Poverty in India

I have personally visited Calcutta, India, wondering exactly why so many
people line the streets in absolute destitution. Seeing homeless and poverty
stricken people is sad anywhere in the world; I have seen it in much of the
United States and in other countries as well. But nowhere is it as vast and grave
a problem as it is in India. Every time someone asks for a few rupees on the
street, it is an eye-opening experience that makes you realize how many people
in this world are living below the poverty line – with not enough to eat, nowhere
to live, no quality of life to speak of. India holds about one sixth of the world’s
population, yet is responsible for thirty-five percent of the world’s poverty. If
one wants to begin fighting the world’s poverty problems, India is probably the
place to start.
In the year 2000, twenty-six percent of the people of India were living
under the poverty level. This is a fairly shocking statistic, especially when one
considers the World Bank definition of poverty – income of less than one dollar a
day, per capita. As surprising as this statistic may be, the situation has in fact
improved drastically in the last quarter century. In fact, from 1951 to 1974,
during India’s first quarter of independence, the poverty rate increased from 47
percent to 56 percent, but the last 25 years have seen this figure drop to 26
percent. (Nathan) With this paper, I seek to understand the determinants of this
decreasing yet alarmingly high rate of poverty in India. I will focus on the stateby-state effects, especially as relating to factors such as religion, caste


There is a very evident caste breakdown. poverty levels have decreased across India. I will examine what has been done in India with regard to hunger and poverty elimination efforts. The place where the difference arises is in the rural setting. It is interesting to note that both these states have a similar level of urbanization. literacy rate and other demographic factors. But it was just 3. many of the associations continue to this day. A second lower caste is the “scheduled tribes.02 percent in the state of Gujarat. (Dahiwale) Urban slums are growing in number because of the movement of poor people from the villages to the cities. Breaking down the issue of differential poverty. The “scheduled castes” are a designation given to the lowest caste.” This group of aboriginal people generally 2 . Both states saw a drop in poverty of almost the same percentage in urban centers.72 in the state of Maharashtra and 15. The problem of poverty in India arises in the rural population. For example. especially in rural areas. in examining the data given in Rural Poverty and Slums by Dahiwale. proportion of agrarian workers. Although the caste system is not formally used anymore. consisting of those formerly associated with the designation of “untouchables” amongst others. But Gujarat saw a drop in poverty in rural areas that was 7 times as much as that of Maharashtra.35 percent. take a look at what has been successful and what might need to be changed in the future. however. let us move beyond the states to the actual demographics of the poor in India. India’s decline in poverty from 1970 to 1988 was 12. In addition.breakdown. As mentioned earlier. They have not. done so equally in all regions.

respectively.rejects the caste system and chooses to reside in jungles. those Indians that converted to Islam were from two main groups: the lower classes of Indian society and the ruling classes from various Indian kingdoms. (Daniel) In examining the data. Christianity. Sikhism. (Dahiwale) The reason for this is possibly due to the different backgrounds from which the Muslims arrived in India. Buddhism. Islam represents about 12 percent of all Indians.5 percent. In fact. The former of these two classes is a likely contributor to the large proportions of poor Muslims in present day India.2 percent of the scheduled castes and 62.7 percent.5 percent. Islam. Arabs and other Muslims began invading India. Muslims also exceeded Hindus in urban poverty levels by more than 17 percent. In the 8 th century. (Daniel) These two castes make up a disproportionate fraction of the poor in India. 3 .2 percent of the scheduled tribes were living below the poverty line. and Jainism. and Jainism represent much smaller percentages of people – 2. Since then. Sikhism. in 1988. . and . Buddhism. 54. According to a 1987-1988 consensus survey. or 46 percent. while Christianity. about 82 percent. forests and mountains. If religious groups are considered. The majority of the country identifies with the Hindu faith. there appears to be a correlation with higher percentage of poverty with the Islam religion. 35 million of the nations 76 million Muslims. were living below the poverty line. India has 6 significant religious groups: Hinduism. One of the reasons that we saw a higher percentage in Maharashtra as compared to Gujarat was that there is a higher population percentage of scheduled castes in that state as compared to Gujarat. 2 percent.

Census data.8 percent in the rest of the city. we cannot make any decisive conclusions 4 . could help decrease the incidence of poverty.2 percent was found. showed a literacy rate of 18.6 percent of rural labor households under the poverty line. relative to all other labor. (Dahiwale) All of this evidence points to the conclusion that agricultural laborers are.6 percent of people in rural households are in poverty. 45.Next let us examine the proportion of agricultural laborers. also suggest that a reduction in the proportion of agricultural workers causes unemployment to decrease. Slum and rural poor areas can be identified with low literacy rates as well as educational levels. more likely to be living under the poverty line than the average laborer. in a slum in the city of Kanpur. we find another correlation. From all of this information on agricultural labor. Maharashtra also has a higher ratio of agricultural workers to all other workers. For example. since most people in the rural communities take part in agriculture. There is also a correlation between literacy rates and caste. as compared to a literacy rate of 50. where there were 56. According to the World Bank. while the upper castes had a literacy rate of 88. The highest level of poverty. we might conclude that reduction in agricultural labor. a literacy rate of 36. Some cities found literacy rates as low as 20 percent in slums.1 percent. was in Maharashtra. the backward castes. on state lines. While all of this data on literacy rates is interesting to note.2 percent – a tremendous differential. interestingly. and therefore a reduction in rural labor unemployment. in which the scheduled castes are included. on the average. If we take a look at education. As found in Kohalpur city in the study done by Dahiwale.

Especially in the more well-off states such as Punjab and Haryana. (Chelliah and Sudarshan) The 1980’s saw an increase in food production per capita of 1. Before we go into the programs that have been tried. people are consuming less cereals and more milk and milk products. India has actually made rapid progress over the years when it comes to food production. vegetables. The correlation can be extrapolated to a state level – Kerala’s poverty rate is a bit lower than other countries and we see a very high literacy rate in Kerala. or should be tried. Going beyond the numbers of people that are in poverty. The most important of their living conditions to take a look at. with regards to poverty. is their food situation. meat.based on this because there is no evident causation. With an overall decrease in the 5 . you have little or no money. It is important to see what sort of nourishment the poor have. and in the process are unable to attend school. Children are forced to find work to make money just so they can eat. eggs. however. on the whole implies a less efficient means of getting calories. let us take a lok at the conditions in which they are living. let us examine the current situation with regards to nutrition. fish. This changing diet. having nearly achieved self-sufficiency in the 1970’s with regard to availability of foodgrains. While this is fine for those that can afford it. Interestingly. foodgrain and cereal consumption has been decreasing since the early 1970’s. it falls hard upon those that cannot. the highest in the nation. fruits and so on. In fact the correlation likely runs in the opposite way: being born into a destitute family.6 percent per year. and what sort of food security measures are in place because it gets at the core of the problem: those under the poverty level are undernourished.

Furthermore. we find that the poor become very succeptible to a sudden change of price of cereals. In fact. and Niacin. and making the poor more vulnerable to these volatile prices. there has not been much of a decline in food-poverty. As of 1994. 6 . the lowest 30 percent of rural populations were only taking in about 1680 calories per day. the cereal prices are destabilized by lesser consumption. Similarly 46 percent of all rural adults suffered from chronic energy deficiency. (Chelliah and Sudharshan) These trends of changing diets have also not necessarily improved nourishment. this change in consumer preferences shows that even though there has been a decline in income-poverty between 1972 and 1992. when a minimum of 2000 is needed for a healthy diet. (Chelliah and Sudarshan) In addition. overall the problem of food-poverty is much worse than the issue of income poverty. and the problem is augmented the less money you have. many experience a lack of protein and certain essential micro-nutrients. In fact. Many poor households suffer from a lack of Vitamin A. (Chelliah and Sudharshan) It is quite evident that dietary nourishment is a major problem in India. according to surveys taken in 1994. Thus this overall trend is hurtful to the nations poor both by creating unstable prices. (National Nutrition Monitoring Bureau) Thus.consumption of cereals. even beyond those who are living under the poverty level. over one half of all children under the age of 15 were either severely or moderately malnourished. for instance. as non-cereal consumption is proportionately increased. Riboflavin.

During the 1960’s there was a foodgrain shortage which caused the birth of a program called the Public Distribution System. rural poverty is largely where all poverty in India stems from. many programs beyond the Public Distribution System have been tried out in an attempt to alleviate the situation. to be some sort of an inter-regional bias in how the PDS operates. The following is a listing of programs enacted since 1971: 7 . as mentioned earlier. There also seems to be an urban bias with the PDS. Uttar Pradesh has an incidence of poverty that is more than six times as high as Kerala. (Chelliah and Sudarshan) Given the vast nature of the problem of poverty in India. Many of these programs have focused on eliminating rural poverty. since. Meanwhile. Kerala. If we take a look at some of the data provided for who has benefited from the PDS over the years. we see that those states with high incidence of poverty have not necessarily been the states that have received a lot of aid from PDS. The States of Jammu and Kashmir as well as West Bengal show a large urban bias. There appears. for instance has a low incidence of poverty. On the whole. or PDS. yet a high share in PDS. It focused mostly upon stabilization of prices in urban areas until the 1980’s when it began expanding to rural areas as well. or from the effects of economic reforms. therefore. it has tried to maintain a supply of foodgrains especially to protect the poor who might be affected by sudden price hikes either due to natural fluctuations in the economy. Since then. it is evident that the Public Distribution System is not providing the safety net it intends to for the rural poor in India. yet its share in PDS is lower than that of Kerala.

1986 Eradicating poverty under various schemes 6 Food for Work Program 1977 Improving the consumption level of the poor 7 Training Rural Youth for Self Employment 1979 Upgrading the technical skills of rural youth for taking up selfemployment ventures 8 Integrated Rural Development Program 1979 Providing assistance for acquisition of productive assets for self-employment 9 National Rural Employment Program (NREP) 1980 Providing wage employment for assets creation 10 Rural Landless Employment Guarantee Program (RLEGP) 1983 Providing wage employment to landless agricultural laborers for creating a social forestry and for construction activities 11 Jawahar Rojgar Yojana (JRY) 1989 NREP and RLEGP merged into JRY for generating additional employment on productive works. 1982. It is to be implemented in all villages in the country 8 .1 Program Small Farmers Development Agency Launching year 1971 Objectives Controlling soil conservation and promoting agricultural productivity 2 Tribal Area Development 1972 Program Improving Economy of the tribal 3 Minimum Needs Program 1972 Providing construction assistance and controlling drop-out rate of children in school and improving health 4 Drought Prone Area 1973 Promoting dryland agriculture 5 Twenty-Point Program 1975.

300 to a pregnant woman. Urban Basic Services for the poor (revised) 1986 Aiming at child survival development. education and minimum needs. 10. a pension of Rs.000 in the case of an accident 15 Prime Minister’s 1995 Uplifting the urban poor by Integrated Urban Poverty mobilizing the women power and Eradication Program encouraging for self-employment (PMIUPEP) in 345 Class and training II cities Table 1.12 Urban Basic Services Scheme. 3) Programs that directly target poverty eradication through creation of employment. Assistance to handicapped and street children 13 Nehru Rojgar Yojana 1986 Encouraging unemployed youth to take up self-employment ventures and providing/upgrading shelter to pavements/slum dwellers 14 National Poverty Line Benefit Schemes 1995 Paying Rs. Anti-Poverty Programs (Taken from Table 1. 2) Programs that promote human development with emphasis on health. 75 per month to an old aged and a sum of Rs. 1) Programs that promote economic growth and overall development.000 in the event of a death of the bread earner and Rs. training and creating asset endowments of the poor 9 .4 of Rural Poverty and Slums) Basically all of these programs are of four basic types. 5.

Other similar programs for self-employment. The main objective for the 10 . started in 1979.4) Lastly. the targeted Public Distribution System (PDS) mentioned earlier. The JRY was actually created as a merger of two earlier plans known as the National Rural Employment Program (NREP) and the Rural Landless Employment Guarantee (RLEGP). which provides protection from inflationary pressures by providing food at affordable prices. and there has been a lack of concern for responding to actual markets. Studies have pointed out two major reasons for this: there has been very little interaction with the actual people being affected after the program has been enacted. The program brought about an incremental income of more than Rs 2000 for 57 percent of households affected and less for all other families. In addition to self-employment programs. The Integrated Rural Development Program (IRDP). it has generally not been enough extra income to allow these families to cross the poverty line. works to help poor families in rural areas by providing them with government subsidies for food. In other words the programs have received little feedback. One major example is the Jawahar Rozgar Yojana (JRY). there have been different wageemployment programs intended for poverty alleviation. (Chelliah and Sudharshan) While the IRDP did in fact bring extra income to families. have not adapted to meet changing demands of its beneficiaries. such as the Development of Women and Children in Rural Areas (DWCRA) and the Training of Rural Youth for Self-Employment have met with similar weak results. and have not created opportunities that have been viable in existing markets.

(Chelliah and Sudarshan) Despite this. women’s club buildings. The overall organization was not impressive either. but the opportunities are created at many rural areas and for anyone who is willing to work. Generally the JRY program has been moderately successful. Shortage of funds and organization led to about half the projects not being completed on time. drinking water wells. while contributing to the development of projects such as medium irrigation. soil conservation. The employment offered through the program is a minimum wage for unskilled labor. as annual action plans were rarely discussed. Local resources were not properly utilized. and differential rates were paid to women and men. 11 . construction of school buildings. and the Million Wells Scheme (MWS) aims to create open irrigation wells free of cost to the needy in rural agricultural areas. It has created millions of jobs. more than half of the Panchyat heads had no training for the projects they were undertaking. called the Indira Awas Yojana (IAY) works on creating housing. the JRY projects are two-fold. rural roads. there has been much criticism of the program’s inefficacy. One area. There were very few women’s jobs created.JRY is to create rural economic infrastructure and community and social assets. Specifically. driving up production costs. Panchyat offices (Panchyats are those responsible for project direction at the local levels). The wage is generally below the market rate for such work. however. providing employment as a by-product. housing and sanitation and social forestry. According to evaluations of the program. land development.

were more focused on creation of employment. stating that just 15 percent of development funds actually reached the intended beneficiaries. as shown in Table 1 were poverty alleviation programs that worked through assistance to the poor. The IRDP was reported upon by the National Commission on Rural Labor as not having sustainable potential. many of the other programs in practice many have also fallen through due to issues with corruption. The Jawahar Rojgar Yojana program. as mentioned earlier the poverty rate has been almost cut in half. Former Prime Minister Rajiv Gandhi also openly admitted to a large corruption. people who should not have been classified as poor benefited from the programs. The programs introduced in the 1980’s. much has been accomplished in the last quarter century. many of these programs have worked and are very good programs in theory.” Similarly a committee on urban and rural development publicly criticized the Nehru Rojgar Yojana for poor implementation. that they received. (Dahiwale) Often. then misused or sold the assets.Many of the programs created in the 1970’s. such as animals. was reported upon by a parliamentary standing committee in The Times of India. elimination of the corruption at the 12 . Thus far. as having a “misappropriation of funds. and Jawahar Rozgar Yojana. What this implies is that although India has seen improvements in poverty alleviation. Training of Rural Youth for SelfEmployment. Beyond the aforementioned Integrated Rural Development Program. (Dahiwale) Amidst all of this corruption and misappropriation of funds. Development of Women and Children in Rural Areas. Public Distribution System. however.

They suggest removing government controls on the grain markets. and creating more opportunities for their employment. and what steps should be taken in an effort to reduce poverty in India.” This implies creating opportunities for the poor as part of plans for development. while aiding the poor simultaneously. there is lots of room for corruption. you can directly involve the poor in the development process. With regards to the future. By providing them with greater access to markets. Perhaps the way to achieve this is to create government bodies at a local level that can monitor and enforce the policies. different groups have differing opinions. improve nutrition. Chelliah and Sudarshan suggest structural reformation of the Public Distribution System. According to the ADB. 13 . increasing their productivity. and are tied to welfare programs for the old and disabled to employment of the poor. while eliminating poverty. Creating some greater accountability at the local leve will be very helpful in eliminating such corruption. Given that these programs are spread across such vast areas and therefore go through many levels of management. The Asian Development Bank provides some ideas for the future of Asian economies. (ADB) This will be better for the economy in general. creation of schemes which connect the food distribution to programs that create wage employment. For one thing. the main goal of India should be what they call “inclusive growth. They also suggest for the very poor states with weak administrative structures.government level could ensure a much greater outcome. and I will focus on some of their suggestions for improvement of agrarian economies.

perhaps by finding ways to reduce corruption in these systems.One of the most important challenges for India. This will give foreign investors more confidence. Foreign and domestic private investment must be facilitated by the creation of solid infrastructure. In the age of globalization and fast moving technology. It has actually been estimated by the World Bank that if all of India’s states were to improve their investment climate to equal that of the most successful ones. India should seek to implement policies that reduce constraint on competition and entrepreneurship. which include the labor of the poor. and will create employment opportunities within itself. as well as implementation of appropriate incentives and institutions. From a policy standpoint. integration of new technologies in the production process. both domestic and foreign. will be the development of infrastructure. 14 . This improved infrastructure will help lead to market expansion which will decrease regional disparities within India. especially given the large volume of resources and labor available. easier integration of changing technologies in Asia. A strong infrastructure will aid in bringing private investment. given its large percentage of rural poor. the potential rate of growth of the nation would increase by 2 percentage points (World Bank 2002). It will be important for the nation to capture and capitalize upon all opportunities created by globalization. India must keep pace and be able to utilize all of its resources. and help to bolster legal systems. as well as increasing productivity.

a sector that provides just 15 percent of the nation’s GDP. a survey found that most small and medium size enterprises in India have their own power generators because of the unreliable power grids. Another important component for the Asian Development Bank’s inclusive growth strategy is to modernize agriculture and augment the development of rural economies. relative to the rest of the economy. While much of the countries GDP is shifting towards these new technological industries. As an example. Such an infrastructure would also be increased incentive for large multinational firms to invest in India as well. This causes agriculture to be very inefficient. According to the ADB.Improvement of infrastructure and infrastructure services will improve investment climate directly. Increased technology will then provide a boost in the agriculture industry which will then create a larger need 15 . one of the tech capitals of the world. In fact. technological centers have sprung up in cities like Bangalore. the end result would be employment of much of the available labor force from the poor in rural communities. the agricultural industry remains in its archaic state. In countries such as India. Improvement of these parts of the infrastructure will reduce the risk of small business start-ups. China employs fifty percent of its labor force in agriculture. Since SME’s are the majority of businesses in Asian developing economies. the current inadequate infrastructure in place in many parts of rural India makes the price of business increase tremendously. (ADB) Agricultural growth will be sped up through investment in technological change. This would in turn provide further economic stability for the local small and medium size enterprises (SME’s).

All of the aforementioned factors are contingent upon improvement of the current infrastructure in place. This again relies heavily on infrastructure. Poor transportation causes people to be unable to access different marketplaces and prevents sellers from selling outside of their small communities. This will require that the Indian government put forth 16 . development of larger markets will encourage better products. more competitive prices. Many regions of India have isolated markets due to poor infrastructure such as roads. the site of the agricultural industry. This barrier to trade and reduction of competition inhibits the potential for growth and productivity. better communication through telephone and internet services. thus reducing competition both on the buyer and seller sides. This will continue on in a cycle of increased employment.for skilled and trained labor which can be provided by the labor surplus that exists in rural India. and increased efficiency which will allow the agriculture industries in India to catch up in efficiency to the high-technology industries at urban industrial centers. especially in rural India. Overall. and improvements in irrigation and water supply for crops. proper roads and vehicles to decrease the time of transport. Development of these rural economies will also involve increases in the quality of infrastructure. increased technology. such as commercial production of goods. (ADB) Finally. inclusive growth will involve market expansion in rural economies. increased technology and thus increased employment of the available labor force by reducing transaction costs and facilitating exchange. Most technology will rely on electricity reaching all rural lands.

in conclusion. Due to disorganization. and most importantly. lack of funds. But it was interesting to learn that there is a significant state by state difference in the poverty problem. it was no shock to see the vast amount of poverty that exists in India. the numbers only confirmed my fears of the extent of the problem. corruption. India can grow economically. I was also surprise to find the large number of social programs that have been put into place already in an attempt to alleviate the situation. now we just need the organization and cooperation of all people in India to get that country to achieve its potential. if India can adopt an attitude of “inclusive growth” where they include the country’s poor in the grand scheme of wanting to achieve economic growth in a globalizing economy. We have the resources to accomplish it. It is my hope that during my life time I see the number of poverty-stricken individuals decrease drastically. while its people deep in the villages can become financially able and independent beings. First. it was apparent that even with such a large number of programs in existence. as suggested by the World Bank. Since I have visited firsthand. many have not been efficiently implemented.funding towards these improvements if reduction of poverty is high on their list of priorities. But. and varying amounts of people from the “Scheduled Castes” and “Scheduled Tribes. these programs have not helped out their beneficiaries in the way they have the potential to do. Furthermore.” and the amount of agriculture in that area. These state differences arose due to differential inhabitants of different religions. I have found throughout this study a number of things that have surprised me. 17 . they will be most benefited.

htm Aharon Daniel.tripod. 18 . http://adaniel.com/modernindia.Works Cited Caste System in Modern India.

Sudarshan. www.net/scst.adb.com/knowindia. Rural Poverty in India. Chelliah and R. Rawat Publications.India at a Glance. Anthem Press. Inc. Bombay 1991 S.html Know India http://www. UK 1999 Ratnakar Gedam.htm Raja J. Jaipur and New Delhi. New Delhi. Poverty in India. Deep & Deep Publications. Income-Poverty and Beyond. 2002 Asian Development Bank. Nathan Associates. 1997 Poverty in India Since 1974.incadoindia. Oxford Unviersity Press. London.censusindia. http://www. Rural Poverty and Slums.org 19 . 1995 Rohini Nayyar.M Dahiwale.