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Chapter Poverty as a Challenge

Overview dhabas. They could also be beggars with

This chapter deals with one of the most children in tatters. We see poverty all
difficult challenges faced by independent around us. In fact, every fourth person in
India—poverty. After discussing this India is poor. This means, roughly 270
multi-dimensional problem through million (or 27 crore) people in India live
examples, the chapter discusses the way in poverty 2011-12. This also means that
poverty is seen in social sciences. Poverty India has the largest single concentration
trends in India and the world are of the poor in the world. This illustrates
illustrated through the concept of the the seriousness of the challenge.
poverty line. Causes of poverty as well as
anti-poverty measures taken by the Two Typical Cases of Poverty
government are also discussed. The
chapter ends with broadening the official Urban Case
concept of poverty into human poverty. Thirty-three year old Ram Saran works
as a daily-wage labourer in a wheat
Introduction flour mill near Ranchi in Jharkhand.
In our daily life, we come across many He manages to earn around Rs 1,500
people who we think are poor. They could a month when he finds employment,
be landless labourers in villages or people which is not often. The money is not
living in overcrowded jhuggis in cities. They enough to sustain his family of six—
could be daily wage workers at that includes his wife and four children
construction sites or child workers in aged between 12 years to six months.

Picture 3.1 Story of Ram Saran

Poverty as a Challenge 29

He has to send money home to his old Rural case
parents who live in a village near Lakha Singh belongs to a small village
Ramgarh. His father a landless near Meerut in Uttar Pradesh. His
labourer, depends on Ram Saran and family doesn’t own any land, so they
his brother who lives in Hazaribagh, do odd jobs for the big farmers. Work
for sustenance. Ram Saran lives in a is erratic and so is income. At times
one-room rented house in a crowded they get paid Rs 50 for a hard day’s
basti in the outskirts of the city. It’s a work. But often it’s in kind like a few
temporary shack built of bricks and kilograms of wheat or dal or even
clay tiles. His wife Santa Devi, works vegetables for toiling in the farm
as a part time maid in a few houses through the day. The family of eight
and manages to earn another Rs 800. cannot always manage two square
They manage a meagre meal of dal and meals a day. Lakha lives in a kuchha
rice twice a day, but there’s never hut on the outskirts of the village.
enough for all of them. His elder son The women of the family spend the
works as a helper in a tea shop to day chopping fodder and collecting
supplement the family income and firewood in the fields. His father a
earns another Rs 300, while his 10- TB patient, passed away two years
year -old daughter takes care of the ago due to lack of medication. His
younger siblings. None of the children mother now suffers from the same
go to school. They have only two pairs disease and life is slowly ebbing away.
of hand-me-down clothes each. New Although, the village has a primary
ones are bought only when the old school, Lakha never went there. He
clothes become unwearable. Shoes are had to start earning when he was 10
a luxury. The younger kids are years old. New clothes happen once
undernourished. They have no access in a few years. Even soap and oil are
to healthcare when they fall ill. a luxury for the family.

Study the above cases of poverty

and discuss the following issues
related to poverty:
• Landlessness
• Unemployment
• Size of families
• Illiteracy
• Poor health/malnutrition
• Child labour
• Helplessness

Picture 3.2 Story of Lakha Singh

30 Economics

These two typical cases illustrate many both a cause as well as a
dimensions of poverty. They show that consequence of poverty in the usual
poverty means hunger and lack of shelter. sense. Broadly, it is a process through
It also is a situation in which parents are which individuals or groups are
not able to send their children to school excluded from facilities, benefits and
or a situation where sick people cannot opportunities that others (their
afford treatment. Poverty also means lack “betters”) enjoy. A typical example is
of clean water and sanitation facilities. It the working of the caste system in
also means lack of a regular job at a India in which people belonging to
minimum decent level. Above all it means certain castes are excluded from
living with a sense of helplessness. Poor equal opportunities. Social exclusion
people are in a situation in which they thus may lead to, but can cause more
are ill-treated at almost every place, in damage than, having a very low
farms, factories, government offices, income.
hospitals, railway stations etc. Obviously,
nobody would like to live in poverty.
One of the biggest challenges of Vulnerability to poverty is a measure,
independent India has been to bring which describes the greater
millions of its people out of abject poverty. probability of certain communities
Mahatama Gandhi always insisted that (say, members of a backward caste)
India would be truly independent only or individuals (such as a widow or a
when the poorest of its people become free physically handicapped person) of
of human suffering. becoming, or remaining, poor in the
coming years. Vulnerability is
Poverty as seen by social scientists determined by the options available
Since poverty has many facets, social to different communities for finding
scientists look at it through a variety of an alternative living in terms of
indicators. Usually the indicators used assets, education, health and job
relate to the levels of income and opportunities. Further, it is analysed
consumption. But now poverty is looked on the basis of the greater risks these
through other social indicators like groups face at the time of natural
illiteracy level, lack of general resistance disasters (earthquakes, tsunami),
due to malnutrition, lack of access to terrorism etc. Additional analysis is
healthcare, lack of job opportunities, lack made of their social and economic
of access to safe drinking water, ability to handle these risks. In fact,
sanitation etc. Analysis of poverty based vulnerability describes the greater
on social exclusion and vulnerability is probability of being more adversely
now becoming very common (see box). affected than other people when bad
time comes for everybody, whether a
Social exclusion flood or an earthquake or simply a
fall in the availability of jobs!
According to this concept, poverty
must be seen in terms of the poor
having to live only in a poor Poverty Line
surrounding with other poor people, At the centre of the discussion on poverty
excluded from enjoying social equality is usually the concept of the “poverty line”.
of better -of f people in better A common method used to measure
surroundings. Social exclusion can be poverty is based on the income or

Poverty as a challenge 31

consumption levels. A person is higher amount for urban areas has been
considered poor if his or her income or fixed because of high prices of many
consumption level falls below a given essential products in urban centres. In
“minimum level” necessary to fulfill the this way in the year 2011-12, a family of
basic needs. What is necessary to satisfy five members living in rural areas and
the basic needs is different at different earning less than about Rs 4,080 per
times and in different countries. month will be below the poverty line. A
Therefore, poverty line may vary with time similar family in the urban areas would
and place. Each country uses an need a minimum of Rs 5,000 per month
imaginary line that is considered to meet their basic requirements. The
appropriate for its existing level of poverty line is estimated periodically
development and its accepted minimum (normally every five years) by conducting
social norms. For example, a person not sample surveys. These surveys are
having a car in the United States may be carried out by the National Sample Survey
considered poor. In India, owning of a car Organisation (NSSO). However, for
is still considered a luxury. making comparisons between developing
While determining the poverty line in countries, many international
India, a minimum level of food requirement, organisations like the World Bank use a
clothing, footwear, fuel and light, uniform standard for the poverty line:
educational and medical requirement, etc., minimum availability of the equivalent of
are determined for subsistence. These $1.90 per person per day (2011, ppp).
physical quantities are multiplied by their
prices in rupees. The present formula for Let’s Discuss
food requirement while estimating the Discuss the following:
poverty line is based on the desired
calorie requirement. Food items, such as • Why do different countries use different
cereals, pulses, vegetable, milk, oil, sugar, poverty lines?
etc., together provide these needed • What do you think would be the
calories. The calorie needs vary depending “minimum necessary level” in your
on age, sex and the type of work that a locality?
person does. The accepted average calorie
requirement in India is 2400 calories per Poverty Estimates
person per day in rural areas and 2100 It is clear from Table 3.1 that there is a
calories per person per day in urban substantial decline in poverty ratios in
areas. Since people living in rural areas India from about 45 per cent in 1993-94
engage themselves in more physical work, to 37.2 per cent in 2004–05. The
calorie requirements in rural areas are proportion of people below poverty line
considered to be higher than in urban further came down to about 22 per cent
areas. The monetary expenditure per in 2011–12. If the trend continues, people
capita needed for buying these calorie below poverty line may come down to less
requirements in terms of food grains, etc., than 20 per cent in the next few years.
is revised periodically taking into Although the percentage of people living
consideration the rise in prices. under poverty declined in the earlier two
On the basis of these calculations, for decades (1973–1993), the number of poor
the year 2011–12, the poverty line for a declined from 407 million in 2004–05 to
person was fixed at Rs 816 per month for 270 million in 2011–12 with an average
rural areas and Rs 1000 for urban areas. annual decline of 2.2 percentage points
Despite less calorie requirement,the during 2004–05 to 2011–12.
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Table 3.1: Estimates of Poverty in India (Tendulkar Methodology)
Poverty ratio (%) Number of poor (in millions)
Year Rural Urban Total Rural Urban Combined
1993–94 507 32 45 329 75 404
2004–05 42 26 37 326 81 407
2009–10 34 21 30 278 76 355
2011–12 26 14 22 217 53 270
Source: Economic Survey 2015-16

Let’s Discuss among the economic groups, the most

vulnerable groups are the rural
Study Table 3.1 and answer the following agricultural labour households and the
questions: urban casual labour households. Graph
• Even if poverty ratio declined between 3.1 shows the percentage of poor people
1993–94 and 2004–05, why did the in all these groups. Although the average
number of poor remain at about 407 for people below poverty line for all groups
million? in India is 22, 43 out of 100 people
• Are the dynamics of poverty reduction belonging to Scheduled Tribes are not
the same in rural and urban India? able to meet their basic needs. Similarly,
34 per cent of casual workers in urban
Vulnerable Groups areas are below poverty line. About 34
The proportion of people below poverty line per cent of casual labour farm (in rural
is also not same for all social groups and areas) and 29 per cent of Scheduled
economic categories in India. Social C a s t e s a r e a l s o p o o r. The double
groups, which are most vulnerable to disadvantage of being a landless casual
poverty are Scheduled Caste and wage labour household in the socially
Scheduled Tribe households. Similarly, disadvantaged social groups of the

Graph 3.1: Poverty in India 2000: Most Vulnerable Groups


Poverty as a Challenge 33

Picture 3.3 Story of Sivaraman

scheduled caste or the scheduled tribe

Story of Sivaraman
population highlights the seriousness of Sivaraman lives in a small village
the problem. Some recent studies have near Karur town in Tamil Nadu. Karur
shown that except for the scheduled tribe is famous for its handloom and
households, all the other three groups (i.e. powerloom fabrics. There are a 100
scheduled castes, rural agricultural families in the village. Sivaraman an
labourers and the urban casual labour Aryunthathiyar (cobbler) by caste now
households) have seen a decline in poverty works as an agricultural labourer for
in the 1990s. Rs 160 per day. But that’s only for
Apart from these social groups, there five to six months in a year. At other
is also inequality of incomes within a times, he does odd jobs in the town.
His wife Sasikala too works with him.
family. In poor families all suffer, but some
But she can rarely find work these
suffer more than others. In some cases
days, and even if she does, she’s paid
women, elderly people and female infants
Rs 100 per day for the same work that
are denied equal access to resources
Sivaraman does. There are eight
available to the family. members in the family. Sivaraman’s
65 year old widowed mother is ill and

34 Economics

seventies, the success rate of reducing
needs to be helped with her daily
poverty varies from state to state. Recent
chores. He has a 25-year-old
estimates show while the all India Head
unmarried sister and four children
Count Ratio (HCR) was 21.9 per cent in
aged between 1 year to 16 years.
2011-12 states like Madhya Pradesh,
Three of them are girls, the youngest
Assam, Uttar Pardesh, Bihar and Orissa
is a son. None of the girls go to school.
had above all India poverty level. As the
Buying books and other things for
Graph 3.2 shows, Bihar and Orissa
school-going girls is a luxury he
continue to be the two poorest states with
cannot afford. Also, he has to get them
poverty ratios of 33.7 and 32.6 per cent
married at some point of time so he
respectively. Along with rural poverty,
doesn’t want to spend on their
urban poverty is also high in Orissa,
education now. His mother has lost
Madhya Pradesh, Bihar and Uttar Pradesh.
interest in life and is just waiting to
In comparison, there has been a
die someday. His sister and elder
significant decline in poverty in Kerala,
daughter take care of the household.
Maharashtra, Andhra Pradesh, Tamil
Sivaraman plans to send his son to
Nadu, Gujarat and West Bengal. States
school when he comes of age. His
like Punjab and Haryana have
unmarried sister does not get along
traditionally succeeded in reducing
with his wife. Sasikala finds her a
poverty with the help of high agricultural
burden but Sivaraman can’t find a
growth rates. Kerala has focused more on
suitable groom due to lack of money.
human resource development. In West
Although the family has difficulty in
Bengal, land reform measures have
arranging two meals a day,
helped in reducing poverty. In Andhra
Sivaraman manages to buy milk once
Pradesh and Tamil Nadu public
in a while, but only for his son.
distribution of food grains could have been
responsible for the improvement.

Let’s Discuss Global Poverty Scenario

Observe some of the poor families The proportion of people in developing
around you and try to find the following: countries living in extreme economic
poverty— defined by the World Bank as
• Which social and economic group do
living on less than $1.90 per day—has
they belong to?
fallen from 35 per cent in 1990 to 10.68
• Who are the earning members in the per cent in 2013. Although there has been
family? a substantial reduction in global poverty,
• What is the condition of the old people it is marked with great regional
in the family? differences. Poverty declined substantially
• Are all the children (boys and girls) in China and Southeast Asian countries
attending schools? as a result of rapid economic growth and
massive investments in human resource
Inter-State Disparities development. Number of poors in China
Poverty in India also has another aspect has come down from 88.3 per cent in 1981
or dimension. The proportion of poor to 14.7 per cent in 2008 to 1.9 per cent in
people is not the same in every state. 2013. In the countries of South Asia (India,
Although state level poverty has witnessed Pakistan, Sri Lanka, Nepal, Bangladesh,
a secular decline from the levels of early Bhutan) the decline has also been rapid

Poverty as a challenge 35

Graph 3.2: Poverty Ratio in Selected Indian States, 2015–16

Source: Economic Survey 2015–16, Ministry of Finance, Government of India

Let’s Discuss Suistainable development goals of the

Study the Graph 3.2 and do the following: United Nations (UN) proposes ending
• Identify the three states where the poverty of all types by 2030.
poverty ratio is the highest.
• Identify the three states where poverty Let’s Discuss
ratio is the lowest. Study the Graph 3.4 and do the following:
• Identify the areas of the world, where
from 54 to 15 per cent. Despite decline in
poverty ratios have declined.
the percentage of the poor, the number of
poor has declined significantly from 44 per • Identify the area of the globe which has
cent in 1990 to 17 per cent in 2013. Because the largest concentration of the poor.
of different poverty line definition, poverty
Table 3.2: Poverty: Comparison among
in India is also shown higher than the
Some Selected Countries
national estimates.
In Sub-Saharan Africa, poverty in fact Country % of Population below
rose from 54 per cent in 1990 to 41 per $1.90 a day (2011ppp)
cent in 2013 (see graph 3.3). In Latin 1. Nigeria 53.5 (2009)
America, the ratio of poverty has also 2. Bangladesh 18.5 (2010)
declined from 16% in 1990 to 5.4 per cent 3. India 21.2 (2011)
in 2013. (see graph 3.3) Poverty has also 4. Pakistan 6.1 (2013)
resurfaced in some of the former socialist 5. China 1.9 (2013)
countries like Russia, where officially it 6. Brazil 3.7 (2014)
was non-existent earlier. Table 3.2 shows 7. Indonesia 8.3 (2014)
the proportion of people living under 8. Sri Lanka 1.9 (2012)
poverty in different countries as defined
by the international poverty line (means Source : Poverty & Equity Database, World Bank
population below $1.90 a day). The new Data; (

36 Economics

Graph 3.3: Share of people living on $1.90 a day, 1990–2013

Source: Poverty and Equity Database; World Bank


Graph 3.4: Number of poor by region ($ 1.90 per day) in millions

Source: Poverty and Equity Database; World Bank


Poverty as a Challenge 37

Causes of Poverty effectively by most of the state
governments. Since lack of land resources
There were a number of causes for the
has been one of the major causes of
widespread poverty in India. One
poverty in India, proper implementation
historical reason is the low level of
of policy could have improved the life of
economic development under the British
millions of rural poor.
colonial administration. The policies of
Many other socio-cultural and
the colonial government ruined traditional
economic factors also are responsible for
handicrafts and discouraged development
poverty. In order to fulfil social obligations
of industries like textiles. The low rate of
and observe religious ceremonies, people
growth persisted until the nineteen-
in India, including the very poor, spend a
eighties. This resulted in less job
lot of money. Small farmers need money
opportunities and low growth rate of
to buy agricultural inputs like seeds,
incomes. This was accompanied by a high
fertilizer, pesticides etc. Since poor people
growth rate of population. The two
hardly have any savings, they borrow.
combined to make the growth rate of per
Unable to repay because of poverty, they
capita income very low. The failure at both
become victims of indebtedness. So the
the fronts: promotion of economic growth
high level of indebtedness is both the
and population control perpetuated the
cause and effect of poverty.
cycle of poverty.
With the spread of irrigation and the Anti-Poverty Measures
Green revolution, many job opportunities
Removal of poverty has been one of the
were created in the agriculture sector. But
major objectives of Indian developmental
the effects were limited to some parts of strategy. The current anti-poverty
India. The industries, both in the public strategy of the government is based
and the private sector, did provide some broadly on two planks (1) promotion of
jobs. But these were not enough to absorb economic growth (2) targeted anti-poverty
all the job seekers. Unable to find proper programmes.
jobs in cities, many people started working Over a period of thirty years lasting
as rickshaw pullers, vendors, up to the early eighties, there were little
construction workers, domestic servants per capita income growth and not much
etc. With irregular small incomes, these reduction in poverty. Official poverty
people could not afford expensive housing. estimates which were about 45 per cent
They started living in slums on the in the early 1950s remained the same even
outskirts of the cities and the problems in the early eighties. Since the eighties,
of poverty, largely a rural phenomenon India’s economic growth has been one of
also became the feature of the urban the fastest in the world. The growth rate
sector. jumped from the average of about 3.5 per
Another feature of high poverty rates cent a year in the 1970s to about 6 per
has been the huge income inequalities. cent during the 1980s and 1990s. The
One of the major reasons for this is the higher growth rates have helped
unequal distribution of land and other significantly in the reduction of poverty.
resources. Despite many policies, we have Therefore, it is becoming clear that there
not been able to tackle the issue in a is a strong link between economic growth
meaningful manner. Major policy and poverty reduction. Economic growth
initiatives like land reforms which aimed widens opportunities and provides the
at redistribution of assets in rural areas resources needed to invest in human
have not been implemented properly and development. This also encourages people
38 Economics

to send their children, including the girl Rural Employment Generation Programme
child, to schools in the hope of getting (REGP) was launched in 1995. The aim of
better economic returns from investing in the programme is to create self-
education. However, the poor may not be employment opportunities in rural areas
able to take direct advantage from the and small towns. A target for creating 25
opportunities created by economic lakh new jobs has been set for the
growth. Moreover, growth in the programme under the Tenth Five Year
agriculture sector is much below plan. Swarnajayanti Gram Swarozgar
expectations. This has a direct bearing Yojana (SGSY) was launched in 1999. The
on poverty as a large number of poor programme aims at bringing the assisted
people live in villages and are dependent poor families above the poverty line by
on agriculture. organising them into self help groups
In these circumstances, there is a through a mix of bank credit and
clear need for targeted anti-poverty government subsidy. Under the Pradhan
programmes. Although there are so many Mantri Gramodaya Yozana (PMGY)
schemes which are formulated to affect launched in 2000, additional central
poverty directly or indirectly, some of them assistance is given to states for basic
are worth mentioning. Mahatma Gandhi services such as primary health, primary
National Rural Employment Guarantee education, rural shelter, rural drinking
Act, 2005 aims to provide 100 days of wage water and rural electrification. Another
employment to every household to ensure important scheme is Antyodaya Anna
livelihood security in rural areas. It also Yozana (AAY) about which you will be
aimed at sustainable development to reading more in the next chapter.
address the cause of draught, The results of these programmes have
deforestration and soil erosion. One-third been mixed. One of the major reasons for
of the proposed jobs have been reserved less effectiveness is the lack of proper
for women. The scheme provided implementation and right targeting.
employment to 220 crores person days of Moreover, there has been a lot of
employment to 4.78 crore households. The overlapping of schemes. Despite good
share of SC, ST, Women person days in intentions, the benefits of these schemes
the scheme are 23 per cent, 17 per cent are not fully reached to the deserving poor.
and 53 per cent respectively. The average Therefore, the major emphasis in recent
wage has increased from 65 in 2006-07 years is on proper monitoring of all the
to 132 in 2013-14. poverty alleviation programmes.
Prime Minister Rozgar Yozana (PMRY)
The Challenges Ahead
is another scheme which was started in
1993. The aim of the programme is to Poverty has certainly declined in India.
create self-employment opportunities for But despite the progress, poverty
educated unemployed youth in rural reduction remains India’s most
areas and small towns. They are helped in compelling challenge. Wide disparities
setting up small business and industries. in poverty are visible between rural and

Poverty as a challenge 39

urban areas and among different states. have been able to feed themselves. But
Certain social and economic groups are do they have education? Or shelter? Or
more vulnerable to poverty. Poverty health care? Or job security? Or self-
reduction is expected to make better confidence? Are they free from caste and
progress in the next ten to fifteen years. gender discrimination? Is the practice of
This would be possible mainly due to child labour still common? Worldwide
higher economic growth, increasing experience shows that with development,
stress on universal free elementary the definition of what constitutes poverty
education, declining population growth, also changes. Eradication of poverty is
increasing empowerment of the women
always a moving target. Hopefully we will
and the economically weaker sections of
be able to provide the minimum
“necessary” in terms of only income to
The official definition of poverty,
all people by the end of the next decade.
however, captures only a limited part of
But the target will move on for many of
what poverty really means to people. It is
about a “minimum” subsistence level of the bigger challenges that still remain:
living rather than a “reasonable” level of providing health care, education and job
living. Many scholars advocate that we security for all, and achieving gender
must broaden the concept into human equality and dignity for the poor. These
poverty. A large number of people may will be even bigger tasks.

You have seen in this chapter that poverty has many dimensions. Normally, this
is measured through the concept of “poverty line”. Through this concept we
analysed main global and national trends in poverty. But in recent years, analysis
of poverty is becoming rich through a variety of new concepts like social exclusion.
Similarly, the challenge is becoming bigger as scholars are broadening the concept
into human poverty.

1. Describe how the poverty line is estimated in India?
2. Do you think that present methodology of poverty estimation is appropriate?
3. Describe poverty trends in India since 1973?
4. Discuss the major reasons for poverty in India?
5. Identify the social and economic groups which are most vulnerable to poverty
in India.
6. Give an account of interstate disparities of poverty in India.
7. Describe global poverty trends.
8. Describe current government strategy of poverty alleviation?
9. Answer the following questions briefly
(i) What do you understand by human poverty?
(ii) Who are the poorest of the poor?
(iii) What are the main features of the National Rural Employment
Guarantee Act 2005?

40 Economics

DEATON, ANGUS AND VALERIE KOZEL (Eds.) 2005. The Great Indian Poverty Debate.
MacMillan India Limited, New Delhi.
Economic Survey 2015–2016. Ministry of Finance, Government of India, New Delhi.
(Chapter on social sectors, [Online web] URL:
Mid-Term Appraisal of the Tenth Five Year Plan 2002–2007. Planning Commission,
New Delhi. Part II, Chapter 7: Poverty Elimination and Rural Employment,
[Online web] URL:
National Rural Employment Guarantee Act 2005. [Online web] URL:
PANAGRIYA ARVIND AND VISHAL MORE ‘Poverty by social, religious and economic groups in
India and its largest state’, working paper no. 2013-14, Programme on Indian
economic policies, Columbia University.
Tenth Five Year Plan 2002–2007. Planning Commission, New Delhi. (Chapter 3.2,
Poverty Alleviation in Rural India: Strategy and Programmes, [Online web] URL:
World Development Indicators 2016. Featuring the Suistainable Development Goals,
The World Bank.

Poverty as a Challenge 41