POVERTY

 EXTENT OF POVERTY Poverty or the ‘state of being poor’ is a relative term. Its meaning varies
depending upon the state of the economy in question. In U.S.A., for instance, poverty line is drawn at
a level where the essential needs include all minimum conveniences, electric lightning, indoor flush
toilets, refrigerators, etc. In a developing poor country like India poverty line generally denotes a
subsistence level. This is just enough calorie intake to ward off hunger or malnutrition.
 The Planning Commission has defined the poverty line on the basis of recommended nutritional
requirements of 2,400 calories per person per day for rural areas and 2,100 calories per person per
day for urban areas.
 On this basis, the poverty line turns out to be at the monthly income level of Rs. 228.90 in the rural
areas and Rs. 264.10 in the urban areas (at 1992-93 prices; if prices move up, the poverty line will
also move up). On an annual income basis, a rural household (consisting of five members) is said to
be living below the line of poverty if its income is less than Rs. 13,734, and an urban household is said
to be living below the poverty line if its annual income is less than Rs. 15,846.
 As per the data now released by the Planning Commission, about 28 per cent of the urban population
and about 25 per cent of the rural population lived below the line of poverty in 1999-2000. Overall,
about 26 per cent of India’s total population lives below the line of poverty. It means that about 260
million persons living in India are not in a position to earn minimum means of subsistence.
 The incidence of poverty, within the country, differs from state to state. While the percentage of
population below the poverty line is less than 20 in states like Punjab, about 50% of the total
population in states like Orissa, Madhya Pradesh, Bihar and Uttar Pradesh lives below the line of
poverty.
WHO ARE THE POOR
 Broadly speaking, the rural poor
comprise i. small landholders, ii. agricultural
labour households, and iii. village artisans
progressively thrown out of their traditional
occupations. The urban poor comprise those
with no or little paid jobs, hawkers, rickshaw
or cartpullers, unskilled workers, and bulk of
those who squatter in and around ever-
spreading slums and jhuggi-jhompri
colonies.
CAUSES OF POVERTY

   ECONOMIC FACTORS The main economic factors responsible for acute poverty in India are as
follows:
 1. FAST RISE IN POPULATION The population during the five decades has increased at the rate of
2.2 per cent per annum. On an average, India adds about 17 million people every year to its
population. Increasing population means increasing demand for consumer goods. A large part of
the country’s wealth is spent on the maintenance of its population. There is hardly any money
available for development activities.
 2. LOW PRODUCTIVITY IN AGRICULTURE In the absence of alternative occupations the burden of
increasing population falls upon the land. Land holdings are sub-divided and fragmented. The
methods employed for the cultivation of land are traditional and outdated. It results in low
agricultural productivity and low level of income.
 3. UNUTILISED NATURAL RESOURCES Due to lack of capital, entrepreneurial skill and technical
knowledge we fail to exploit the resources fully. The overall rate of production is very low.
 4. SLOW GROWTH OF EMPLOYMENT OPPORTUNITIESThe growth of the economy has failed to
generate new employment opportunities, specially in the manufacturing sectors. The growing
labour force finds itself with no job opportunities. The unemployed persons are forced to live in a
state of poverty.
 SOCIAL FACTORS The social structure in India is also responsible for poverty. The influence of
various social customs and taboos on our people is so pervasive that they have not been in a
position to break the barriers to growth. Therefore, it is rightly suggested that social change is a
pre-requisite for economic changes in India.
Measures to eradicate poverty

  1.INCREASE IN PRODUCTION The level of production should be raised in

industries and agriculture.
 To raise the industrial productivity, there should be fuller utilisation of the plant
capacity. Modern techniques of production should be used. Rationalisation
should be introduced in stages. Large and small-scale industries should be
integrated. Labour should be given proper training facilities.
 Agricultural productivity may be improved if four basic conditions are fulfilled..
 One, a viable minimum economic land holding for a family is to be fixed. The
perspective of arming must be changed from production for subsistence to
production for the market.
 Two, adapting farm structure to meet the demand for increased use of land and
along with this land tenure system must be reformed.
 Three, assisting the farmer and the rural community as a whole to adjust to the
changing farm structure.
 Four, the farmer, specially the small farmer, should be exposed to innovations in
agricultural farming. Farmer should be induced to adopt the new package of
water, high-yielding variety seeds, fertilisers and pesticides.
Measures to eradicate poverty
 2. EQUITABLE DISTRIBUTION Inequalities of income arise due to uneven opportunities of work. Those who are poor should
be provided gainful employment opportunities. Tax system should be so formulated that it may restrict the concentration
of wealth in fewer hands. Progressive tax system can be adopted. Concessions in taxes should be given to the poor
classes. Various schemes of economic and other help should be implemented for uplift of the poor classes.
 3. CAPITAL FORMATION High rate of capital formation is a pre-condition to economic growth. Wastes of all kinds must be
avoided. Monetary and banking institutions can also mobilise the savings. The Government can introduce incentive
schemes for production. Use of capital resources in unproductive occupations should be checked. Vast human resources
should be properly utilised. In the initial stages, foreign capital can also be invited to start production activities.
 4. POPULATION CONTROL Family planning measures, i.e., use of contraceptives, sterlisation and abortion, could be
effectively and extensively used. For the existing population new job opportunities should be created. Labour intensive
production techniques should be used to absorb the surplus labour.
 5. SUITABLE ATMOSPHERE Unless all the sections of the society are conscious about the evils of poverty, it cannot be
removed. Concerted efforts at the national level should be3 made, and a favourable climate for those efforts created
People should break the bonds of traditionalism and superstition. Mass awakening and enlightenment is possible only by
imparting general education. Through education people can understand what economic development and planning are.
They can actively participate in the programmes of economic liberation. Educated persons will easily get job opportunities,
raise their money income and finally, have a good standard of living. But it is necessary to bring drastic changes in the
educational policy. It should be job oriented, and higher education should be restricted to the really keen students.
 6. SPECIAL PROGRAMMES TO BENEFIT THE POOR Government should formulate and implement different welfare
programmes. Households living below the line of poverty should be the targeted beneficiaries of these programmes These
should aim at three things:
 These should create employment opportunities for the poor.
 These should make available at cheap rates all the essential goods like wheat, sugar, etc.
 The various services like health facilities, education, transportation, housing etc., should be made available free of cost to
the poor.
Government Policy

 We observe that poverty is the crux of all problems. We have to

eradicate it as early as possible. Removal of poverty has been the
foremost objective of or plans.
 In pursuance of this objective the Government has adopted a programme
affecting three fronts:
 All assets including land should be redistributed on a functional basis-
pen should be given to the man who knows how to write and land to the
man who can cultivate it.
 Public production and distribution of essential commodities and
infrastructure facilities and services should be in favour of low income
producers and consumers.
 Assist and guide small-scale production in agriculture and industry as
an interdependent element in a complementary cumulative process of
structural change and transformation in the village economy.


 
UNEMPLOYMENT
 While treating the problem of unemployment in India, we need
to distinguish between rural unemployment and urban
unemployment.
 RURAL UNEMPLOYMENT Two types of unemployment can be
identified in rural areas.
 DISGUISED UNEMPLOYMENT is a situation in which more
persons are working on a piece of land than are required. If a
few of these persons are removed from land, this would not
adversely affect agricultural output.
 Agriculture is a seasonal occupation. During the season a
large number of farmers find work on land. But during off-
season they remain totally unemployed. This is known as
SEASONAL UNEMPLOYMENT.
  
UNEMPLOYMENT
 URBAN EMPLOYMENT Urban employment is largely the off-shoot of
rural unemployment. A mass of population keeps on moving from
rural areas to urban areas. But this migration from rural areas to
urban areas does not reflect the abundance of job opportunities in
the cities. But rather the people are pushed out of the villages; it
thus reflects the “push” of poverty and lack of opportunities in the
villages. This type of migration swells the size of labour force in
urban areas, and in turn adds to the number of the unemployed
army of labour.
 One of the special features of urban unemployment in India is that
the rate of unemployment is higher among the educated than
among the uneducated people. This is perhaps due to the fact that
tertiary occupations do not grow to that extent to which the people
are being educated in urban areas. As a result, the unemployment
problem among the educated middle class is acute.
Extent and Magnitude of
Unemployment
 At the time of the formulation of the First Plan(1951-56), there were
hardly any statistical data on employment and unemployment except
the employment exchange statistics limited to a few towns and major
cities. No estimates of unemployment in the economy as a whole
were, therefore, attempted in the First Plan. No estimates were offered
either of the growth of the labour force during the Plan period. The
Second Plan furnished fairly good estimates of unemployment for the
first time. The backlog of unemployment at the beginning of the First
Plan was put at 3.3 million to which were added 9.0 million new
entrants during this period. The Plan provided additional employment
to 7.0 million, thus leaving a backlog of 5.3 million at the beginning of
the Second Plan. In the subsequent plans, the backlog of
unemployment has been continuously increasing since the new jobs
created during each plan period invariably fell short of the new
entrants to the labour force. At the beginning of the Tenth Plan in
2002, the backlog of unemployment is estimated at 24 million.
CAUSES OF UNEMPLOYMENT

 First, in an economy in which the pressure of population of land is already very

high, the responsibility for creating new jobs is largely to be borne and shared
by secondary and tertiary sectors of the economy. If these sectors fail to
discharge this responsibility it either leads to more unemployment or promotes
disguised unemployment in the rural agrarian sector. This is precisely what has
been happening in India.
 The rate of labour absorption in the whole organised sector is very small. Even if
this absorption is miraculously doubled by a phenomenal growth in large scale
industry and public services, it would still employ not more than 20 per cent of
the annual increase in our labour force. Therefore, the only hope of absorbing
most of the annual increase in our labour force lies in making employment in
small units fuller and more productive. Besides we will have to choose a
technology in the organised sector which absorbs substantially more labour per
unit of output and investment.
 Secondly, the growth of the agricultural sector itself has been slow and tardy. It
has not responded to the needs of a growing economy; productivity in
agriculture continues to be one of the lowest. Consequently, agriculture has
provided only low productivity employment.
CAUSES OF UNEMPLOYMENT
 Thirdly, the education system in the country too has failed to respond to the ground
realities. After remaining at schools and colleges for a number of years men and
women come out in large numbers, with no practical training or useful skills. They
would have gained neither occupational and vocational training nor functional literacy
from which all future skilled, educated, professional and managerial manpower is
drawn. The system as such has rather failed to deliver the goods in the manner in
which it should.
 Finally, quite a few snags in our technique of planning can be identified that have
worked as constraints on employment expansion
 One, efforts to lay sufficient infrastructure in the country for balanced economic
development have been lacking.
 Two, the plans could not stop the migration of the rural population into cities by
making rural areas more attractive and congenial by enabling them to earn a better
living off land and encouraging the development of ‘growth centres’ around villages.
 Three, the plans could not encourage the use of labor-intensive techniques of
agriculture and industrial production.
 Last, the plans also have not done well in the spheres of irrigation, waste land
reclamation, soil conservation, and development of dairies, fisheries and poultry
farming, flood control, drainage, anti-water logging, rural electrification and other
construction activities which, in turn, could have provided extensive employment
opportunities to all categories of workers including skilled and unskilled personnel.
Suggested Remedies to Unemployment Problem

 REMEDIES TO URBAN UNEMPLOYMENT

 Reform of the educational system to make it vocational at the school stage, further
give it a vocational bias at the undergraduate stage, and restrict admissions to
really highly qualified persons at the postgraduate and research stages.
 Fiscal incentives and technological facilities will have to be provided for
encouraging low capital intensive methods of production that will still be modern
and viable in costs.
 The present policy must be changed and deliberate attempts should be made to
identify and develop techniques of production that can be undertaken with low
capital-intensity.
 In planning investment, whether in the private or public sector, long gestation
periods should be avoided except where they are technologically inescapable.
 In order to diminish the concentration of employment in the metropolitan centres
action will have to be taken to promote decentralisation and dispersal of industrial
activity.
 The new policy directives given to the nationalised banks to promote small
industries and encourage self-employment by engineers and other technicians
should be vigorously followed up in actual implementation.
Suggested Remedies to Unemployment Problem

 REMEDIES TO RURAL UNEMPLOYMENT The main measures for rural development can be listed as
follows:
 Local capital construction projects, particularly projects suitable to a quick increase in agricultural
production, such as small and medium irrigation and drainage works, the construction of storage
facilities and feeder roads and the development of local transport;
 Land development and settlement
 More labour-intensive methods of cultivation, expansion of animal husbandry and the diversification
of agricultural production
 The development of other productive activities, such as forestry and fishings
 The promotion of rural social activities, such as education, housing and health services
 The development of viable small-scale industries and handicrafts in rural areas, such as the local
processing of agricultural products and the manufacture of simple consumer and producer goods
needed in the areas;
 Promotion and rapid spread of rural electrification.
 Some measures will have to be taken to increase employment potential of development. This goal can
be achieved:
 by land reforms with ceilings on holdings and redistribution of surplus land in such a manner as to
increase the number of owner-cultivated holdings, and
 by paying special and differential attention to the needs of marginal and small farmers in terms of
availability of credit, lower rates of interest and facilities for obtaining easily technically-improved
agricultural inputs.
 .
Suggested Remedies to Unemployment Problem

 OTHER MEASURES Employment opportunities both in the rural and

urban areas can also be promoted by a large national programme of
public works for the creation of the national network of infrastructural
facilities especially in terms of transport and communications that can
widen the Indian market, facilitate mobility of goods and people, and
create opportunities for new as well as increased economic activity in
both urban and rural areas. This type of programme may cause
inflationary consequences in the short run. To offset consequences,
simultaneous attempts need be make to increase the supply of basic
wage-goods and services that will enable the economy to meet the
pressure of the increased purchasing power resulting from the public
works programmes.
 Finally, as long as the rate of population growth does not slow down
so that it enables new jobs to be created at a faster rate than the rate
at which new entrants join the labour force, all our efforts may prove
self-defeating