DAVPE_XI_Eco

Poverty CLASS XI INDIAN ECONOMY CHAPTER 4 POVERTY

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Relative poverty: While comparing people we find that some have higher income than the others. People having lower income are called poor in comparison to higher income people. This is called relative poverty. Absolute poverty: If the income of some people is so low that they cannot fulfill even their basic needs, it is called absolute poverty. The absolute poverty is defined by the poverty line. Poverty is a major challenge for India as more than one-fifths of the worlds poor live in India. Poverty has many dimensions; it has to be looked at through various indicators like levels of income, levels of consumption, social indicators, indicators of vulnerability to risks and socio/political access. How to identify poor? Jail cost of living : Dadabhai Naoroji introduced the concept. He used the menu for a prisoner and used appropriate prices to arrive at jail cost of living. Then he made suitable adjustments for children and others. The average poverty line came out to be three-fourths of the adult jail cost of living. Poverty line: It refers to the minimum income, which is just sufficient to purchase the food that may provide 2400 calories per day in rural areas and 2100 calories per day in urban areas. Persons having income lower than this are called poor in the absolute sense. In 1999-2000 it was fixed at Rs 328 per person for rural areas and Rs 454 for urban areas. Problems with Poverty Line Definition of Poverty 1. It groups all the poor together. It does not differentiate between the very poor and the other poor. It is helpful in identifying the poor as a group but does not identify who among the poor need help the most. 2. Factors other than income and assets are ignored like a. Accessibility to basic education, healthcare, drinking water and sanitation b. Social Factors that trigger and perpetuate poverty such as illiteracy, ill health, lack of access to resources and discrimination or lack of access to civil and political freedoms 3. Poverty line is sometimes manipulated by the kind of items included in the consumption basket. It is used to arrive at the reduced figures of the number of poor in India. Other Indices of Poverty Sen Index developed by Amartaya Sen Poverty Gap Index

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Squared Poverty Gap Index Categories of Poor 1. Chronic Poor Always poor and usually poor 2. Transient Poor Churning poor and occasionally poor 3. Non-Poor never poor Poverty in rural areas Rural poor work mainly as landless agricultural labourers, cultivators with very small landholdings, landless labourers who are engaged in a variety of nonagricultural jobs and tenant cultivators with small land holdings Rural poor lack literacy and skills. They have limited economic opportunities and have unstable employment. They are characterized by chronic indebtedness. They have to borrow from money lenders at very high rate of interest. They are often exploited by employers as legal wages are not paid to them. They have no access to electricity and safe drinking water. Starvation, hunger and high malnutrition lead to ill health which often causes serious illness or disability. As a result they are unable to work. Poor health of their children causes high infant mortality rate (IMR) which results in high birth rate. I Among the rural poor there is gender inequality in gainful employment, education and decision-making within family Poverty in urban areas The urban poor are largely the overflow of the rural poor who migrate to urban areas in search of employment and a livelihood. Urban poor are mainly migrants in search of alternative employment and livelihood, labourers who do a variety of casual jobs and self employed who sell a variety of things on roadsides and are engaged in various activities. Examples are push cart vendors, street cobblers, rag pickers and beggars Most of the urban poor are either unemployed or intermittently employed as casual labourers. Casual labourers are among the most vulnerable in society as they have no job security, no assets, limited skills, sparse opportunities and no surplus to sustain them. They possess few assets and reside in kutcha hutments The Number of Poor in India Head Count Ratio: The number of poor is estimated as the proportion of people below the poverty line. The number of poor persons reduced from 321 million in 1973-74 to 260 million in 1999-2000. In terms of proportion it reduced from 55% to 26% over the same period. In 1973-74 80% of poor resided in rural areas. It decreased marginally to 75% in 1999-2000. The gap between the absolute number of poor in rural and urban areas did not narrow down until the early 1990s.

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Five states UP, Bihar, MP, WB and Orissa account for about 70% of Indias poor. No improvement in Bihar and Orissa. Best performance is that of Gujarat where poverty reduced from 48% to 15% during 1973-2000. West Bengal also showed good performance where poverty reduced from 63% to 27% over the same period. What Causes Poverty? Poverty is the result of interaction of many social and economic factors. Following are the main causes of poverty in India: 1. Exploitation under the British rule : The British exploited vast natural resources of India. During the British rule no effort was made to develop modern industries whereas cottage and small-scale industries were destroyed. 2. Backwardness of agriculture: The Indian agriculture is backward because of the outdated technology in use and lack of irrigation facility because of which agriculture is a gamble on the monsoon. 3. Increasing unemployment and Indebtedness is also contributing to the increase in poverty. Poverty is closely related to nature of unemployment. Unemployed persons have to borrow in order to survive. They have to borrow from money lenders at very high rate of interest. Often they are unable to repay the debt and are caught in a debt trap. 4. Capital Deficiency: Because of low income of the majority of the people the savings are low in the economy. This means there are fewer funds available for the investments. This leads to the slow economic growth of the economy. 5. Rapid growth of population: Due to high growth rate of population, per capita income and consumption expenditure has not increased to the desired level. The population growth has also been greater among the poor persons. 6. Inflation: When prices increase the purchasing power of money falls and in this way affects badly the poor and middle-income people. With the fall in the value of money the poor is able to purchase less commodities. A steep rise in the price of food grains further increases the hardship of lower income groups. 7. The unequal distribution of income and assets has also led to the continuation of poverty. Over the years, the gap between the rich and poor in India has widened. 8. Social Discrimination: The scheduled castes and scheduled tribes are not able to participate in the emerging employment opportunities in different sectors of the economy. They do not have the necessary knowledge and skills to do so. POLICIES & PROGRAMMES TOWARDS POVERTY ALLEVIATION The governments approach to poverty reduction was of following three dimensions: 1. Trickle Down Approach: This approach was based on the expectation that rapid growth of industries and agriculture would automatically solve the problem of poverty. The benefits of economic growth in the form of better standard of living would spread to all sections of society and will trickle to the poor sections only. This policy has not been successful. The overall growth of agriculture and industry has not been impressive. There has been slow growth of per capita income because of rapid population growth. The gap between rich and poor has actually widened. The green revolution further increased the inequality between large and small farmers and between different regions. The benefits of economic growth have not trickled down to the poor.

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2. Poverty Alleviation Programmes: According to this approach income of the poor persons could be raised through creation of community assets and by employment generation. This can be done through specific government programmes like Food for Work programme started in 1970s. 3. Poverty can be removed by providing basic amenities to the poor people by the government. Standard of living of people can be improved through public expenditure on social consumption needs like provision of food grains at subsidised rates, education, health, water supply and sanitation. There are three major programmes under this scheme, namely Public Distribution System (PDS), Integrated Child Development Scheme (ICDS) and Midday Meal Scheme. Other schemes: Pradhan Mantri Gram Sadak Yojana Pradhan Mantri Gramodaya Yojana Valmiki Ambedkar Awas Yojana National Social Assistance Programme : Under this programme, elderly people who do not have anyone to take care of them are given pension to sustain themselves. Widows and poor women who do not have any source of livelihood are also covered under this scheme. Poverty Alleviation Programmes Rural Employment Generation Programme (REGP) creating self-employment opportunities in rural areas and small towns. The Khadi and Village Industries Commission is implementing it. A poor person can get loans from banks to set up small industries. Prime Ministers Rozgar Yojana (PMRY) educated unemployed from rural and urban areas gets financial help to start any enterprise that generates employment. Swarna Jayanti Shahari Rozgar Yojana (SJSRY) creating employment opportunities both self-employment and wage employment in urban areas. Swaranjayanti Gram Swarozgar Yojana (SGSY) Self Help Groups (SHG) are formed. They are encouraged to save some money and lend among themselves as small loans. The banks provides partial financial assistance to SHGs. SHGs decide whom the loan is to be given for self-employment activities. National Food for Work Programme (NFWP) : Started in the year 2001, it aims at improving food security through wage employment in the drought affected rural areas.The centre makes available the foodgrains free of cost to the State government. Wages by the State government are paid partly in kind (foodgrains) and partly in cash. Sampoorna Grameen Rozgar Yojana (SGRY) National Rural Employment Guarantee (NREG) Act 2005 minimum 100 days of unskilled manual work is guaranteed Annapurna: Started in 2000, it aims at providing food security to senior citizens. The beneficiaries of National Old Age Pension Scheme are provided foodgrains at subsidised rates of Rs. 2 per kg of wheat and Rs. 3 per kg of rice. Antyodaya: The policy of the upliftment of the poorest of the poor. POVERTY ALLEVIATION PROGRAMMES A CRITICAL ASSESSMENT

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Despite a variety of approaches, programmes and schemes to alleviate poverty, hunger, malnourishment, illiteracy and lack of basic amenities continue to be a common feature in many parts of India. Following are the reasons for failure of poverty alleviation programmes in India: 1. Compared to the magnitude of poverty, the amount of resources located for these programmes is not sufficient. 2. Lack of permanence: The programmes failed to provide self-sustained growth for the removal of poverty. As a result poor persons become dependent on these programmes. Their poverty is not removed permanently. 3. Banks are reluctant in offering loans to the poor because of high risk of nonpayment. Politicians, in order to create their vote-bank, have started the wrong trend of waiving off of the loans. 4. Corruption: Because of corruption the funds allocated under these programmes have not reached the poor persons. 5. There is non-participation of local level institutions in programme implementation. 6. These programmes depend mainly on govt. and bank officials. Such officials are often ill motivated, inadequately trained, corruption prone and vulnerable to pressure from elites. As a result the resources are inefficiently used and wasted. 7. These programmes focus on people who are near the poverty line in order to show better performance of the government. They have done little to help poorest of poor persons. 8. Inefficiency: The target groups in these programmes are not properly identified. Moreover there is overlapping in different programmes. 9. Due to unequal distribution of land and other assets, the benefits from direct poverty alleviation programmes have been appropriated by the non-poor. 10. These programmes did little for disabled, sick and socially handicapped persons who cannot participate in normal economic activities. The poverty can be removed only when the poor start contributing to growth by their active involvement in the growth process. This is possible through a process of social mobilisation, encouraging poor people to participate and get them empowered. This will also help create employment opportunities which may lead to increase in levels of income, skill development, health and literacy. Moreover, it is necessary to identify poverty stricken areas and provide infrastructure such as schools, roads, power, telecom, IT services and training institutions etc. QUESTIONS 1. Define absolute poverty. 2. What is Head Count Ratio? 3. Explain Jail Cost of Living. 4. Define poverty line. 5. Define relative poverty. 6. What is Antyodaya? 7. What is meant by Food for Work programme? 8. State an example each of self employment in rural and urban areas. 9. How can creation of income earning assets address the problem of poverty? 10. Briefly explain the three dimensional attack on poverty adopted by the government. 11. What programmes has the government adopted to help the elderly people, poor women and widows? 12. Is there any relationship between unemployment and poverty? Explain.

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13. What is the difference between relative and absolute poverty? 14. Poverty is caused by a mixture of social and economic factors. Elaborate. 15. Illustrate the difference between rural and urban poverty. Is it correct to say that poverty has shifted from rural to urban areas? Use the trends in poverty ratio to support your answer. 16. Discuss the problem associated with poverty line definition of poverty. 17. Name two indices of poverty other than poverty line. 18. Name two major programmes that aim at improving the food and nutritional value of the poor. 19. Name three major programmes aimed at providing basic amenities to the poor people by the government. 20. Poverty eradication policies initiated by the govt have been successful to limited extent. Discuss the progress made in this regard over the years. 21. Which states have shown best performance in the field of removal of poverty? 22. Which states have failed in the field of removal of poverty? 23. The poverty alleviation programmes started by the government have failed to eradicate poverty. Discuss the main factors responsible for these programmes. 24. Write short notes on: a. Trickle down approach f. NFWP b. REGP g. NREG Act c. PMRY h. Annapurna d. SJSRY i. National Social e. SGSY Assistance Programme