Concept of Poverty

It is a state in which a person or community lacks the financial resources and is unable to
fulfil even its basic necessities like food, clothing & home.
In India, definition of Poverty: on min level of living rather than reasonable level of living
Previously, Planning commission was the authority which published poverty estimates based
on various rounds conducted by the NSSO based on monthly per capita consumption
expenditure
At present, the poverty estimates are compiles by the National Statistics Office (NSO) under
Ministry of Statistics and Programme Implementation.
17th Oct  International Day of Eradication of Poverty (by UN, 1987)

Causes of Poverty in India

Colonial exploitation
Low agricultural productivity
High population growth rate
Unemployment and Under-employment
Urbal rural divide
Social disparities
High inflation
Disparities in income distribution and ownership of assets etc.

Vicious Cycle of Poverty

Poverty

lack of Food,
health and
Low Income
education
facilities

Unskilled and
poor health
Low
conditions,
Productivity
high child
birth
Absolute Poverty vs. Relative Poverty
Absolute Poverty:

If someone doesn’t have money necessary to meet basic needs such as food, clothing,
shelter, safe drinking water, education, healthcare etc.
This poverty is independent of economic prosperity of the country. It is same for all
countries.

Relative Poverty/Relative Deprivation:

When someone is deprives of the min amount of income in order to maintain the average
standard of living in the society they live in.
Thus, it defines poverty in connection with the economic status of other members of society.
This means it changes with the economic growth of the country.

Measures used to estimate absolute Poverty

Poverty Line:

It is required level of income to fulfil basic necessities of life

It can be represented either in terms of per capita calorie intake or per capita consumption
expenditure
Required to attain a min living conditions
Varies from one country to another
It may also vary from one state to another in India due different price levels prevailing there
In October 2015, the World Bank updated the International Poverty Line, a global absolute
min, to $1.90 per capita per day consumption expenditure. It is found out by averaging the
national survey lines of the poorest 15 countries

Head Count Ratio/Poverty Incidence Ratio:

This is the proportion of poor in the total population

It is calculated by diving the number of people below the Poverty Line by the total
population
Thus, it measures quantity of poor people.

Poverty Gap Ratio:

It is developed by World Bank. It measures the intensity of poverty

It measures that on an average how far the people (below BPL) are short from the poverty
line
It indicates the depth of poverty; the more the PGR, the worse is the condition of the poor.

Squared Poverty Gap Index:

It determines poverty for a given area

The shortfalls of the BPL people are squared giving the very poor much more weight that
those falling only a few cents short of the poverty line
This index is more beneficial to the very poor who are further away from the poverty line
because they will receive more amount of aid from the government