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Textbook for Class IX

ISBN 81-7450-517-2
First Edition
March 2006 Phalguna 1927 ALL RIGHTS RESERVED

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The National Curriculum Framework (NCF), 2005, recommends that
children’s life at school must be linked to their life outside the school.
This principle marks a departure from the legacy of bookish learning
which continues to shape our system and causes a gap between the
school, home and community. The syllabi and textbooks developed on
the basis of NCF signify an attempt to implement this basic idea. They
also attempt to discourage rote learning and the maintenance of sharp
boundaries between different subject areas. We hope these measures
will take us significantly further in the direction of a child-centred
system of education outlined in the National Policy on Education (1986).
The success of this effort depends on the steps that school principals
and teachers will take to encourage children to reflect on their own
learning and to pursue imaginative activities and questions. We must
recognise that given space, time and freedom, children generate new
knowledge by engaging with the information passed on to them by adults.
Treating the prescribed textbook as the sole basis of examination is one
of the key reasons why other resources and sites of learning are ignored.
Inculcating creativity and initiative is possible if we perceive and treat
children as participants in learning, not as receivers of a fixed body of
These aims imply considerable change in school routines and mode
of functioning. Flexibility in the daily time-table is as necessary as
rigour in implementing the annual calendar so that the required number
of teaching days are actually devoted to teaching. The methods used for
teaching and evaluation will also determine how effective this textbook
proves for making children’s life at school a happy experience, rather
than a source of stress or boredom. Syllabus designers have tried to
address the problem of curricular burden by restructuring and
reorienting knowledge at different stages with greater consideration for
child psychology and the time available for teaching. The textbook
attempts to enhance this endeavour by giving higher priority and space
to opportunities for contemplation and wondering, discussion in small
groups, and activities requiring hands-on experience.
The National Council of Educational Research and Training (NCERT)
appreciates the hard work done by the textbook development committee
responsible for this book. We wish to thank the Chairperson of the
advisory group in Social Sciences, Professor Hari Vasudevan and the

Chief Advisor for this book, Professor Tapas Majumdar for guiding the
work of this committee. Several teachers contributed to the development
of this textbook; we are grateful to their principals for making this
possible. We are indebted to the institutions and organisations which
have generously permitted us to draw upon their resources, material
and personnel. We are especially grateful to the members of the National
Monitoring Committee, appointed by the Department of Secondary and
Higher Education, Ministry of Human Resource Development under the
Chairmanship of Professor Mrinal Miri and Professor G.P. Deshpande, for
their valuable time and contribution. As an organisation committed to
systemic reform and continuous improvement in the quality of its
products, NCER T welcomes comments and suggestions which will
enable us to undertake further revision and refinement.

New Delhi National Council of Educational
20 December 2005 Research and Training




Hari Vasudevan, Professor, Department of History, University of
Culculta, Kolkata

Tapas Majumdar, Professor Emeritus of Economics, Jawaharlal Nehru
University, New Delhi.

Gulsan Sachdeva, Associate Professor, School of International Studies,
Jawaharlal Nehru University, New Delhi
Nutan Punj, PGT, Kendriya Vidhyalaya, Border Security Force,
Najafgarh, New Delhi
Sukanya Bose, Senior Economist, Economic Research Foundation,
Katwaria Sarai, New Delhi

Jaya Singh, Associate Professor, DESS, NCERT, New Delhi


The National Council of Educational Research and T raining

acknowledges the valuable contribution of all the individuals and
organisation involved in the development of Economics textbook for
Class IX.
We are grateful to Jan Breman and Parthiv Shah, for giving us
permission to use photographs from their book Working in the mill no
more, Oxford University Press, Delhi, 2005. We also acknowledge the
contribution made by Arvind Sadana of Eklavya, Madhya Pradesh;
Janmejoy Khuntia, Senior Lecturer, School of Corrrespondence Course,
Delhi University.
Special thanks are due to Savita Sinha, Professor and Head, DESSH,
NCERT for her constant support.
The Council also gratefully acknowledges the contributions of
Dinesh Kumar, Incharge, Computer Station; Deependra Kumar and
Achin Jain, DTP Operators; and Dillip Kumar Agasthi, Proof Reader in
shaping this book. The efforts of the Publication Division, NCERT, in
bringing out this book are also highly appreciated.


The Story of Village Palampur 1

People as Resource 16

Poverty as a Challenge 29

Food Security in India 42

Constitution of India
Part IV A (Article 51 A)

Fundamental Duties
It shall be the duty of every citizen of India —
(a) to abide by the Constitution and respect its ideals and institutions, the
National Flag and the National Anthem;
(b) to cherish and follow the noble ideals which inspired our national struggle
for freedom;
(c) to uphold and protect the sovereignty, unity and integrity of India;
(d) to defend the country and render national service when called upon to
do so;
(e) to promote harmony and the spirit of common brotherhood amongst all
the people of India transcending religious, linguistic and regional or
sectional diversities; to renounce practices derogatory to the dignity of
(f) to value and preserve the rich heritage of our composite culture;
(g) to protect and improve the natural environment including forests, lakes,
rivers, wildlife and to have compassion for living creatures;
(h) to develop the scientific temper, humanism and the spirit of inquiry and
(i) to safeguard public property and to abjure violence;
(j) to strive towards excellence in all spheres of individual and collective
activity so that the nation constantly rises to higher levels of endeavour
and achievement;
*(k) who is a parent or guardian, to provide opportunities for education to
his child or, as the case may be, ward between the age of six and
fourteen years.

Note: The Article 51A containing Fundamental Duties was inserted by the Constitution
(42nd Amendment) Act, 1976 (with effect from 3 January 1977).
*(k) was inserted by the Constitution (86th Amendment) Act, 2002 (with effect from
1 April 2010).

Chapter The Story of Village Palampur

The purpose of the story is to introduce
some basic concepts relating to production
and this we do through a story of a
hypothetical village called Palampur.*
Farming is the main activity in
Palampur, whereas several other
activities such as small scale
manufacturing, dairy, transport, etc. are
carried out on a limited scale. These
production activities need various types
of resources — natural resources, man-
made items, human effort, money, etc. As
we read through the story of Palampur,
we will learn how various resources Picture 1.1 Scene of a village
combine to produce the desired goods and
electric connections. Electricity powers all
services in the village.
the tubewells in the fields and is used in
Introduction various types of small business. Palampur
Palampur is well-connected with has two primary schools and one high
neighbouring villages and towns. Raiganj, school. There is a primary health centre
a big village, is 3 kms from Palampur. An run by the government and one private
all weather road connects the village to dispensary where the sick are treated.
Raiganj and further on to the nearest • The description above shows that
small town of Shahpur. Many kinds of Palampur has fairly well-developed
transport are visible on this road starting system of roads, transport, electricity,
from bullock carts, tongas, bogeys (wooden irrigation, schools and health centre.
cart drawn by buffalos) loaded with jaggery Compare these facilities with those in
(gur) and other commodities to motor your nearby village.
vehicles like motorcycles, jeeps, tractors The story of Palampur, an imaginary
and trucks. village, will take us through the different
This village has about 450 families types of production activities in the
belonging to several different castes. The village. In villages across India, farming
80 upper caste families own the majority is the main production activity. The other
of land in the village. Their houses, some production activities, referred to as non-
of them quite large, are made of brick with farm activities include small
cement plastering. The SCs (dalits) manufacturing, transport, shop-keeping,
comprise one third of the population and etc. We shall take a look at both these
live in one corner of the village and in types of activities, after learning a few
much smaller houses some of which are general things about production.
of mud and straw. Most of the houses have
* The narrative is partly based on a research study by Gilbert Etienne of a village in Bulandshahr district in Western
Uttar Pradesh.
The Story of Village Palampur 1

Organisation of Production capital. We shall learn more about human
capital in the next chapter.
The aim of production is to produce the • In the picture, identify the land, labour
goods and services that we want. There and fixed capital used in production.
are four requirements for production of
goods and services.
The first requirement is land, and
other natural resources such as water,
forests, minerals.
The second requirement is labour, i.e.
people who will do the work. Some
production activities require highly
educated workers to perform the
necessary tasks. Other activities require
workers who can do manual work. Each
worker is providing the labour necessary
for production.
The third requirement is physical
capital, i.e. the variety of inputs required
at every stage during production. What
are the items that come under physical Picture 1.2 A factory, with several labourers
capital? and machines
(a) Tools, machines, buildings: Tools and
Every production is organised by
machines range from very simple tools
combining land, labour, physical capital
such as a farmer’s plough to
and human capital, which are known as
sophisticated machines such as
factors of production. As we read
generators, turbines, computers, etc.
through the story of Palampur, we will
Tools, machines, buildings can be used learn more about the first three factors
in production over many years, and of production. For convenience, we will
are called fixed capital. refer to the physical capital as the capital
(b) Raw materials and money in hand: in this chapter.
Production requires a variety of raw
materials such as the yarn used by Farming in Palampur
the weaver and the clay used by the
potter. Also, some money is always 1. Land is fixed
required during production to make Farming is the main production activity
payments and buy other necessary in Palampur. 75 per cent of the people
items. Raw materials and money in who are working are dependent on
hand are called working capital. farming for their livelihood. They could
Unlike tools, machines and buildings, be farmers or farm labourers. The well-
these are used up in production. being of these people is closely related to
There is a fourth requirement too. You production on the farms.
will need knowledge and enterprise to be But remember that there is a basic
able to put together land, labour and constraint in raising farm production.
physical capital and produce an output Land area under cultivation is practically
either to use yourself or to sell in the fixed. Since 1960 in Palampur, there has
market. This these days is called human been no expansion in land area under

2 Economics

cultivation. By then, some of the larger areas of land more effectively. The
wastelands in the village had been first few tubewells were installed by the
converted to cultivable land. There exists gover nment. Soon, however, far mers
no further scope to increase farm started setting up private tubewells. As a
production by bringing new land under result, by mid-1970s the entire cultivated
cultivation. area of 200 hectares (ha.) was irrigated.

The standard unit of measuring land Not all villages in India have such
is hectare, though in the villages you high levels of irrigation. Apart from
may find land area being discussed the riverine plains, coastal regions in
in local units such as bigha, guintha our country are well-irrigated. In
etc. One hectare equals the area of a contrast, plateau regions such as the
square with one side measuring 100 Deccan plateau have low levels of
metres. Can you compare the area of irrigation. Of the total cultivated area
a 1 hectare field with the area of your in the country a little less than 40
school ground? per cent is irrigated even today. In
the remaining areas, farming is
largely dependent on rainfall.
2. Is there a way one can grow more
from the same land?
To grow more than one crop on a piece of
In the kind of crops grown and facilities
land during the year is known as multiple
available, Palampur would resemble a
cropping. It is the most common way of
village of the western part of the state of
increasing production on a given piece of
Uttar Pradesh. All land is cultivated in
land. All farmers in Palampur grow
Palampur. No land is left idle. During the
atleast two main crops; many are growing
rainy season (kharif) farmers grow jowar
potato as the third crop in the past fifteen
and bajra. These plants are used as cattle
feed. It is followed by cultivation of potato to twenty years.
between October and December. In the
winter season (rabi), fields are sown with
wheat. From the wheat produced, farmers
keep enough wheat for the family’s
consumption and sell the surplus wheat
at the market at Raiganj. A part of the
land area is also devoted to sugarcane
which is harvested once every year.
Sugarcane, in its raw form, or as jaggery,
is sold to traders in Shahpur.
The main reason why farmers are able Picture 1.3 Different crops
to grow three different crops in a year in
Palampur is due to the well-developed
system of irrigation. Electricity came early Let’s Discuss
to Palampur. Its major impact was to
• The following Table1.1 shows the land
transform the system of irrigation.
Persian wheels were, till then, used by under cultivation in India in units of
farmers to draw water from the wells and million hectares. Plot this on the graph
irrigate small fields. People saw that the provided. What does the graph show?
electric-run tubewells could irrigate much Discuss in class.

The Story of Village Palampur 3

Table 1.1: Cultivated area over the years for higher yield. Yield is measured as
Cultivated Area (Million Hectare) crop produced on a given piece of land
during a single season. Till the mid-
1950 120
1960s, the seeds used in cultivation
1960 130 were traditional ones with relatively low
1970 140 yields. T raditional seeds needed less
1980 140 irrigation. Farmers used cow-dung and
1990 140 other natural manure as fertilizers. All
2000 140 these were readily available with the
farmers who did not have to buy them.
2010 155
The Green Revolution in the late 1960s
2012 155 introduced the Indian farmer to
cultivation of wheat and rice using high
Source: State of Indian Agriculture 2015-16; yielding varieties (HYVs) of seeds.
Directorate of Economics and Statistics, Compared to the traditional seeds, the
Department of Agriculture, Cooperation and HYV seeds promised to produce much
Farmers Welfare. greater amounts of grain on a single plant.
As a result, the same piece of land would
now produce far larger quantities of
foodgrains than was possible earlier. HYV
seeds, however, needed plenty of water
and also chemical fertilizers and

• Is it important to increase the area

under irrigation? Why?
• You have read about the crops grown
in Palampur. Fill the following table
based on information on the crops
grown in your region.
You have seen that one way of
increasing production from the same
land is by multiple cropping. The other
way is to use modern farming methods Picture 1.4 Modern Farming Methods: HYV
seeds, chemical fertilizer etc.
Name of crop Month sown Month Harvested Source of irrigation (Rain,
tanks, tubewells, canals, etc.)

4 Economics

pesticides to produce best results. Higher • Modern farming methods require the
yields were possible only from a farmer to start with more cash than
combination of HYV seeds, irrigation, before. Why?
chemical fertilisers, pesticides, etc.
Farmers of Punjab, Haryana and Suggested Activity
Western Uttar Pradesh were the first to
try out the modern farming method in • During your field visit talk to some
India. The farmers in these regions set farmers of your region. Find out:
up tubewells for irrigation, and made use 1. What kind of farming methods —
of HYV seeds, chemical fertilisers and modern or traditional or mixed — do
pesticides in farming. Some of them the farmers use? Write a note.
bought farm machinery, like tractors and 2. What are the sources of irrigation?
threshers, which made ploughing and
harvesting faster. They were rewarded 3. How much of the cultivated land is
with high yields of wheat. irrigated? (very little/nearly half/
In Palampur, the yield of wheat grown majority/all)
from the traditional varieties was 1300 kg 4. From where do farmers obtain the
per hectare. With HYV seeds, the yield inputs that they require?
went up to 3200 kg per hectare. There
was a large increase in the production of 3. Will the land sustain?
wheat. Farmers now had greater amounts
of surplus wheat to sell in the markets. Land being a natural resource, it is
necessary to be careful in its use.
Let’s Discuss Scientific reports indicate that the modern
farming methods have overused the
• What is the difference between multiple natural resource base.
cropping and modern farming method? In many areas, Green Revolution is
• The following table shows the associated with the loss of soil fertility
production of wheat and pulses in India due to increased use of chemical
after the Green Revolution in units of fertilisers. Also, continuous use of
million tonnes. Plot this on a graph. groundwater for tubewell irrigation has
Was the Green Revolution equally led to the depletion of the water-table.
successful for both the crops? Discuss. Environmental resources, like soil fertility
• What is the working capital required and groundwater, are built up over years.
by the farmer using modern farming Once destroyed it is very difficult to
methods? restore them. We must take care of the
Table 1.2: Production of pulses and wheat environment to ensure future
(Tonnes) development of agriculture.
Production Production
of Pulses of Wheat Suggested Activity
1965 - 66 10 10
1970 - 71 12 24 • After reading the following reports from
1980 - 81 11 36 newspapers/magazines, write a letter
1990 - 91 14 55 to the Agriculture Minister in your own
2000 - 01 11 70
2010 - 11 18 87 words telling him how the use of
2012 - 13 18 94 chemical fertilisers can be harmful.
2013 - 14 19 96
2014 - 15 17 89
2015 - 16 17 94 ...Chemical fertilisers provide
minerals which dissolve in water and
Source: State of Indian Agriculture 2016; Directorate
of Economics and Statistics, Department of are immediately available to plants.
Agriculture, Cooperation and Farmers Welfare. But these may not be retained in the

The Story of Village Palampur 5

Picture 1.5 Palampur village: Distribution of cultivated land
land, 240 families cultivate small plots of
soil for long. They may escape from
land less than 2 hectares in size.
the soil and pollute groundwater,
Cultivation of such plots doesn’t bring
rivers and lakes. Chemical fertilizers
adequate income to the farmer family.
can also kill bacteria and other micro-
organisms in the soil. This means In 1960, Gobind was a farmer with
some time after their use, the soil will 2.25 hectares of largely unirrigated
be less fertile than ever land. With the help of his three sons
before....(Source: Down to Earth, New Gobind cultivated the land. Though
Delhi) they didn’t live very comfortably, the
family managed to feed itself with a
.....The consumption of chemical
little bit of extra income from one
fertilizers in Punjab is highest in the
buffalo that the family possessed.
country. The continuous use of chemical
Some years after Gobind’s death, this
fertilizers has led to degradation of soil
land was divided among his three
health. Punjab farmers are now forced
to use more and more chemical sons. Each one now has a plot of land
fertilizers and other inputs to achieve that is only 0.75 hectare in size. Even
the same production level. This means with improved irrigation and modern
cost of cultivation is rising very farming method, Gobind’s sons are
fast.....(Source: The Tribune, not able to make a living from their
Chandigarh) land. They have to look for additional
work during part of the year.
You can see the large number of small
4. How is land distributed between
plots scattered around the village in the
the farmers of Palampur? picture. These are cultivated by the small
You must have realised how important land farmers. On the other hand, more than
is for farming. Unfortunately, not all the half the area of the village is covered by
people engaged in agriculture have plots that are quite large in size. In
sufficient land for cultivation. In Palampur, Palampur, there are 60 families of medium
about one third of the 450 families are and large farmers who cultivate more
landless, i.e. 150 families, most of them than 2 hectares of land. A few of the large
dalits, have no land for cultivation. farmers have land extending over 10
Of the remaining families who own hectares or more.
6 Economics

Picture 1.6 Work on
the fields: Wheat crop—
ploughing by bullocks,
sowing, spraying of
insecticides, cultivation
by traditional method,
cultivation by modern
method, and cutting of

Let’s Discuss Let’s Discuss

• In the Picture 1.5, can you shade the • Would you agree that the distribution
land cultivated by the small farmers? of cultivated land is unequal in
• Why do so many families of farmers Palampur? Do you find a similar
cultivate such small plots of land?
situation for India? Explain.
• The distribution of farmers in India and
the amount of land they cultivate is given 5. Who will provide the labour?
in the following Graph 1.1. Discuss in
the classroom. After land, labour is the next necessary
Graph 1.1: Distribution of Cultivated Area factor for production. Farming requires a
and Farmers great deal of hard work. Small farmers
along with their families cultivate their
own fields. Thus, they provide the labour
required for farming themselves. Medium
and large farmers hire farm labourers to
work on their fields.

Let’s Discuss
• Identify the work being done on the
field in the Pictures 1.6 and arrange
them in a proper sequence.
Farm labourers come either from
Source: Pocket Book of Agriculture Statistics landless families or families cultivating
2015 and State of Indian Agriculture 2015,
Department of Agriculture, Cooperation and small plots of land. Unlike farmers, farm
Farmers Welfare labourers do not have a right over the
The Story of Village Palampur 7

Dala and Ramkali are among the poorest native of the village

Picture 1.7 The conversation between Dala and Ramkali

crops grown on the land. Instead they are labourer might be employed on a daily
paid wages by the farmer for whom they basis, or for one particular farm activity
work. Wages can be in cash or in kind like harvesting, or for the whole year.
e.g. crop. Sometimes labourers get meals Dala is a landless farm labourer who
also. Wages vary widely from region to works on daily wages in Palampur. This
region, from crop to crop, from one farm means he must regularly look for work. The
activity to another (like sowing and minimum wages for a farm labourer set by
harvesting). There is also a wide variation the government is Rs 300 per day (March
in the duration of employment. A farm 2017), but Dala gets only Rs 160. There is

8 Economics

heavy competition for work among the farmer. Tejpal Singh agrees to give
farm labourers in Palampur, so people Savita the loan at an interest rate of
agree to work for lower wages. Dala 24 per cent for four months, which is
complains about his situation to Ramkali, a very high interest rate. Savita also
who is another farm labourer. has to promise to work on his field as
Both Dala and Ramkali are among the a farm labourer during the harvest
poorest people in the village. season at Rs 100 per day. As you can
tell, this wage is quite low. Savita
Let’s Discuss knows that she will have to work very
• Why are farm labourers like Dala and hard to complete harvesting on her
Ramkali poor? own field, and then work as a farm
• Gosaipur and Majauli are two villages labourer for Tejpal Singh. The harvest
in North Bihar. Out of a total of 850 time is a very busy time. As a mother
households in the two villages, there of three children she has a lot of
are more than 250 men who are household responsibilities. Savita
employed in rural Punjab and Haryana agrees to these tough conditions as
or in Delhi, Mumbai, Surat, Hyderabad she knows getting a loan is difficult
or Nagpur. Such migration is common for a small farmer.
in most villages across India. Why do 2. In contrast to the small farmers, the
people migrate? Can you describe medium and large farmers have their
(based on your imagination) the work own savings from farming. They are
that the migrants of Gosaipur and thus able to arrange for the capital
Majauli might do at the place of needed. How do these farmers have
destination? their own savings? You shall find the
answer in the next section.
6. The capital needed in farming
You have already seen that the modern
Let's discuss the story so far....
farming methods require a great deal of We have read about the three factors of
capital, so that the farmer now needs production—land, labour and capital—
more money than before. and how they are used in farming. Let us
1. Most small farmers have to borrow fill in the blanks given below.
money to arrange for the capital. They Among the three factors of production,
borrow from large farmers or the we found that labour is the most
village moneylenders or the traders abundant factor of production. There are
who supply various inputs for many people who are willing to work as
cultivation. The rate of interest on farm labourers in the villages, whereas
such loans is very high. They are put the opportunities of work are limited. They
to great distress to repay the loan. belong to either landless families or
Savita is a small farmer. She plans . They are paid low wages,
to cultivate wheat on her 1 hectare of and lead a difficult life.
land. Besides seeds, fertilizers and In contrast to labour,
pesticides, she needs cash to buy is a scarce factor of production. Cultivated
water and repair her farm land area is . Moreover,
instruments. She estimates that the even the existing land is distributed
working capital itself would cost a (equally/unequally) among
minimum of Rs 3,000. She doesn’t the people engaged in farming. There are
have the money, so she decides to a large number of small farmers who
borrow from Tejpal Singh, a large cultivate small plots of land and live in
The Story of Village Palampur 9

conditions not much better than the Tejpal Singh, the large farmer, has a
landless far m labourer. To make the surplus of 350 quintals of wheat from all
maximum use of the existing land, his lands! He sells the surplus wheat at
farmers use and the Raiganj market and has good earnings.
. Both these have led to What does Tejpal Singh do with his
increase in production of crops. earnings? Last year, Tejpal Singh had put
most of the money in his bank account.
Modern farming methods require a
Later he used the savings for lending to
great deal of . Small
farmers like Savita who were in need of a
farmers usually need to borrow money to
loan. He also used the savings to arrange
arrange for the capital, and are put to
for the working capital for farming in the
great distress to repay the loan. Therefore,
next season. This year Tejpal Singh plans
capital too is a scarce factor of production,
to use his earnings to buy another tractor.
particularly for the small farmers.
Another tractor would increase his fixed
Though both land and capital are capital.
scarce, there is a basic difference between Like Tejpal Singh, other large and
the two factors of production. medium farmers sell the surplus farm
is a natural resource, products. A part of the earnings is saved
whereas is man-made. It and kept for buying capital for the next
is possible to increase capital, whereas season. Thus, they are able to arrange
land is fixed. Therefore, it is very for the capital for farming from their own
important that we take good care of land savings. Some farmers might also use the
and other natural resources used in savings to buy cattle, trucks, or to set up
farming. shops. As we shall see, these constitute
the capital for non-farm activities.
7. Sale of Surplus Farm Products
Let us suppose that the farmers have Non-Farm Activities in Palampur
produced wheat on their lands using the We have learnt about farming as the main
three factors of production. The wheat production activity in Palampur. We shall
is harvested and production is complete. now take a look at some of the non-farm
What do the farmers do with the wheat? production activities. Only 25 per cent
They retain a part of the wheat for the of the people working in Palampur are
family’s consumption and sell the engaged in activities other than
surplus wheat. Small farmers like agriculture.
Savita and Gobind’s sons have little
surplus wheat because their total 1. Dairy — the other common
production is small and from this a activity
substantial share is kept for their own Dairy is a common activity in many families
family needs. So it is the medium and of Palampur. People feed their buffalos on
large farmers who supply wheat to the various kinds of grass and the jowar and
market. In the Picture 1.1, you can see the bajra that grows during the rainy season.
bullock cart streaming into the market The milk is sold in Raiganj, the nearby large
each carrying loads of wheat. The traders village. Two traders from Shahpur town
at the market buy the wheat and sell it have set up collection cum chilling centres
further to shopkeepers in the towns and at Raiganj from where the milk is
cities. transported to far away towns and cities.

10 Economics

Let's Discuss
• Let us take three farmers. Each has grown wheat on his field though the
production is different (see Column 2). The consumption of wheat by each
farmer family is the same (Column 3). The whole of surplus wheat this year
is used as capital for next year’s production. Also suppose, production is
twice the capital used in production. Complete the tables.
Farmer 1

Production Consumption Surplus = Capital for the

Production – next year

Year 1 100 40 60 60

Year 2 120 40

Year 3 40

Farmer 2

Production Consumption Surplus Capital for the

next year
Year 1 80 40
Year 2 40
Year 3 40

Farmer 3

Production Consumption Surplus Capital for the

next year

Year 1 60 40

Year 2 40

Year 3 40

Let’s Discuss
• Compare the production of wheat by the three farmers over the years.
• What happens to Farmer 3 in Year 3? Can he continue production? What
will he have to do to continue production?

2. An example of small-scale Unlike the manufacturing that takes

manufacturing in Palampur place in the big factories in the towns
At present, less than fifty people are and cities, manufacturing in Palampur
engaged in manufacturing in Palampur. involves very simple production methods

The Story of Village Palampur 11

and are done on a small scale. They are
carried out mostly at home or in the fields Kareem has opened a computer class
with the help of family labour. Rarely are centre in the village. In recent years
labourers hired. a large number of students have been
attending college in Shahpur town.
Kareem found that a number of
Mishrilal has purchased a
students from the village are also
mechanical sugarcane crushing
attending computer classes in the
machine run on electricity and has
town. There were two women in the
set it up on his field. Sugarcane
village who had a degree in computer
crushing was earlier done with the
applications. He decided to employ
help of bullocks, but people prefer to
them. He bought computers and set
do it by machines these days.
up the classes in the front room of
Mishrilal also buys sugarcane from
their house overlooking the market.
other farmers and processes it into
High school students have started
jaggery. The jaggery is then sold to
attending them in good numbers.
traders at Shahpur. In the process,
Mishrilal makes a small profit.
Let’s Discuss
Let’s Discuss • In what ways is Kareem’s capital and
labour different from Mishrilal’s?
• What capital did Mishrilal need to set • Why didn’t someone start a computer
up his jaggery manufacturing unit? centre earlier? Discuss the possible
• Who provides the labour in this case? reasons.
• Can you guess why Mishrilal is unable
to increase his profit? 4. Transport: a fast developing
• Could you think of any reasons when sector
he might face a loss? There are variety of vehicles on the road
• Why does Mishrilal sell his jaggery to connecting Palampur to Raiganj.
traders in Shahpur and not in his Rickshawallahs, tongawallahs, jeep,
village? tractor, truck drivers and people driving
the traditional bullock cart and bogey are
3. The shopkeepers of Palampur people in the transport services. They
ferry people and goods from one place to
People involved in trade (exchange of another, and in return get paid for it. The
goods) are not many in Palampur. The number of people involved in transport
traders of Palampur are shopkeepers who has grown over the last several years.
buy various goods from wholesale
markets in the cities and sell them in Kishora is a farm labourer. Like other
the village. You will see small general such labourers, Kishora found it
stores in the village selling a wide range difficult to meet his family’s needs from
of items like rice, wheat, sugar, tea, oil, the wages that he received. A few years
biscuits, soap, toothpaste, batteries, back Kishora took a loan from the
candles, notebooks, pen, pencil, even bank. This was under a government
some cloth. A few of the families whose programme which was giving cheap
houses are close to the bus stand have loans to poor landless households.
used a part of the space to open small Kishora bought a buffalo with this
shops. They sell eatables. money. He now sells the buffalo’s milk.

12 Economics

Further, he has attached a wooden cart Let’s Discuss
to his buffalo and uses it to transport
• What is Kishora’s fixed capital?
various items. Once a week, he goes to
• What do you think would be his
the river Ganga to bring back clay for
working capital?
the potter. Or sometimes he goes to
Shahpur with a load of jaggery or other • In how many production activities is
commodities. Every month he gets some Kishora involved?
work in transport. As a result, Kishora • Would you say that Kishora has
is able to earn more than what he used benefitted from better roads in
to do some years back. Palampur?

Farming is the main production activity in the village. Over the years there have
been many important changes in the way farming is practiced. These have allowed
the farmers to produce more crops from the same amount of land. This is an
important achievement, since land is fixed and scarce. But in raising production
a great deal of pressure has been put on land and other natural resources.
The new ways of farming need less land, but much more of capital. The medium
and large farmers are able to use their own savings from production to arrange
for capital during the next season. On the other hand, the small farmers who
constitute about 80 per cent of total farmers in India, find it difficult to obtain
capital. Because of the small size of their plots, their production is not enough.
The lack of surplus means that they are unable to obtain capital from their own
savings, and have to borrow. Besides the debt, many of the small farmers have
to do additional work as farm labourers to feed themselves and their families.
Labour being the most abundant factor of production, it would be ideal if
new ways of farming used much more labour. Unfortunately, such a thing has
not happened. The use of labour on farms is limited. The labour, looking for
opportunities is thus migrating to neighbouring villages, towns and cities. Some
labour has entered the non-farm sector in the village.
At present, the non-farm sector in the village is not very large. Out of every
100 workers in the rural areas in India, only 24 are engaged in non-farm activities.
Though there is a variety of non-farm activities in the villages (we have only
seen a few examples), the number of people employed in each is quite small.
In the future, one would like to see more non-farm production activities in the
village. Unlike farming, non-farm activities require little land. People with some
amount of capital can set up non-farm activities. How does one obtain this capital?
One can either use his own savings, but more often has to take a loan. It is
important that loan be available at low rate of interest so that even people without
savings can start some non-farm activity. Another thing which is essential for
expansion of non-farm activities is to have markets where the goods and services
produced can be sold. In Palampur, we saw the neighbouring villages, towns and
cities provide the markets for milk, jaggery, wheat, etc. As more villages get
connected to towns and cities through good roads, transport and telephone, it is
possible that the opportunities for non-farm activities in the village would increase
in the coming years.

The Story of Village Palampur 13

1. Every village in India is surveyed once in ten years during the Census and
some of details are presented in the following format. Fill up the following based
on information on Palampur.
c. LAND USE (in hectares):
Cultivated Land Land not available for cultivation
(Area covering dwellings, roads,
Irrigated Unirrigated
ponds, grazing ground)

26 hectares

Electricity Supply
Nearest Town

2. Modern farming methods require more inputs which are manufactured in

industry. Do you agree?
3. How did the spread of electricity help farmers in Palampur?
4. Is it important to increase the area under irrigation? Why?
5. Construct a table on the distribution of land among the 450 families of
6. Why are the wages for farm labourers in Palampur less than minimum wages?
7. In your region, talk to two labourers. Choose either farm labourers or labourers
working at construction sites. What wages do they get? Are they paid in cash
or kind? Do they get work regularly? Are they in debt?
8. What are the different ways of increasing production on the same piece of
land? Use examples to explain.
9. Describe the work of a farmer with 1 hectare of land.
10. How do the medium and large farmers obtain capital for farming? How is it
different from the small farmers?
11. On what terms did Savita get a loan from Tajpal Singh? Would Savita’s condition
be different if she could get a loan from the bank at a low rate of interest?
12. Talk to some old residents in your region and write a short report on the changes
in irrigation and changes in production methods during the last 30 years.

14 Economics

13. What are the non-farm production activities taking place in your region? Make
a short list.
14. What can be done so that more non-farm production activities can be started
in villages?

ETIENNE, GILBER T. 1985. Rural Development in Asia: Meetings with Peasants, Sage
Publications, New Delhi.
ETIENNE, GILBERT. 1988. Food and Poverty: India’s Half Won Battle, Sage Publications,
New Delhi.
RAJ, K.N. 1991. ‘Village India and its Political Economy’ in C.T. Kurien (Edited)
Economy, Society and Development, Sage Publications, New Delhi
THORNER, DANIEL AND ALICE THORNER. 1962. Land and Labour in India, Asia Publishing
House, Bombay.

The Story of Village Palampur 15

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.
32 Economics

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

Chapter Food Security in India

Overview In the 1970s, food security was

• Food security means availability, understood as the “availability at all times
accessibility and affordability of food to of adequate supply of basic foodstuffs”
(UN, 1975). Amartya Sen added a new
all people at all times. The poor
dimension to food security and
households are more vulnerable to food
emphasised the “access” to food through
insecurity whenever there is a problem what he called ‘entitlements’ — a
of production or distribution of food combination of what one can produce,
crops. Food security depends on the exchange in the market alongwith state
Public Distribution System (PDS) and or other socially provided supplies.
government vigilance and action at Accordingly, there has been a substantial
times, when this security is threatened. shift in the understanding of food security.
The 1995 World Food Summit declared,
What is food security?
“Food security at the individual,
Food is as essential for living as air is for household, regional, national and global
breathing. But food security means levels exists when all people, at all times,
something more than getting two square have physical and economic access to
meals. Food security has following sufficient, safe and nutritious food to meet
dimensions their dietary needs and food preferences
for an active and healthy life” (FAO, 1996,
(a) availability of food means food
p.3). The declaration further recognises
production within the country, food
that “poverty eradication is essential to
imports and the previous years stock
improve access to food”.
stored in government granaries.
(b) accessibility means food is within reach a national disaster/calamity like
of every person. earthquake, drought, flood, tsunami,
(c) affordability implies that an individual widespread failure of crops causing
has enough money to buy sufficient, famine, etc. How is food security
safe and nutritious food to meet one's affected during a calamity? Due to a
dietary needs. natural calamity, say drought, total
Thus, food security is ensured in a production of foodgrains decreases. It
country only if (1) enough food is available creates a shortage of food in the affected
for all the persons (2) all persons have areas. Due to shortage of food, the prices
the capacity to buy food of acceptable goes up. At the high prices, some people
quality and (3) there is no barrier on cannot afford to buy food. If such calamity
access to food. happens in a very wide spread area or is
stretched over a longer time period, it
Why food security? may cause a situation of starvation.
The poorest section of the society might A massive starvation might take a turn
be food insecure most of the times while of famine.
persons above the poverty line might also A Famine is characterised by wide
be food insecure when the country faces spread deaths due to starvation and
42 Economics

epidemics caused by forced use of Do you know who were affected the
contaminated water or decaying food and most by the famine? The agricultural
loss of body resistance due to weakening labourers, fishermen, transport
from starvation. workers and other casual labourers
The most devastating famine that were affected the most by dramatically
occurred in India was the FAMINE OF increasing price of rice. They were the
BENGAL in 1943. This famine killed thirty ones who died in this famine.
lakh people in the province of Bengal.

Table 4.1: Production of Rice in the Province of Bengal

Year Production Imports Exports Total Availability

(Lakh tonnes) (Lakh tonnes) (Lakh tonnes) (Lakh tonnes)

1938 85 – – 85
1939 79 04 – 83
1940 82 03 – 85
1941 68 02 – 70
1942 93 – 01 92
1943 76 03 – 79
Source: Sen, A.K, 1981 Page 61

Let’s Discuss
1. Some people say that the Bengal famine happened because there was a shortage
of rice. Study the table and find out whether you agree with the statement?
2. Which year shows a drastic decline in food availability?

Picture 4.1 Starvation victims arriving at a Picture 4.2 During the Bengal Famine of
relief centre, 1945. 1943, a family leaves its village
in Chittagong district in Bengal.

Food Security in India 43

engaged in seasonal activities and are paid
Suggested Activity very low wages that just ensure bare
(a) What do you see in Picture 4.1? survival.
(b) Which age group is seen in the first Story of Ramu
picture? Ramu works as a casual labourer
(c) Can you say that the family shown in in agriculture in Raipur village. His
the Picture 4.2 is a poor family? why? eldest son Somu who is 10 years old
(d) Can you imagine the source of also works as a pali to look after the
livelihood of the people, (shown in two cattle of the Sarpanch of the village
Pictures) before the occurrence of Satpal Singh. Somu is employed for
famine? (In the context of a village) the whole year by the Sarpanch and
(e) Find out what type of help is given to is paid a sum of Rs 1,000 for this
the victims of a natural calamity at a work. Ramu has three more sons
relief camp. and two daughters but they are too
(f ) Have you ever helped such victims (in young to work on the field. His wife
the form of money, food, clothes, Sunhari is also (part time) working
medicines etc.) as house cleaner for the livestock,
removing and managing cow dung.
PROJECT WORK: Gather more
She gets ½ litre milk and some
information about famines in India.
cooked food along with vegetables
Nothing like the Bengal Famine has for her daily work. Besides she also
works in the field along with her
happened in India again. But it is
husband in the busy season and
disturbing to note that even today, there
supplements his earnings.
are places like Kalahandi and Kashipur
Agriculture being a seasonal
in Orissa where famine-like conditions
activity employs Ramu only during
have been existing for many years and
times of sowing, transplanting and
where some starvation deaths have also harvesting. He remains unemployed
been reported. Starvation deaths are also for about 4 months during the
reported in Baran district of Rajasthan, period of plant consolidation and
Palamau district of Jharkhand and many maturing in a year. He looks for
other remote areas during the recent work in other activities. Some times
years. Therefore, food security is needed he gets employment in brick laying
in a country to ensure food at all times. or in construction activities in the
Who are food-insecure? village. By all his efforts, Ramu is
able to earn enough either in cash
Although a large section of people suffer
or kind for him to buy essentials for
from food and nutrition insecurity in two square meals for his family.
India, the worst affected groups are However, during the days when he
landless people with little or no land to is unable to get some work, he and
depend upon, traditional artisans, his family really face difficulties and
providers of traditional services, petty self- sometimes his small kids have to
employed workers and destitutes sleep without food. Milk and
including beggars. In the urban areas, the vegetables are not a regular part of
food insecure families are those whose meals in the family. Ramu is food
working members are generally employed insecure during 4 months when he
in ill-paid occupations and casual labour remains unemployed because of the
market. These workers are largely seasonal nature of agriculture work.

44 Economics

Let’s Discuss run his family even with small
earnings from rickshaw-pulling?
• Why is agriculture a seasonal activity? The social composition along with the
• Why is Ramu unemployed for about inability to buy food also plays a role in
four months in a year? food insecurity. The SCs, STs and some
• What does Ramu do when he is sections of the OBCs (lower castes among
unemployed? them) who have either poor land-base or
• Who are supplementing income in very low land productivity are prone to
Ramu’s family? food insecurity. The people affected by
• Why does Ramu face difficulty when natural disasters, who have to migrate to
he is unable to have work? other areas in search of work, are also
• When is Ramu food insecure? among the most food insecure people. A
Story of Ahmad high incidence of malnutrition prevails
among women. This is a matter of serious
Ahmad is a rickshaw puller in
concern as it puts even the unborn baby
Bangalore. He has shifted from
at the risk of malnutrition. A large
Jhumri Taliah along with his 3
proportion of pregnant and nursing
brothers, 2 sisters and old parents.
mothers and children under the age of 5
He stays in a jhuggi. The survival of
years constitute an important segment of
all members of his family depends on
the food insecure population.
his daily earnings from pulling
rickshaw. However, he does not have
a secured employment and his According to the National Health and
earnings fluctuate every day. During Family Survey (NHFS) 1998–99, the
some days he gets enough earning for number of such women and children is
him to save some amount after buying approximately 11 crore.
all his day-to-day necessities. On
other days, he barely earns enough The food insecure people are
to buy his daily necessities. However, disproportionately large in some regions
fortunately, Ahmad has a yellow card, of the country, such as economically
which is PDS Card for below poverty backward states with high incidence of
line people. With this card, Ahmad poverty, tribal and remote areas, regions
gets sufficient quantity of wheat, rice, more prone to natural disasters etc. In
sugar and kerosene oil for his daily fact, the states of Uttar Pradesh (eastern
use. He gets these essentials at half and south-easter n parts), Bihar,
of the market price. He purchases his Jharkhand, Orissa, West Bengal,
monthly stock during a particular day Chattisgarh, parts of Madhya Pradesh and
when the ration shop is opened for Maharasthra account for largest number
below poverty people. In this way, of food insecure people in the country.
Ahmad is able to eke out his survival Hunger is another aspect indicating
with less than sufficient earnings for food insecurity. Hunger is not just an
his big family where he is the only expression of poverty, it brings about
earning member. poverty. The attainment of food security
therefore involves eliminating current
hunger and reducing the risks of future
Let’s Discuss hunger. Hunger has chronic and seasonal
• Does Ahmad have a regular income dimensions. Chronic hunger is a
from rickshaw-pulling? consequence of diets persistently
• How does the yellow card help Ahmad inadequate in terms of quantity and/or
Food Security in India 45

quality. Poor people suffer from chronic
hunger because of their very low income
and in turn inability to buy food even for
survival. Seasonal hunger is related to
cycles of food growing and harvesting. This
is prevalent in rural areas because of the
seasonal nature of agricultural activities
and in urban areas because of casual
labourers, e.g., there is less work for
casual construction labourers during the
rainy season. This type of hunger exists Picture 4.3 A farmer from Punjab standing in
when a person is unable to get work for a field of one of the High Yielding
the entire year. Varieties of wheat on which the
Green Revolution is based
Table 4.2: Percentage of Households with
‘Hunger’ in India success of wheat was later replicated in
rice. The increase in foodgrains was,
Type of hunger however, disproportionate. The highest rate
Year Seasonal Chronic Total of growth was achieved in Uttar Pradesh
and Madhya Pradesh, which was 44.01 and
Rural 30.21 million tonnes in 2015–16. The total
1983 16.2 2.3 18.5 foodgrain production was 252.22 Million
1993–94 4.2 0.9 5.1 tonnes in 2015–16.
Uttar Pradesh and Madhya Pradesh
1999–2000 2.6 0.7 3.3
recorded a significant production in field
Urban of wheat which was 26.87 and 17.69
1983 5.6 0.8 6.4 million tonnes in 2015–16, respectively.
1993–94 1.1 0.5 1.6 West Bengal and UP, on the other hand,
recorded significant production of rice 15.75
1999–2000 0.6 0.3 0.9
and 12.51 Million tonnes in 2015–16
Source: Sagar (2004) respectively.

The percentage of seasonal, as well as, Suggested Activity

chronic hunger has declined in India as
shown in the above table. Visit some farms in a nearby village and
India is aiming at Self-sufficiency in collect the details of food crops cultivated
Foodgrains since Independence. by the farmers.
After Independence, Indian policy- Food Security in India
makers adopted all measures to achieve Since the advent of the Green Revolution
self-sufficiency in food grains. India in the early-1970s, the country has
adopted a new strategy in agriculture, avoided famine even during adverse
which resulted in ‘Green Revolution’, weather conditions.
especially in the production of wheat India has become self-sufficient in
and rice. foodgrains during the last 30 years
Indira Gandhi, the then Prime Minister because of a variety of crops grown all
of India, officially recorded the impressive over the country. The availability of
strides of Green Revolution in agriculture foodgrains (even in adverse weather
by releasing a special stamp entitled conditions or otherwise) at the country
‘Wheat Revolution’ in July 1968. The level has further been ensured with a
46 Economics

Graph 4.1: Production of Foodgrains in India (Million Tonnes)

Source: Pocket Book of Agricultural Statistics, 2016, Government of India.

before the sowing season to provide

Let’s Discuss incentives to farmers for raising the
Study Graph 4.1 and answer the following production of these crops. The purchased
questions: foodgrains are stored in granaries. Do
(a) In which year did our country cross you know why this buffer stock is created
the 200 Million tonne per year mark by the government? This is done to
in foodgrain production? distribute foodgrains in the deficit areas
and among the poorer strata of the
(b) In which decade did India experience
society at a price lower than the market
the highest decadal increase in
price also known as Issue Price. This
foodgrain production?
also helps resolve the problem of shortage
(c) Is production increase consistent in of food during adverse weather conditions
India since 2000–01? or during the periods of calamity.
carefully designed food security system by
What is the Public Distribution
the government. This system has two
components: (a) buffer stock, and (b) public
distribution system. The food procured by the FCI is distributed
through government regulated ration
What is Buffer stock? shops among the poorer section of the
Buffer Stock is the stock of foodgrains, society. This is called the Public
namely wheat and rice, procured by the Distribution System (PDS). Ration shops
government through the Food Corporation are now present in most localities,
of India (FCI). The FCI purchases wheat villages, towns and cities. There are
and rice from the farmers in states about 5.5 lakh ration shops all over the
where there is surplus production. The country. Ration shops also, known as
farmers are paid a pre-announced price Fair Price Shops, keep stock of foodgrains,
for their crops. This price is called sugar, and kerosene for cooking. These
Minimum Support Price (MSP). The MSP items are sold to people at a price lower
is declared by the government every year than the market price. Any family with

Food Security in India 47

a ration card* can buy a stipulated amount The introduction of Rationing in India
of these items (e.g. 35 kg of grains, 5 litres dates back to the 1940s against the
of kerosene, 5 kgs of sugar etc.) every backdrop of the Bengal famine. The
month from the nearby ration shop. rationing system was revived in the wake
*There are three kinds of ration cards: of an acute food shortage during the
(a) Antyodaya cards for the poorest 1960s, prior to the Green Revolution. In
of the poor; (b) BPL cards for those the wake of the high incidence of poverty
below poverty line; and (c) APL cards levels, as reported by the NSSO in the
for all others. mid-1970s, three important food
intervention programmes were
Suggested Activity introduced: Public Distribution System
Visit your area’s ration shop and get the (PDS) for food grains (in existence earlier
following details but strengthened thereafter); Integrated
1. When does the ration shop open? Child Development Services (ICDS)
2. What are the items sold at the ration (introduced in 1975 on an experimental
shop? basis) and Food-for -Work** (FFW)
3. Compare the prices of rice and sugar (introduced in 1977–78). Over the years,
from the ration shop with the prices several new programmes have been
at any other grocery shop? (for families launched and some have been
below poverty line) restructured with the growing
4. Find out: experience of administering the
Do you have a ration card? programmes. At present, there are
What has your family recently bought several Poverty Alleviation Programmes
with this card from the ration shop? (PAPs), mostly in rural areas, which have
Are there any problems that they face? an explicit food component also. While
Why are ration shops necessary? some of the programmes such as PDS,
mid-day meals etc. are exclusively food
security programmes, most of the PAPs
also enhance food security. Employment
programmes greatly contribute to food
security by increasing the income of
the poor.

Suggested Activity
Gather detailed information about some
of the programmes initiated by the
government, which have food
Hint: Rural wage employment
programme, Employment Guarantee
Scheme, Sampurna Grameen Rojgar
Yojana, Mid Day Meal, Integrated Child
Development Services, etc.
Picture 4.4 Discuss with your teacher.
48 Economics

the coverage of PDS was universal with
**The National Food Security
no discrimination between the poor and
Act, 2013
the non-poor. Over the years, the policy
This Act provides for food and related to PDS has been revised to make
nutritional security life at affordable it more efficient and targeted. In 1992,
prices and enables people to live a life Revamped Public Distribution System
with dignity. Under this act, 75% of (RPDS) was introducted in 1,700 blocks
the rural population and 50% of the in the country. The target was to provide
the benefit s o f P D S t o r e m o t e a n d
urban population have been
backward areas. From June 1997, in a
categorised as eligible households for
renewed attempt, Targeted Public
food security. Distribution System (TPDS) was
introducted to adopt the principle of
Current Status of Public the targeting the ‘poor in all areas’. It was
Distribution System for the first time that a differential price
policy was adopted for poor and non-
Public Distribution System (PDS) is the poor. Further, in 2000, two special
most important step taken by the schemes were launched viz., Antyodaya
Government of India (GoI) towards Anna Yojana*** (AAY) and Annapurna
ensuring food security. In the beginning, Scheme (APS) with special target groups

Table 4.3: Some Important Features of PDS

Name of Year of Coverage target Latest volume Issue price

scheme introduction group (Rs per kg.)

PDS Up to 1992 Universal – W-2.34


RPDS 1992 Backward blocks 20 kg of W-2.80

foodgrains R-3.77

TPDS 1997 Poor and non-poor 35 kg of BPL – W-4.15

BPL foodgrains R-5.65
APL APL-W-6.10

AAY 2002 Poorest of the poor 35 kg of W-2.00

foodgrains R-3.00

APS 2000 Indigent senior 10 kg of Free

citizens foodgrains

National 2013 Priority households 5 Kg per person W-2.00

Food per month R-3.00
Security Coarse-1.00
Act (NFSA) grains

Note: W - Wheat; R - Rice; BPL - Below poverty line; APL - Above poverty line
Source: Economic Survey

Food Security in India 49

of ‘poorest of the poor’ and ‘indigent senior eaten by rats. Graph 4.2 shows the
citizens’, respectively. The functioning of difference in foodgrain stocks in Central
these two schemes was linked with the pool and its stocking norms.
existing network of the PDS.
Some important features of PDS are ***Antyodaya Anna Yojana (AAY)
summarised in Table 4.3. AAY was launched in December 2000.
The PDS has proved to be the most Under this scheme one crore of the
effective instrument of government policy poorest among the BPL families
over the years in stabilising prices and covered under the targeted public
making food available to consumers at distribution system were identified.
affordable prices. It has been instrumental Poor families were identified by the
in averting widespread hunger and famine respective state rural development
by supplying food from surplus regions of departments through a Below Poverty
the country to the deficit ones. In addition, Line (BPL) survey. Twenty-five
the prices have been under revision in favour kilograms of foodgrains were made
of poor households in general. The system, available to each eligible family at a
including the minimum support price and highly subsidised rate of Rs 2 per kg
procurement has contributed to an increase for wheat and Rs 3 per kg for rice.
in foodgrain production and provided income This quantity has been enhanced
security to farmers in certain regions. from 25 to 35 kg with effect from April
However, the Public Distribution 2002. The scheme has been further
System has faced severe criticism on expanded twice by additional 50 lakh
several grounds. Instances of hunger are BPL families in June 2003 and in
prevalent despite overflowing granaries. August 2004. With this increase, 2
FCI godowns are overflowing with grains, crore families have been covered
with some rotting away and some being under the AAY.

Graph 4.2: Central Foodgrains (Wheat + Rice) Stock and Minimum Buffer Norm (Million Tonnes)

Source: Food Corporation and India

50 Economics

Subsidy is a payment that a
government makes to a producer to
supplement the market price of a
commodity. Subsidies can keep
consumer prices low while maintaining
a higher income for domestic producers.

Let’s Discuss
Study the Graph 4.2 and answer the
following questions:
• In which recent year foodgrain stock
with the government was maximum?
• What is the minimum buffer stock
norm for the FCI?
Picture 4.5 Farmers Carrying Bags of Grains
• Why were the FCI granaries
to the Granaries.
overflowing with foodgrains?
Mor eover, as the pr o c u r ement is
In 2014, the stock of wheat and rice
concentrated in a few prosperous
with FCI was 65.3 million tonnes which
r egions (Punjab, Haryana, Wester n
was much more than the minimum
Uttar Pradesh, Andhra Pradesh and to
buffer norms. However, these remained
a lesser extent in West Bengal) and
consistently higher than the buffer
mainly of two crops— wheat and rice—
norms. The situation improved with the
increase in MSP has induced farmers,
distribution of foodgrains under
particularly in surplus states, to divert
different schemes launched by the
land from production of coarse grains,
government. There is a general
which is the staple food of the poor, to
consensus that high level of buffer
the production of rice and wheat. The
stocks of foodgrains is very undesirable
intensive utilisation of water in the
and can be wasteful. The storage of
cultivation of rice has also led to
massive food stocks has been environmental degradation and fall in
responsible for high carrying costs, in the water level, threatening the
addition to wastage and deterioration sustainability of the agricultural
in grain quality. Freezing of MSP for a development in these states.
few years should be considered
seriously. The rising Minimum Support Prices
The increased food grains (MSP) have raised the maintenance
procurement at enhanced MSP is the cost of procuring foodgrains by the
result of the pressure exerted by leading government. Rising transportation
foodgrain producing states, such as and storage costs of the FCI are other
Punjab, Haryana and Andhra Pradesh. contributing factors in this increase.

Food Security in India 51

As per the NSSO report No. 558 in rural is almost as high as open market price,
India, the per person per month has so there is little incentive for them to buy
declined from 6.38 Kg. in 2004-05 to 5.98 these items from the ration shop.
Kg in 2011-12. In urban India, the per
person per month consumption of rice, too Role of cooperatives in food security
has declined from 4.71 Kg in 2004-05 to The cooperatives are also playing an
4.19 Kg in 2011-12. Per Capita consumption important role in food security in India
of PDS rice has doubled in rural India and especially in the southern and western
increased by 66% in urban India since parts of the country. The cooperative
2004-05. The per Capita consumption of societies set up shops to sell low priced
PDS wheat has doubled since 2004-05 in goods to poor people. For example, out
both rural and urban India. of all fair price shops running in Tamil
PDS dealers are sometimes found Nadu, around 94 per cent are being run
resorting to malpractices like diverting by the cooperatives. In Delhi, Mother
the grains to open market to get better Dairy is making strides in provision of
margin, selling poor quality grains at milk and vegetables to the consumers
ration shops, irregular opening of the at controlled rate decided by
Government of Delhi. Amul is another
shops, etc. It is common to find that ration
success story of cooperatives in milk
shops regularly have unsold stocks of poor
and milk products from Gujarat. It has
quality grains left. This has proved to be
brought about the White Revolution in
a big problem. When ration shops are
the country. These are a few examples
unable to sell, a massive stock of
of many more cooperatives running in
foodgrains piles up with the FCI. In recent
different parts of the country ensuring
years, there is another factor that has
food security of different sections
led to the decline of the PDS. Earlier every of society.
family, poor and non-poor had a ration Similarly, in Maharashtra, Academy of
card with a fixed quota of items such as Development Science (ADS) has
rice, wheat, sugar etc. These were sold facilitated a network of NGOs for setting
at the same low price to every family. The up grain banks in different regions. ADS
three types of cards and the range of organises training and capacity building
prices that you see today did not exist. A programmes on food security for NGOs.
large number of families could buy Grain Banks are now slowly taking shape
foodgrains from the ration shops subject in different parts of Maharashtra. ADS
to a fixed quota. These included low efforts to set up Grain Banks, to facilitate
income families whose incomes were replication through other NGOs and to
marginally higher than the below poverty influence the Government’s policy on food
line families. Now, with TPDS of three security are thus paying rich dividends.
different prices, any family above the The ADS Grain Bank programme is
poverty line gets very little discount at acknowledged as a successful and
the ration shop. The price for APL family innovative food security intervention.

52 Economics

Food security of a nation is ensured if all of its citizens have enough nutritious food
available, all persons have the capacity to buy food of acceptable quality and there
is no barrier on access to food. The people living below the poverty line might be food
insecure all the time while better off people might also turn food insecure due to
calamity or disaster. Although a large section of people suffer from food and nutrition
insecurity in India, the worst affected groups are landless or land poor households
in rural areas and people employed in ill paid occupations and casual labourers
engaged in seasonal activities in the urban areas. The food insecure people are
disproportionately large in some regions of the country, such as economically
backward states with high incidence of poverty, tribal and remote areas, regions
more prone to natural disasters etc. To ensure availability of food to all sections of
the society the Indian government carefully designed food security system, which is
composed of two components: (a) buffer stock and (b) public distribution system. In
addition to PDS, various poverty alleviation programmes were also started which
comprised a component of food security. Some of these programmes are: Integrated
Child Development Services (ICDS); Food-for-Work (FFW); Mid-Day Meals; Antyodaya
Anna Yojana (AAY) etc. In addition to the role of the government in ensuring food
security, there are various cooperatives and NGOs also working intensively towards
this direction.

1. How is food security ensured in India?
2. Which are the people more prone to food insecurity?
3. Which states are more food insecure in India?
4. Do you believe that green revolution has made India self-sufficient in food
grains? How?
5. A section of people in India are still without food. Explain?
6. What happens to the supply of food when there is a disaster or a calamity?
7. Differentiate between seasonal hunger and chronic hunger?
8. What has our government done to provide food security to the poor? Discuss
any two schemes launched by the government?
9. Why buffer stock is created by the government?
10. Write notes on:
(a) Minimum support price
(b) Buffer stock
(c) Issue price
(d) Fair price shops
11. What are the problems of the functioning of ration shops?
12. Write a note on the role of cooperatives in providing food and related items.

Food Security in India 53

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54 Economics