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CHAPTER I

REVIEW OF POVERTY

1.1 Introduction

1.2 Meaning of Poverty

1.3 Concept of Poverty

1.4 Nature of Poverty Line

1.5 Absolute Poverty

1.6 Relative Poverty

1.7 Rural Poverty

1.8 Urban Poverty

1.9 Poverty Alleviation Programme

1.10 Estimates of Poverty in India

Summary

References

1
CHAPTER I

REVIEW OF POVERTY

1.1 INTRODUCATION

Poverty is not new word to Indian ears. Indian literature of all genres is full of
plots woven around the dehumanizing existence and misery of the poor.1 The problem
of poverty and unemployment is considered as the biggest challenge to development
planning in India. High poverty levels are synonymous with poor quality of life,
deprivation, malnutrition, illiteracy and low human resource development.2 The
problem of poverty has continued to remain the central challenge of development at
the global level.3

Poverty is a state of an individual, a family or a society where people are


unable to fulfill even their basic necessities of life. When a substantial segment of a
society is deprived of the minimum level of living and continues at a bare subsistence
level, that society is said to be plagued with mass poverty.4 Poverty is a stark reality in
India, and therefore poverty reduction was always given a top priority by the
Government right from the beginning of the plan period.5 The Present chapter is
related with Poverty. It elaborates the concept of Poverty and Poverty line. It also
explains Absolute and Relative Poverty. Rural and Urban Poverty is explained in this
chapter. This chapter also focuses on various Programmes on Poverty Alleviation.

1.2 MEANING OF POVERTY

Poverty, like beauty, is easier to recognize than to define and compare. Some
social workers and economists, nevertheless, define poverty with reference to certain
basic amenities such as food, floor space per person and medical care, etc. When a
family lacks a certain proportion of basic amenities it is considered poor, regardless of
income. The definition is broad enough to cover a miser who denies himself basic
amenities even though he has the ability to purchase these, and a family who has zero

1
K. Nageswara Rao, Poverty in India Global and Regional Dimensions Deep & Deep Publication
2005, page no.121
2
Ibid page no.213
3
Ibid page no.123
4
Ibid page no.197
5
Ibid page no. 212

2
income but manages to fulfill the basic needs by borrowing, reducing saving, or living
on the charity of friends and relatives.6

Poverty can be defined as a social phenomenon in which a section of the


society is unable to fulfill even its basic necessities of life. In India the generally
accepted definition of poverty emphasizes minimum level of living rather than a
reasonable level of living.7 Poverty is defined as a lack of income to acquire minimum
necessities of life; per capita income, per capita consumption expenditure, per capita
calorie intake and availability of the size of land holding are the main indicators of
poverty in different definitions.8

a) DEFINITIONS OF POVERTY:

Poverty is defined in many different ways and using many different standards.
The definitions of poverty are as follow:

 WORLD BANK :

“Poverty is pronounced as deprivation in well-being, and comprises many


dimensions. It includes low incomes and the inability to acquire the basic goods and
services necessary for survival with dignity. Poverty also encompasses low levels of
health and education, poor access to clean water and sanitation, inadequate physical
security, lack of voice and insufficient capacity and opportunity to better one’s life”.9

 UNITED NATIONS :

“Fundamentally, poverty is denial choices and opportunities, a violation of


human dignity. It means lack of basic capacity to participate effectively in society. It
means not having enough to feed and clothe to family, not having a school or clinic to
go to not having the land on which to grow one’s food or a job to earn one’s living,
and not having access to credit. It means insecurity, powerlessness and exclusion of
individuals, households and communities. It means susceptibility to violence, and it

6
K. Nageswara Rao, Poverty in India Global and Regional Dimensions Deep & Deep Publication
2005, page no.212
7
Ruddar Datta, K.P.M. Sundharam, Indian Economy, Chand and company Ltd. New Delhi 2008, page
no.361
8
Ajit Kumar Sinha, Raj Kumar Sen, Economics of Amarty Sen, Deep & Deep Publications, Pvt. Ltd.
New Delhi, 2001, page no.232
9
http://en.wikipedia.org/wiki/poverty

3
often implies living in marginal or fragile environments, without access to clean water
or sanitation.”10

AMARTY SEN:

“Poverty as consisting of a deprivation of a capabilities”, So that the poor have


inadequate resources (financial, information, and so on) to participate fully in society
in short, they are socially excluded.11

 GODDARD :

“Poverty is insufficient supply of those things which are requisite for an


individual to maintain himself and those dependent upon him in health and vigor.”12

Attempts have been made in all societies to define poverty, but all of them are
conditioned by the vision of minimum or good life obtaining in society. There is an
effort in all definitions of poverty to approach the average level of living in a society
and as such these definitions reflect the existence of inequalities in a society and the
extent to which different societies are prepared to tolerate them.13

1.3 CONCEPT OF POVERTY:

The Concept of poverty is multi-dimensional (viz. income poverty and non-


income poverty). It covers not only the levels of income and consumption, but also
health and education, vulnerability and risk, and marginalization and exclusion of the
poor from the mainstream of the poverty. To quote Prof. Chelliah, "There has been
much debate about how exactly poverty should be defined. In popular understanding,
poverty is identified with lowness of income, which prevents a family from obtaining
and enjoying the basic necessities of life, including a minimum of food, clothing, and
shelter water. This concept is defined as income poverty. For a comprehensive picture
of poverty those other deprivations, such as in relation to health, education, sanitation
and insurance against mishaps, must be taken into account.”14

10
http: en.wikipedia.org/wiki/poverty
11
Jonathan Haughton, Shandur R. Khandker Handbook on Poverty+Inequality, Rawat Publications
Jaipur 2010, page no.171
12
http:// www.preservarticles.com
13
Ruddar Datt. Growth, Poverty and Equity, Deep & Deep Publications, New Delhi 2008, page no.361
14
K. Nageswara Rao, Poverty in India Global and Regional Dimensions Deep & Deep Publication
2005, page no 103

4
Literally, poverty means scarcity or few. From social and economic point of
view, it refers to that state or condition which fails to provide minimum necessities of
life. Thus, poverty leads to extreme lower standard of living, denying even the basic
requirements of life to a vast majority of population. Poverty is a state in which a
section of society is unable to get the basic necessities of life.15

Poverty is a relative concept. No individual or country is absolutely poor or


rich. A man is poor or rich in comparison to the others. As Adam smith says, “Man is
poor or rich according to the degree in which he can afford to enjoy the necessaries,
conveniences and amusements of life.” The form of these minimum necessities
however changes, with variation in place and time. There is no uniform standard to
define poverty throughout the world.16

Poverty conventionally refers to inability of the people to attain certain


predetermined minimum consumption needs. But in a wider sense, poverty is the
constraint which restricts people to enjoy certain facilities of life. This is regarded as
capability poverty. Thus, capability poverty is defined as the lack of basic capabilities.
When people are unable to reach a certain level of essential human achievements of
functioning, they suffer from capability poverty.17

Poverty hinders the economic development of a country by reducing working


capacity, efficiency, saving and investment. If mass population remains below
poverty line it will reduce saving, investment, income and employment. Less income
will further lead to less saving, less investment and less income and employment.
Thus, vicious circle of poverty operates in a country. Poverty connotes that people
who do not enjoy a certain minimum consumption standard should be regarded as
poor. Experts who have studied poverty quantitatively find it difficult to agree on the
amount of income that will ensure the minimum consumption standard at a specified
time. There are a number of studies made by the Government as well as individuals
on incidence of poverty.18

15
http:// www.preservarticles.com
16
http:// www.preservearticles.com.
17
K. Nageswara Rao, Poverty in India Global and Regional Dimensions Deep & Deep Publication
2005, page no 184
18
Suresh Chand, Aggarwal, Rashmi Agrawal, Rakesh Shahani, Indian Economic Development and
Business Emerging Issues and outlook, New Century Publications, New Delhi, India, 2005. Page
no.108.

5
1.4 NATURE OF POVERTY LINE:

Defining poverty line is the first step for estimating poverty. The poverty
estimates are generally divided into an official estimate, from the Planning
Commission and non-official estimates by various researchers and others. The official
estimates have been much lower than the non-official estimates. The poverty line so
defined has been updated over time to take care of changes in price levels.19

It is generally agreed in our country that only they who fail to reach a certain
minimum consumption standard be regarded as poor. But the experts who have
examined the question of poverty quantitatively find it difficult to agree on the
amount of income that will ensure the minimum consumption standard at a point of
time.20

The strength and weakness of defining poverty lines based on three methods

1. The cost of basic needs

2. Foods energy intake

3. Subjective evaluation

The cost of basic needs approach is most commonly used. It first estimates the
cost of acquiring enough food for adequate nutrition usually 2,100 Calories per person
per day and then adds the cost of other essentials such as clothing and shelter. When
price information is unavailable, the food energy intake method can be used. This
method plots expenditure per capita against food consumption (in calories per person
per day) to determine the expenditure (or income) level at which a household acquires
enough food. Subjective poverty lines are based on asking people what minimum
income level is needed just to make ends meet.21

19
Rumki Basu, Economic Liberalization and Poverty Alleviation, Deep &Deep Publication New
Delhi 2000 page no.42,43
20
K. Nageswara Rao, Poverty in India Global and Regional Dimensions Deep & Deep Publication
2005, page no 108
21
Jonathan Haughton, Shandur R. Khandker Handbook on Poverty +Inequality, Rawat Publications
Jaipur 2010, page no.39

6
A) ALTERNATIVE ESTIMATES OF POVERTY IN INDIA

To determine the poverty line various committees have been formed after
independence.

Table No.1.1
Alternative Estimates of Poverty in India
Sr.No. Author Year Criterion of Poverty line Percentage

1 P. D. Ojha 1960-61 2,250 calories 51.8 (rural)


`8-11 (rural) 7.6(urban)
1967-68 `15-18 (urban) 70.0 (rural)
2 De. Costa. 1963-64 - 13.2 (chronic poverty)
34.9
3 Dandekar & Rath 1960-61 2250 calories 41.0
1968-69 `324 (rural) 40.0 (rural)
`486 (urban) 50.0 (urban)
4 B. S. Minhas 1967-68 Consumption expenditure 50.6 (rural)
1956-57 `240 65.0( urban)
5 P. K. Barthan 1968-69 Monthly per capita 54.0 (rural)
1960-61 consumption 38.0 (urban)
Expenditure
`15
6 M, Ahluwalia 1956-57 Consumption expenditure 54.1
(1977) 1965-66 `15 (rural 53.9
1973-74 `20 (urban) 46.1
7 Seventh Finance 197071 Monthly per capita 52.0 (22.5 rural,5.2
commission Consumption expenditure urban crore)
`32.7
8 Sixth Plan 1979-80 Calories 50.7 (rural)
2,400 (rural) 40.0 (urban)
2,100 (urban)
9 World Bank 1970-71 Calories 53.0 (rural)
(1989) 1983-84 2400 (rural) 45.5 (urban)
1988-89 2100 (urban) 44.9 (rural)
36.4 (urban)
41.7 (rural)
33.6 (urban)
10 Tendulkar 1987-88 Consumption Expenditure 44.8 (rural)
(2009) 2009-10 `122 (Rural) 36.5 (urban)
`158 (Urban) 37.2
11 Planning 1973-74 Monthly per capita 56.4 (rural)
commission 1987-88 Consumption Expenditure 49.2 (urban)
Expert Group 1993-94 `49 (Rural) 39.1 (rural)
(1993) `57 (Urban) 40.1 (urban)
37.3 (rural)
32.4 (urban)

7
Sr.No. Author Year Criterion of Poverty line Percentage

12 Human 2000 - 34.6


Development
Report
13 NSSO (55th round) 1999-2000 Consumption Expenditure 27.09 (rural)
` 211 (Rural) 23.62 (urban)
` 454 (Urban)
14 NSSO 61th round 2004-05 __ 28.3

15 Economic Survey 2004-05 - 28.6


2010-11
Source: Yojana, August 2012, Pg.no. 18-19

Several economists like P. D. Ojha Costa, V. M. Dandekar and Nilkantha


Rath, B. S. Minhas, S. D. Tendulkar, P. K. Bardhan, Montek Singh Ahluwalia Gaurav
Datt and Martin Ravallion, A. Dubey S. Gangopadhyay, etc. and institutions like
World Bank, Seventh Finance Commission and the Planning Commission have
estimated the incidence of poverty in India. These estimates show wide variations in
the poverty incidence in India.22

Bardhan also defined poverty line to be monthly per capita consumption.


Montek S. Ahluwalia states that poverty line has a well-established pedigree in the
Indian literature. P. D. Ojha defined poverty in terms of minimum needs which in turn
were expressed in terms of physical survival. He has estimated the number of persons
below the poverty line on the basis of an average calorie intake per capita per day.

The Seventh Finance Commission developed a concept of an “augmented


poverty line” for the calculation of the percentage of persons below the poverty line in
each state, as also for the calculation of poverty percentage. It made an attempt to
have a more inclusive concept of poverty line. Dandekar and Rath have estimated the
value of the diet with 2250 calorie as the desired minimum level of nutrition. Like
Dandekar and Rath, Minhas also defines poverty line in terms of minimum amount of
per capita consumption expenditure.

In 1977, the Planning Commission had set up the “Task Force on Projections
of minimum Needs and Effective Consumption Demand” for an assessment of the
problem of poverty and determining a qualitative index of poverty. The Task Force

22
K. Nageswara Rao, Poverty in India Global and Regional Dimensions Deep & Deep Publication
2005, page no,124,126

8
defined the poverty line as the mid–point of the monthly per capita expenditure
having a daily calorie intake of 2,400 per person in rural area and 2,100 in urban
areas.23

The committee headed by Suresh Tendulkar has submitted its report to


planning commission in December 2009 suggesting a new formula for identifying the
people below the poverty line, committee suggested a formula based on consumption
expenditure for identifying BPL families. A “Basket of Minimum List” has been
included in consumption expenditure.

The new updated data released by the Planning Commission, based on the
price indices computed from the 66th Round NSS (2009-10) data on Household
Consumer Expenditure Survey. The updated poverty estimates of the Tendulkar
Committee have lowered the poverty line itself from ` 32 a day to `28.24

Table No. 1.2


State –Wise Poverty Lines and BPL Population (2009-10 monthly per capita)
Total BPL Population (%)

Sr.No. States Rural Urban 2004-05 2009-10

1 Nagaland 1016.8 1147.6 8.8 20.9


2 Delhi 747.8 1040.3 13.0 14.2
3 Sikkim 728.9 1035.2 30.9 13.1
4 Goa 931 1025.4 24.9 8.7
5 Meghalaya 686.9 989.8 16.1 17.1
6 Haryana 791.6 975.4 24.1 20.1
7 Maharashtra 743.7 961.1 38.2 24.5
8 Punjab 830 960.8 20.9 15.9
9 Manipur 871 955 37.9 47.1
10 Gujarat 725.9 951.4 31.6 23.0
11 Mizoram 850 939.3 15.4 21.1
12 Andhra 693.8 926.4 29.6 21.1
13 Arunachal 773.7 925.2 31.4 25.9
14 Karnataka 629.4 908 33.3 23.6

23
Ajit Kumar Sinha, Raj Kumar Sen, Economics of Amarty Sen, Deep & Deep Publications, Pvt. Ltd.
New Delhi, 2001, page no.232,233
24
Pratiyogita Darpan, Upkar Prakashan, Agra, 2012 Page no.76,78

9
15 Uttarakhand 719.5 898.6 32.7 18.0
16 Himachal 708 888.3 22.9 9.5
17 Assam 691.7 871 34.4 37.9
18 Rajasthan 755 846 34.4 24.8
19 J& K 722.9 845.4 13.1 9.4
20 Jharkhand 616.3 831.2 45.3 39.1
21 W. Bengal 643.2 830.6 34.2 26.7
22 Kerala 775.3 830.7 19.6 12.0
23 Chhattisgarh 617.3 806.7 49.4 48.7
24 Tamil Nadu 639 800.8 29.4 17.1
25 U. P. 663.4 799.9 40.9 37.7
26 Tripura 663.4 782.7 40.0 17.6
27 Pondicherry 641 777.7 14.2 1.2
28 Bihar 655.6 775.3 54.4 53.5
29 M. P. 631.9 771.7 48.6 36.7
30 Orissa 567.1 736 57.2 37.0
All India 672.8 859.6 32.7% 29.8%
Source: Pratiyogita Darpan, Upkar Prakashan, Agra, 2012 Pg. 76

The all-India poverty ratio declined from 37.2 percentages in 2004-05 to 29.8
percentages in 2009-10. Poverty Ratio in Himachal, M. P., Maharashtra, Orissa,
Sikkim, Tamil Nadu, Karnataka, Uttarakhand declined by about 10 percent or more
and in Assam, Delhi, Manipur, Meghalaya, Mizoram, and Nagaland, Meghalaya,
Mizoram and Nagaland poverty increased in 2009-10.

1.5 ABSOLUTE POVERTY:

An absolute poverty line is fixed in terms of the standard indicator being used
and fixed over the entire domain of the poverty comparison. An absolute poverty line
is essential if one is trying to judge the effect of anti-poverty policies over time or to
estimate impact of a project (for example, microcredit) on poverty.25In the absolute
standard minimum physical quantities of serials, pules, milk, butter etc. are
determined for a substance level and then the price quotation convert into monetary
terms the physical quantities.26

25
Jonathan Haughton, Shandur R. Khandker Handbook on Poverty +Inequality, Rawat Publications
Jaipur 2010, page no 45
26
Ruddar Datt. Growth, Poverty and Equity, Deep & Deep Publications, New Delhi 2008, page no.361

10
1.6 RELATIVE POVERTY

Relative Poverty views poverty as socially defined and dependent on social


context, hence relative poverty is a measure of income inequality. Usually, relative
poverty is measured as the percentage of population with income less than some fixed
proportion of median income.27 According to the relative standard, income
distribution of the population in different fractile groups is estimated and a
comparison of the levels of living of the top 5to10 percent with the bottom 5 to10
percent of the population reflects the relative standards of poverty.

The defect of the latter approach is that it indicates the relative position of
different segments of the population in the income hierarchy. Even in affluent
societies, such pockets of poverty exist. But for underdeveloped countries, it is the
existence of mass poverty that is the cause for concern.28

1.7 RURAL POVERTY

Rural poverty refers to poverty found in rural areas, including factors of rural
society, rural economy and rural political systems that give rise to the poverty found
there. Rural poverty is the main problem in India. Poverty studies deal mostly with
rural areas. This is because the vast majority of the chronically poor in Asia are living
in rural settlements. In the year 2000, the planning commission of India estimated that
around 70 percent of the poor including both transient and chronically poor lived in
rural areas. Nearly 200 million people in rural areas were poor while around 67
million people in urban areas were poor.29

Main Reasons of Rural Poverty

1) Rapid population growth

2) Lack of capital

3) Excessive population pressure on agriculture

4) Illiteracy

5) Regional disparities

27
http://en.wikipedia.org/wiki/poverty
28
Ruddar Datt. Growth, Poverty and Equity, Deep & Deep Publications, New Delhi 2008, page no.362
29
John Malcolm Dowling, Yap Chin Fang Chronic Poverty in Asia –Causes consequences & Policies,
Singapore World Scientific Publishing Co. Pvt. Ltd. 2009, page no.35

11
6) Lack of alternate employment opportunities other than agriculture

7) Lack of proper implementation of public distribution system.

8) Indifferent attitude towards investment30

Rural Poverty in India largely emanates from the semi–feudal relations of


production in the agriculture. Rural poverty often is attributed to rapid population
growth. It is asserted that rapid population growth puts pressure on the land base and
as a consequence the real per capita income of labor falls “by decline of labour
productivity and employment as well as by the increases in food prices”.31

1.8 URBAN POVERTY

India is a part of the global trends where an increasing number of people live
in urban areas. The number of towns and the absolute urban population in India has
increased steadily over the last 60 years. More significant for policy formulation is the
share of urban population to total population (Graph 1), which has grown from 17.3
per cent in 1951 to 31.16 per cent in 2011. Varying projections place urban population
at about 590 million – 600 million in 2030.32

Graph 1.1
Urban Population in India (1951-2011)
46.1
41.4
38.2 36.4
31.3 31.8
26.4
31.2
27.8
25.7
23.3
19.9
17.3 18

1951 1961 1971 1981 1991 2001 2011

Share of Urban Population to Total Population (%)


Decadal Growth of Urban Population (%)

Source: Report of the Working Group on Urban Poverty, Slums and Service Delivery System, Steering
Committee on Urbanization, Planning Commission, New Delhi, October, 2011.pg.no.2

30
Pratiyogita Darpan, Upkar Prakashan, Agra, 2012 Pg 77.
31
K. Nageswara Rao, Poverty in India Global and Regional Dimensions Deep & Deep Publication
2005, page no110
32
Report of the Working Group on Urban Poverty, Slums and Service Delivery System, Steering
Committee on Urbanization, Planning Commission, New Delhi, October, 2011.pg.no.2

12
Population estimates indicate that at a certain point in 2007, the world’s urban
population will equal the world’s rural population for the first time in history. The
growth in the urban population will continue to rise, projected to reach almost 5
billion in 2030. Much of this urbanization is predicted to take place in the developing
world, with Asia and Africa having the largest urban populations.

Many of the problems of urban poverty are rooted in a complexity of resource


and capacity constraints, inadequate Government policies at both the central and local
level, and a lack of planning for urban growth and management. Given the high
growth projections for most cities in developing countries, the challenges of urban
poverty and more broadly of city management will only worsen in many places if not
addressed more aggressively. Currently an estimated one third of all urban residents
are poor, which represents one quarter of the world’s total poor (Ravallion, Chen, and
Sangraula, 2007). Many of these are in small cities and towns where the incidence of
poverty tends to be higher than in big cities. While these proportions have not
changed dramatically in the last ten years, with continued urbanization, the numbers
of the urban poor are predicted to rise and poverty will increasingly be an urban
phenomenon.

The general knowledge and understanding of poverty has increased


enormously over the past decade through poverty assessments, city level studies,
academic research and other analytical work. Many studies of poverty are carried out
at the national level. The poverty assessments typically include a rich analysis of
poverty at country level, but say little about the dynamics of urban poverty. In those
where information has been disaggregated, typically the breakdown is for urban and
rural or at the state level. This level of disaggregation, however, does not tell much
about what is happening within cities or details on the issues for the urban poor which
are necessary foundations for policy formulation. A small, but growing number of
studies aimed at understanding the characteristics of urban poverty have been carried
out at the regional level for Latin America and the Caribbean, Europe and Central
Asia, and East Asia and the Pacific, as well as at the country or city level in
Bangladesh, Brazil, Colombia, Ethiopia, Ghana, Nigeria, Yemen, and elsewhere,
including a micro-level longitudinal study of slum dwellers in Rio de Janeiro
surveyed in 1969 and then again in 2001. Small area estimation data are increasingly

13
available for poverty mapping and disaggregated analysis, and has also contributed to
strengthening our knowledge base on the characteristics and estimation of urban
poverty. Finally, at the global level there have been a number of recent reports
addressing issues of urban poverty to coincide with the shift in demographic trends
towards urban.33

A) THE SCOPE OF URBAN POVERTY


Measuring urban poverty is not an easy task. Ravallion, Chen and Sangraula
(2007) analyze data for approximately 90 low- and middle-income countries,
accounting for 95 percent of the population in developing countries, with observations
over time for about 80 percent of them. This research applies country-specific
adjusted poverty lines to account for cost of living differentials, providing new
estimates that can more accurately estimate poverty for 4 approximate time periods
(circa 1993, 1996, 1999 and 2002). On average the urban poverty lines are about 30
percent higher than the rural lines though this differs from region to region. Estimates
are calculated using two poverty lines, the “$1 a day” and “$2 a day” (which are
actually $1.08/day and $2.15/day) using 1993 PPP.

Based on this analysis, approximately 750 million people living in urban areas
in developing countries were below the poverty line of $2/day in 2002, and 290
million using the $1/day line. This represents approximately one third of all urban
residents ($2/day) or 13 percent ($1/day), and one quarter of the total poor in
developing countries. For the same time period, 2002, almost half of the world’s
urban poor were in South Asia (46 percent) and another third in Sub-Saharan Africa
(SSA) (34 percent) for $1/day line. Using the $2/day line, these proportions were 40
percent for Africa and 22 percent for South Asia (SAS). The incidence of urban
poverty, or the share of poor as a proportion of the urban population, is highest for
South Asia and Sub Saharan Africa. Urban poverty incidence was notably lower in
East Asia and the Pacific (EAP), Eastern Europe and Central Asia (ECA) and Middle
East and North Africa (MENA) than the other regions reflecting initial conditions.
Latin America and the Caribbean (LAC) and ECA have the greatest proportion of

33
Urban Paper, Urban Poverty: A Global View Judy L. Baker THE World Bank Washington
D.C.2008, Pg.no.1,2

14
urban poor relative to the total poor, as a result of the high urbanization rates in these
regions. Overall, MENA has the lowest incidence and share of urban poverty.34

Table No.1.3
Urban Poverty Estimates, 2002, using $1.08/day and $2.15/day lines (in1993 PPP)
Region No. of No.of Headcount Headcount Index Urban share of Urban Urban
urban urban Index (%) (%)’ $2/day the poor$1.08/ share of share of
poor (in poor (in “$1/day” day the poor $ the
millions) millions) 2.15/day population
“$1/day” “$/day”
EAP 16 126 2.2 17.7 6.7 15.1 38.8
China 4 53 0.8 10.7 2.2 9.5 37.7
ECA 2 32 0.8 10.7 33.4 49.9 63.5
LAC 38 111 9.5 27.5 59.0 65.6 76.2
MNA 1 20 0.7 12.4 19.9 29.3 55.8
SAC 135 297 34.6 76.2 24.9 25.2 27.8
India 116 236 39.3 80.1 26.0 26.0 28.1
SSA 99 168 40.4 68.5 30.2 31.1 35.2
Total 291 752 13.2 34.0 24.6 26.4 42.3
Source: - Urban Paper, Urban Poverty: A Global View Judy L. Baker THE World Bank Washington
D.C.2008, Pg.no.3
B) URBAN POVERTY AND PROBLEMS:
People in urban areas are homeless and slum households are deprived of good
housing, they do not have access to clean water, hygienic systems of waste disposal
and live in polluted and degraded environments. Urban poverty is easily discernible
through lack of security of land tenure, access to affordable shelter and basic
amenities, particularly, health, education and social security. Urban poverty is linked
to the aspects of social inclusion, city-wide infrastructure and basic service delivery
systems, opportunities for skill development and employment, responsiveness of local
governance structures and policies and programmes impacting on urban environment,
Development and management. The bulk of the urban poor live in extremely deprived
conditions with insufficient physical amenities like low-cost water supply, sanitation,
sewerage, drainage, community centres and social services related to health care,
nutrition, pre-school and non-formal education.

34
Urban Paper, Urban Poverty: A Global View Judy L. Baker THE World Bank Washington D.C.
2008, Pg.no 2,.3

15
Workers engaged in the urban informal sector form the bulk of urban poor.
Workers in this sector get low wages or if they are self-employed, their income is
meager. A large section of this population consists of low-skilled migrants from
villages and smaller towns. Hence, for these people, right from the time of their entry
to the city they become a part of the informal sector as they have neither the skills nor
the opportunities to enter better-paid and more secure formal sector jobs. They thus
move from one level of poverty, at their place of origin, to another level of poverty, at
their destination. At the same time there is a growing section of workers in the formal
sector who have lost their jobs and are compelled to work in the informal sector. For
these people and their families this change means a reduction in their standard of
living and insecure, unregulated employment.35

C) THE DIFFERENT ASPECTS OF URBAN POVERTY

Jack (2006) lists inadequate income, problems of indebtedness, risky asset


base, inadequate shelter and ‘public’ infrastructure provisioning, increased health
burden and work burden, inadequate provision of basic services, limited or no safety
net, voicelessness and powerlessness (Table 1.4).

Table No. 1.4


THE DIFFERENT ASPECTS OF URBAN POVERTY
Inadequate income (and thus inadequate consumption of necessities including food
and, often, safe and sufficient water, often problems of indebtedness, with debt
repayments significantly reducing income available for necessities.)

Inadequate, unstable or risky asset base (non-material and material including


educational attainment and housing) for individuals, households or communities.

Inadequate shelter (typically poor quality, overcrowded and insecure).

Inadequate provision of ‘public’ infrastructure (piped water, sanitation, drainage,


roads, footpaths, etc.) which increases the health burden and often the work burden.

35
Design of Basic Services to Urban Poor (BSUP) Fund Study Report Assigned by Government of
India, Ministry of Housing and Urban Poverty Alleviation Conducted by Centre for Good
Governance Hyderabad December 2010, Page no.11,12

16
Inadequate provision of basic services such as, day care/schools/vocational training,
healthcare, emergency services public transport, communications, law enforcement.

Limited or no safety net to ensure basic consumption can be maintained when


income falls; also to ensure access to shelter and healthcare when these can no longer
be paid for.

Inadequate protection of poorer groups rights through the operation of the law:
including laws and regulations regarding civil and political rights, occupational health
and safety, pollution control environmental health, protection from violence and other
crimes, protection from discrimination and exploitation.

Poorer groups voicelessness and powerlessness within political systems and


bureaucratic structures, leading to little or no possibility of receiving entitlements; of
organizing, making demands and getting fair response; and of receiving support for
developing their own initiatives. Also, no means of ensuring accountability from aid
agencies, NGOs, public agencies and private utilities and being able to participate in
the definition and implementation of their urban poverty programmes.

Source: An Exploratory Analysis of Deprivation and Ill Health led Poverty in Urban India A Case
Study of Delhi, Samik Chowdhury, Aasha Kapur Mehta, Suparna Das, Sourabh Ghosh Indian
Institute of Public Administration, New Delhi, Chronic Poverty Research Centre,2011, page
no,8,9

Urban Poverty has received comparatively less attention even at a description


level. This is not to minimize the plight of the urban poor, many of whom live in
poverty stricken circumstances in large and growing urban slums, near garbage dumps
and along railroad tracks in overly crowded circumstances without proper sewage,
clean water, adequate housing or primary health care. Nevertheless, the problems of
the urban poor have more to do with the rapid growth of cities and the rapid
immigration from the countryside where conditions are even worse and chances of
being chronically poor are even higher. 36

Main Reasons for Urban Poverty

1) Migration of rural youth towards cities

36
John Malcolm Dowling, Yap Chin Fang Chronic Poverty In Asia –Causes consequences & Policies,
Singapore World Scientific Publishing Co. Pvt. Ltd. 2009, page no.35

17
2) Lack of vocational education or training

3) Limited job opportunities of employment in the cities

4) Lack of housing facilities.

5) Rapid increase in population 37

Urban poverty is intimately connected with rural poverty. Urban growth is a


result of

a) Natural increase in population

b) Net migration from rural areas to urban areas and

c) Reclassification of towns

The common notion that migration largely fuels urban growth is only partially
correct. Therefore, it is necessary to view urban poverty as distinct from rural poverty
and not as mere transfer of rural poverty into urban areas.

Urban Poverty leads to

1) Proliferation of slums and bustees

2) Fast growth of the informal sector

3) Increasing casualization of labour

4) Increasing pressure on civic services

5) Increasing educational deprivation and health contingencies. 38

1.9 POVERTY ALLEVIATION PROGRAMMES

There are various causes of poverty such as illiteracy, unemployment, lack of


infrastructure facilities and low standard of living etc. The alleviation of poverty has
been a major objective of planned development in India, especially since 6th Plan.39
Poverty can effectively be eradicated only when the poor start contributing to the
growth by their active involvement in the growth process. Implementation of the

37
Pratiyogita Darpan, Upkar Prakashan, Agra, 2012 Page no.77
38
Uma Kapila, Indian Economy-Issues in Development and Planning and Sectoral Aspects, Academic
Foundation, New Delhi, 2005. page no.217
39
Rumki Basu, Economic Liberalization and Poverty Alleviation, Deep & Deep Publication New Delhi
2000, page no.58

18
Programmes should be increasingly based on approaches and methods which involve
the poor themselves in the process of poverty eradication and economic growth. This
is possible through a process of social mobilization, encouraging participatory
approaches and institutions and empowerment of the poor.40

There is no doubt that growth is important for poverty reduction and pattern of
growth has a specific role in this process. At the same time, it is also recognized that
growth is necessary but not sufficient for removing poverty. Some poor are able to
take up the opportunity offered by a growing economy, while some others are not, due
to inadequacy of their capabilities in terms of resource endowment, skills and access
to the system providing the opportunities. That is why programmes either to directly
redistribute assets and incomes or to increase capabilities through public spending
directed towards the poor have always been a part of public policy, not only with a
view to alleviating poverty, but also for ensuring social justice and equity. A Large
number of such programmes have been in operation in India, some on a continuous
basis, others from time to time.

Programmes specifically designated as anti- poverty Programmes have aimed


to help the poor raise their incomes through provision of gainful employment. They
have broadly two kinds:

1) Assisting the poor to acquire assets and or start business enterprise to create self-
employment,

2) Providing wage employment mostly in public works to supplement incomes of the


poor.41 There is urgent need in the country to remove the poverty. So that the
citizens of the country can fulfill their minimum needs and contribute in increasing
the productivity in all the sectors of the economy and thus resulting in overall
economic development.

Care must be taken to remove the specific problems of a particular state or


region which is responsible for poverty there. Side by side only bringing a person
above poverty line is not sufficient without providing him basic needs. Emphasis

40
Uma Kapila, Indian Economy-Issues in Development and Planning and Sectoral Aspects, Academic
Foundation, New Delhi, 2005, page no.206
41
Uma Kapila, India’s Economic Development, since 1947, Academic Foundation, Delhi 2008.
Pg. No, 301

19
should be not only on increasing his income but also providing him sufficient caloric
intake, regular and permanent employment source, better health facilities and
development of overall social infrastructure.42

To reduce poverty, employment generation is an essential step. The List of


various Development and employment Programmes in India is as follow:

LIST OF VARIOUS DEVELOPMENT AND EMPLOYMENT PROGRAMMES IN INDIA

Sr.No. Programmes Year


1 Drought-prone Area Programme 1973
2 Twenty-point Programme (TPP) 1975
3 Food For Work Programme 1977-78
4 Antyodaya Yojana 1977-78
5 Training Rural Youth For Self–Employment (TRYSEM) 1979
6 Integrated Rural Development Programme (IRDP) 1980
7 National Rural Employment Programme (NREP) 1980
8 Development Of Women And Children In Rural Areas 1982
(DWCRA)
9 Self-Employment To The Educated Unemployed Youth 1983-84
(SEEUY)
10 Self–Employment Programme For The Urban Poor (SEP-UP) 1986
11 Jawahara Rozgar Yojana 1989
12 Nehru Rozgar Yojana 1989
13 Scheme of Urban Micro-Enterprises 1990
14 Scheme of Urban Wage Employment 1990
15 Employment Assurance Scheme 1993
16 Prime Minister Integrated Urban Poverty Eradication program 1993
me
17 National Social Assistance Programme 1995
18 Swarana Jayanti Shahari Rozgar Yojana 1997
19 Swarana Jayanti Gram Swa - Rozgar Yojana 1999

42
K. Nageswara Rao, Poverty in India Global and Regional Dimensions Deep & Deep Publication
2005, page no,216,217

20
20 Janashree Bima Yojana 2000
21 Pradhan Mantri Gramodaya Yojana 2000
22 Antyodaya Anna Yojana 2000
23 Sampurna Gram in Rozgar Yojana 2001
24 Valmiki Ambedkar Awas Yojana 2001
25 Jawaharlal National Urban Renewal Mission 2005
26 National Rural Employment Guarantee Scheme (MNREGA) 2006
Source: Pratiyogita Darpan, General Studies Indian Economy Upkar Prakashan Agra, 2012
Pg.No.206-208.

Some important Programmes started by Government of India for generating


employment and reducing incidence of poverty are summarized as follows:

A) NATIONAL RURAL LIVELIHOOD MISSION (Swarna Jayanti Gram Swarojgar


Yojana)

Government of India has decided to restructure Swarna Jayanti Gram


Swarojgar Yojana (SGSY) as National Rural Livelihood Mission (NRLM).
Accordingly, State Government is implementing the scheme in the form of
Maharashtra State Rural Livelihood Mission (MSRLM) since 2011. Main objective of
the Mission is to reduce poverty through building strong institutions for the poor at
grass root level which will enable them to access gainful self-employment and skilled
wage employment opportunities resulting in appreciable increase in their income on a
sustainable basis. It is implemented as NRLM-Intensive in 10 districts having lowest
Human Development Index and as NRLM-Non-intensive in rest of the districts.
Under this scheme, during 2012-13 upto December, total loan of ` 6.13 crore and
subsidy of ` 2.33 crore was disbursed to 1,417 individual swarojgaries, whereas
` 45.33 crore and subsidy of ` 16.47 crore was disbursed to 1,568 SHGs.43

B)SAMPOORNA GRAMEEN ROZGAR YOJANA

The Sampoorna Grameen Rozgar Yojana has been launched in September


2001.This scheme aims at providing additional wage employment with food security,
creation of durable community, social and economic assets and infrastructure
development in the rural areas. While preference was given to BPL families for

43
Economic Survey of Maharashtra, 2012-13, p.no. 188

21
providing wage employment. During 2001-02, 22 lakh tons of rice and 12.49 lakh
tons of wheat were allocated under this scheme.44

C) ANTOYODAY ANNA YOJANA

This Yojana was launched on December 25, 2001 by the Prime Minister.
Under the scheme 1 crore poorest families out of the BPL families covered under the
targeted public distribution are identified. 25 kgs. of food grains were made available
to each eligible family at a highly subsidies rate of ` 2 per kg. for wheat and ` 3 per
kg. for rice.45

The states are required to bear the distribution, cost, including margin to
dealers and retailers as well as the transportation cost. The scale of issue that was
initially 25 kg. per family per month has been increased to 35 kg. per family per
month with effect from 1st April 2002.46

D) MAHATMAGANDHI NATIONAL RURAL EMPLOYMENT GUARANTEE


SCHEME. (MGNREGS)

National Rural Employment Guarantee Act (NREGA) is being implemented


in all districts except Mumbai city and Mumbai Suburban districts as Mahatma
Gandhi National Rural Employment Guarantee Act (MGNREGA). It is the
combination of NREGA and old Employment Guarantee Scheme (EGS) which was
exclusively implemented by the State. The scheme with its legal framework and
rights-based approach, aims at enhancing livelihood security by providing guaranteed
wage employment of at least 100 days from Central fund and GoM bear expenditure
on wages for more than 100 days in a financial year to every registered rural
household whose adult member volunteers to do unskilled manual work. It also
mandates 33 per cent participation for women.47

E) SWARNA JAYANTI SHAHARI ROZGAR YOJANA

This scheme covers the urban self-employment programme and the urban
wage employment programme. It replaced various Programmes operating earlier for

44
Suresh Chand, Aggarwal, Rashmi Agrawal, Rakesh Shahani, Indian Economic Development and
Business Emerging Issues and outlook, New Century Publications, New Delhi, India, 2005. Page
no119
45
ibid. Page no121
46
Pratiyogita Darpan, Upkar Prakashan, Agra, 2012 Pg. no.190
47
Economic Survey of Maharashtra, 2012-13, p.no. 187

22
reduction of urban poverty. The Government has recently revamped the SJSRY with
effect from April 1, 2009.The scheme provides gainful employment ventures by the
urban poor and also providing wage employment and utilizing their labour for
construction of socially and economically useful public assets.48

1.10 ESTIMATES OF POVERTYIN INDIA


The Planning Commission has been estimating the incidence of poverty at the
national and state level using the methodology contained in the report of the Expert
Group on Estimation of Proportion and Number of poor and applying it to
consumption expenditure data from the large sample surveys on consumer
expenditure conducted by the NSSO at an interval of approximately five years. On
this basis, comparable estimates of poverty are available at national and state level
from 1973-74 onwards.

Table No. 1.5


Estimates of Poverty in India
Year All India Rural Urban
All India Poverty Rural N0 Poverty Urban No. Poverty
No. (Million) Ratio in in Ratio in (%) (million) Ratio in
(%) (Million) (%)
1973-74 321 54.9% 261 56.4% 60 49.0
1977-78 329 51.3% 244 53.1% 65 45.2
1983 323 44.5% 252 45.7% 71 40.8
1987-88 307 38.9% 232 39.1% 75 38.2
1993-94 320 36.0% 244 37.3% 76 32.4
1999-2000 260 26.1% 193 27.1% 67 23.6
2007 220 19.3% 170 21.1% 49 15.1
Source: - India’s Economic Development, since 1947, Uma Kapila, Academic Foundation, Delhi
2008.Pg.No.291

As per the estimates of poverty by the Planning Commission, based on the 55th
Round of NSSO covering the period July 1999 to June 2000, in the last two decades
there was a significant decline in proportion of people living below poverty line from
51.3 percent in 1977-78 to 26.1 percent in 1999-2000. In absolute terms, the number
of the poor declined from 328.9 million in 1977-78 to 260.3 million in 1999-2000.

48
Pratiyogita Darpan, Upkar Prakashan, Agra, 2012 page no.189

23
The Tenth Plan (2002-07) set a target of reduction in poverty ratio by five
percentage points to 19.3 per cent by 2007 and by 15 percentage points by 2012.The
targets for rural and urban poverty in 20007 are 21.1 percent and 15.1 per cent
respectively.49

SUMMARY :
The Present chapter is based on definitions, concept, nature and types of
poverty. This chapter focuses on concept of Poverty and Poverty Alleviation
Programmes. Poverty continues to be the most important problem in the Indian
economy. The meaning of poverty is clearly mentioned in this chapter. Various
definition about poverty are included in this chapter viz, World Bank, United Nations,
Amarty Sen etc. As Poverty is considered as a relative concept, no individual or
country is absolutely poor or rich. The definition of poverty in terms of subsistence
level of living is widely accepted.

The poverty line is drawn at the minimum income which is necessary to


purchase the minimum income which is necessary to purchase the minimum
nutritional flows. This line varies between countries at a time and in the same country
over a period of time. Several economists and organizations have conducted studies
on the extent of poverty in India. It would be worthwhile to study some of the
important estimates are included Mr. P. D. Ojha, Dr. V. M. Dandekar and
Mr. Nilkantha Rath, Mr. B. S. Minhas, Mr. Montek Ahluwalia, World Bank, Planning
Commission, Mr. S. D. Tendulkar etc.

This chapter includes the types of poverty i.e. Absolute and Relative Poverty.
Relative Poverty views poverty as socially defined and dependent on social context
hence relative poverty is a measure of income inequality. This chapter emphasizes on
Urban Poverty. The scope of urban poverty, urban poverty and problem, different
aspects of urban poverty, multidimensional nature of urban poverty includes in this
chapter. The basic reasons of creating poverty in rural and urban areas are clearly
mentioned. The alleviation of poverty has been a major objective of planned
development in India. Several Poverty alleviation and employment generation
programmes are being implemented by the Government. Some important Programmes

49
Uma Kapila, India’s Economic Development, since 1947, Academic Foundation, Delhi 2008. Pg.No.
291,292

24
are National Rural Livelihood Mission, Swarna Jayanti Gram Swa- Rozgar Yojana,
Sampoorna Grameen Rozgar Yojana, Prime Ministers Employment Generation
Programmes, Valmiki Ambedkar Awas Yojana, Swarna Jayanti Shahari Rozgar Yojana
etc.

Several economists and organizations are significant contributors to estimate


the poverty in India. As per the estimates of poverty by the Planning Commission, in
absolute terms, the number of the poor declined from 328.9 million in 1977-78 to
260.3 million in 1999-2000. The Tenth Plan [2002-07} set a target of reduction in
poverty ratio by five percentage points to 19.3 per cent by 2007 and by 15 percentage
points by 2012. The targets for rural and urban poverty in 2007 are 21.1 per cent and
15.1 per cent respectively.

25
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***

28

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