level.
2. Poverty reduction remains India’s most important challenge.
3. Certain social and economic groups are vulnerable to poverty.
4. official definition of poverty is about minimum subsistence level of living rather than a reasonable level of living.
5. Many scholars advocate that we must broaden concept into human poverty.
6. Human poverty not only considers lack of money but also absence of education, healthcare or shelter and freedom from caste and gender discrimination.

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