What is poverty?

Poverty is about not having enough money to meet basic needs including food, clothing and shelter.
However, poverty is more, much more than just not having enough money.

The World Bank Organization describes poverty in this way:

“Poverty is hunger. Poverty is lack of shelter. Poverty is being sick and not being able to see a doctor.
Poverty is not having access to school and not knowing how to read. Poverty is not having a job, is fear
for the future, living one day at a time.

Poverty has many faces, changing from place to place and across time, and has been described in many
ways. Most often, poverty is a situation people want to escape. So poverty is a call to action -- for the
poor and the wealthy alike -- a call to change the world so that many more may have enough to eat,
adequate shelter, access to education and health, protection from violence, and a voice in what happens
in their communities.”

In addition to a lack of money, poverty is about not being able to participate in recreational activities;
not being able to send children on a day trip with their schoolmates or to a birthday party; not being
able to pay for medications for an illness. These are all costs of being poor. Those people who are barely
able to pay for food and shelter simply can’t consider these other expenses. When people are excluded
within a society, when they are not well educated and when they have a higher incidence of illness,
there are negative consequences for society. We all pay the price for poverty. The increased cost on
the health system, the justice system and other systems that provide supports to those living in poverty
has an impact on our economy.

While much progress has been made in measuring and analyzing poverty, the World Bank Organization
is doing more work to identify indicators for the other dimensions of poverty. This work includes
identifying social indicators to track education, health, access to services, vulnerability, and social
exclusion.

There is no one cause of poverty, and the results of it are different in every case. Poverty varies
considerably depending on the situation. Feeling poor in Canada is different from living in poverty in
Russia or Zimbabwe. The differences between rich and poor within the borders of a country can also be
great.

Cyclical Poverty

Cyclical poverty refers to poverty that may be widespread throughout a population, but the occurrence
itself is of limited duration. In nonindustrial societies (present and past), this sort of inability to provide
for one’s basic needs rests mainly upon temporary food shortages caused by natural phenomena or
poor agricultural planning. Prices would rise because of scarcities of food, which brought widespread,
albeit temporary, misery.

In industrialized societies the chief cyclical cause of poverty is fluctuations in the business cycle, with
mass unemployment during periods of depression or serious recession. Throughout the 19th and early
20th centuries, the industrialized nations of the world experienced business panics and recessions that
temporarily enlarged the numbers of the poor. The United States’ experience in the Great Depression of
the 1930s, though unique in some of its features, exemplifies this kind of poverty. And until the Great
Depression, poverty resulting from business fluctuations was accepted as an inevitable consequence of a
natural process of market regulation. Relief was granted to the unemployed to tide them over until the
business cycle again entered an upswing. The experiences of the Great Depression inspired a generation
of economists such as John Maynard Keynes, who sought solutions to the problems caused by extreme
swings in the business cycle. Since the Great Depression, governments in nearly all advanced industrial
societies have adopted economic policies that attempt to limit the ill effects of economic fluctuation. In
this sense, governments play an active role in poverty alleviation by increasing spending as a means of
stimulating the economy. Part of this spending comes in the form of direct assistance to the
unemployed, either through unemployment compensation, welfare, and other subsidies or by
employment on public-works projects. Although business depressions affect all segments of society, the
impact is most severe on people of the lowest socioeconomic strata because they have fewer marginal
resources than those of a higher strata.

Collective Poverty

In contrast to cyclical poverty, which is temporary, widespread or “collective” poverty involves a

relatively permanent insufficiency of means to secure basic needs—a condition that may be so general
as to describe the average level of life in a society or that may be concentrated in relatively large groups
in an otherwise prosperous society. Both generalized and concentrated collective poverty may be
transmitted from generation to generation, parents passing their poverty on to their children.

Collective poverty is relatively general and lasting in parts of Asia, the Middle East, most of Africa, and
parts of South America and Central America. Life for the bulk of the population in these regions is at a
minimal level. Nutritional deficiencies cause disease seldom seen by doctors in the highly developed
countries. Low life expectancy, high levels of infant mortality, and poor health characterize life in these
societies.

Collective poverty is usually related to economic underdevelopment. The total resources of many
developing nations in Africa, Asia, and South and Central America would be insufficient to support the
population adequately even if they were equally divided among all of the citizens. Proposed remedies
are twofold: (1) expansion of the gross national product (GNP) through improved agriculture or
industrialization, or both, and (2) population limitation. Thus far, both population control and induced
economic development in many countries have proved difficult, controversial, and at times inconclusive
or disappointing in their results.

An increase of the GNP does not necessarily lead to an improved standard of living for the population at
large, for a number of reasons. The most important reason is that, in many developing countries, the
population grows even faster than the economy does, with no net reduction in poverty as a result. This
increased population growth stems primarily from lowered infant mortality rates made possible by
improved sanitary and disease-control measures. Unless such lowered rates eventually result in women
bearing fewer children, the result is a sharp acceleration in population growth. To reduce birth rates,
some developing countries have undertaken nationally administered family-planning programs, with
varying results. Many developing nations are also characterized by a long-standing system of unequal
distribution of wealth—a system likely to continue despite marked increases in the GNP. Some
authorities have observed the tendency for a large portion of any increase to be siphoned off by persons
who are already wealthy, while others claim that increases in GNP will always trickle down to the part of
the population living at the subsistence level.

Case Poverty

Similar to collective poverty in relative permanence but different from it in terms of distribution, case
poverty refers to the inability of an individual or family to secure basic needs even in social surroundings
of general prosperity. This inability is generally related to the lack of some basic attribute that would
permit the individual to maintain himself or herself. Such persons may, for example, be blind, physically
or emotionally disabled, or chronically ill. Physical and mental handicaps are usually regarded
sympathetically, as being beyond the control of the people who suffer from them. Efforts to ameliorate
poverty due to physical causes focus on education, sheltered employment, and, if needed, economic
maintenance.
Poverty can be defined as the inability of the people to attain a minimum standard of living. In other
words, poverty is a relationship between the essential needs of people to survive and their ability to
satisfy them. Those people who are unable to satisfy some of the basic needs such as food, clothes,
shelter, sanitation, etc. are called poor. Poor people live without fundamental freedom of choice which
makes their life better. They face vulnerability to ill health, economic dislocation, and natural disaster. In
words of Amartya Sen, a Nobel Laureate in economics, Poverty is a deprivation of basic capabilities
rather than merely a lowness of income.

Types of Poverty

Types of proverty

(Source: www.slideshare.net)

a. Absolute Poverty

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Source: www.slideshare.net

Absolute poverty refers to a situation in which individuals are unable to attain even basic necessities of
life such as food, clothes, shelter, drinking water, health facilities, etc. It is a situation in which the level
of income of the people is so low that they cannot afford most of their basic needs. The minimum
amount of income required to meet the basic necessities of life is known as the poverty line. Therefore,
absolute poverty refers to a situation in which the level of income of the people is below the poverty
line.

b. Relative Poverty

Source: thedailyblog.co.nz

Source: thedailyblog.co.nz

A number of differences can be made between absolute poverty and relative poverty on the basis of
definition like a fulfillment of basic needs, income ceiling, its availability country, etc. The difference
between absolute and relative poverty are: Relative poverty refers to an unequal distribution of income
and economic resources of a country. It is defined as a relative deprivation or exclusion from
participation in society of persons, families, a group of people whose material, cultural, social resources
are so limited that it excludes them from a minimum respectable way of life in the state where they live.
In this types of poverty, the income of an individual is more than US $1 per day.

Absolute Poverty

Relative Poverty

It refers to a situation in which individuals are unable to attain even basic needs.

It refers to an unequal distribution of income and economic resources of a country among the people.

People cannot even fulfill their basic needs of foods, clothes, shelter, etc.

People can fulfill their basic needs but not as much as other rich people.

The individual income is less than US $1 per day.

The individual income is more than US $1 per day.

It can be eradicated.

It cannot be eradicated.

It can be measured in quantitative terms.

It cannot be expressed in number but can be compared.

Characteristics of Poor

Some common characteristics, as well as difference between rural and urban poor of Nepal, have been
discussed below:

1. Low level of income

Poor people usually look assets as well as in urban area. In rural areas, they own small area of low or
unproductive land without irrigation and other physical facilities. They lack income and access to credit
and unable to improve their land productivity.

2. Bad Housing Condition

The housing condition of a majority of the Nepalese people is very bad. Due to large family size, there is
always overcrowded in households. All the family members have to live in a small mud hut with limited
space, a single room house and without electricity and other physical facilities.

3. Literacy

The majority of poor people is generally illiterate, a high illiterate rate is either due to ignorance or
poverty or both. The national literacy rate of Nepal is 65% while the literacy among the poor is far below
than the national average.

4. Occupation

The occupation of the poor is generally agriculture in rural and physical labor in urban areas. Many poor
people even do not have their own land and other employs them as agriculture labor.
5. High Expenditure Pattern

In Nepal, the majority of poor spend more than 70% of their income in consumption. They spend almost
all of their income on food in order to survive. Sometimes, they consume more than what their income
is.

6. Demographic Pattern

There exist large family sizes among both rural and urban poor area because of high population growth
rate. Children are regarded as the source of earning. Poor people often lack access to modern family
planning services.

7. High Gender Disparity

There is high gender disparity at the lowest level of income in both rural and urban areas. Women have
very low chances of going school so, only a few areeducated and so they have fewer employment
opportunities.

8. Lack of access to state facilities

A majority of poor people of Nepal are living in rural areas and government expenditure pattern is
concentrated in favor of urban sectors or to the rich. Therefore, the rural people cannot enjoy the
benefits from the facilities provided by the government.

Causes of Poverty

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Source: slideplayer.com

1. High growth rate of population and low economic growth rate

Various factors such as economic, historical, social, politician, etc are responsible for growing poverty in
Nepal. In Nepal, the growth rate of population is very high as compared to the economic growth rate.
This fails to bring about the required improvement in the living standard of the people.

2. Unemployment

The next important cause of poverty is unemployment. In developing countries like Nepal, there is no
development of employment providing sectors. There is a lack of employment opportunities which is
the great problem of poverty.

3. Low Industrial Development

The industry is the most important sector that provides employment to mass people. But, the growth of
industrial development in developing country like Nepal is very low due to lack of capital, infrastructure,
modern technology and appropriate industry policy.

4. Socio-cultural Factors

In Nepal, people are poor due to the prevalent socio-cultural institutions. In order to fulfill socio-
obligations and their traditional religious ceremonies (from cradle to grave) people spend extravagantly.

5. Old Technology

Old technology is also one of the causes of growing poverty in Nepal. Not only the manufacturing sector
is still employing old technology but also, the agricultural production techniques are far below the
standards of developed economies.

6. Regional Disparity
The extent of poverty is also different in each region because of diversified geographical conditions of
Nepal. The life pattern in mountains and hills are more difficult than in the Terai due to lack of
infrastructure facilities, low productivity, etc.

7. Under utilization of resources

Another cause of poverty is under utilization of resources in an underdeveloped country like Nepal. Even
thoughNepal is rich in various natural resources like water, forest and minerals due to under utilization
of such resources Nepal is facing poverty line.

8. Inadequate socio-economic infrastructure

The social-economic infrastructures such as transport, communication, health, education, safe drinking
water and energy are inadequate in rural areas. Availability of such social services not only determines
the standard of living of people but also influences the income earning capacity of individuals.

Remedial Measure of Poverty Reduction

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(Source: www.slideshare.net)

The remedial measures for poverty reduction are as follows:

1. Increase in Economic Growth Rate

There should be high, sustainable and broad-based economic growth for the long-term reduction of
poverty in a country like Nepal. Sustainable economic development refers to increased productivity of
land and labor, empowerment of women, socially and an economically disadvantaged group of society
and equality in rights and facilities provided by the government.

2. Investment in Human Capital

Adequate investment in human capital also plays a key role in long-term poverty reduction. Therefore,
investment should be made in different sectors like clean drinking water, education, health, and
sanitation for reducing poverty.

3. Development of Rural Infrastructure

The development of rural infrastructures increases the opportunities and productivity of the rural
people. Adequate transport, communication, electricity, irrigation, technological progress, marketing
facilities etc, increases the economic opportunities to people and helps to reduce poverty in a long run
base.

4. Creation of Empowerment Opportunities

We all know that the main cause of poverty is a lack of income earning opportunities. As labor intensive
industrial expansion creates more employment opportunities, emphasis should be given to the
development of such industries which are more labor intensive.

5. Participatory Development Activities

Recently, a new modality of development has been used and it is participatory one. Poor people should
be involved in various development projects in the local area so that they take care of the development
infrastructures in their management and maintenance.

6. Food Pricing and Distribution Policy

Different programs in agriculture like food pricing in the season, subsidy for farmers to purchase inputs
and in transport, government direct purchase of food from farmers in season and distributing such food
in offseason should be adopted according to the need to decrease the incidence of poverty.
7. Targeted Programs for Poor

Different targeted programs in the field of irrigation, health, education, employment etc should be
implemented for the marginalized classes of people and areas, which have not been able to enter into
the mainstream of development.

8. Women Empowerment

It is said that women could play multiple roles in the society. So, special emphasis should be given to
women in education, health and employment. This, in turn, helps to control population and increase
productivity.

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