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Poverty in India: Reasons, Responses, Solutions

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This topic of “Poverty in India: Reasons, Responses, Solutions” is important from the perspective of the UPSC IAS Examination , which falls under General Studies Portion.

What is Poverty?

• Prior to the 1990s when India was a closed economy, the public distribution system provided necessary resources to all the citizens. However, due to the financial constraints and policy changes after the commencement of Globalisation in India, the government provided necessary resources to the target population i.e., those who deserve governmental assistance.
• This lead to the Government’s adoption of the Targeted Public Distribution System. That is, the Government provided subsidised food to those who come under Below Poverty Line.
• It is difficult to give the exact definition of poverty as it has numerous causes and characteristics. It differs from nation-nation, urban-rural, etc. in other words, the definitions of poverty are based on perspectives.
• However, the general idea is that when an individual has lesser accessibility and affordability to certain essentials like food, clothes, a place to live, healthcare, education, etc., then he is said to be living in poverty.
• The UN and the World Bank calculate poverty through Purchasing Power Parity and nominal relative basis.
• Therefore the poverty estimation differs during varying perceptions.

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How was poverty estimated in India?

Estimation of poverty in british india:.

• In India, the first-ever Poverty estimation was done by Dadabhai Naoroji in 1901 which was published in his book “Poverty and Un-British Rule in India”
• The National Planning Committee of 1936 has estimated poverty in India during the Colonial rule. It calculated poverty linking nutrition, clothing, and housing. This method was used in Independent India also. The poverty estimation by the National Planning Committee showed a grim picture of British India’s Economy

Estimation of poverty in Independent India:

• A working group was set up in 1962 to estimate the poverty line of the country.
• This estimation was based on the minimum calories required to survive and the cost estimates of the minimum calories in Rural India. According to this, the average poverty line is Rs.20 per month. Based on 1960-61 prices.
• Alagh Committee: Until 1979, poverty was calculated based on the income of the citizens. In 1979, based on the recommendation by a committee headed by Y K Alagh, poverty was estimated based on the calories consumed by the population. According to the committee, poverty estimation differs in rural and urban areas. In the rural area, if a resident consumes less than 2400 calories per day, then he/ she belongs BPL population. In an urban area, if a resident consumes less than 2100 calories per day then he/she suffers from poverty. This is an assumption that the urban population needs lesser calories as they are not involved in physical works like that of the rural population. The Alagh committee was the first in India to define the poverty line.
• Lakdawala Formula: This was proposed by Lakdawala Committee that was headed by D.T.Lakdawala. This is also based on household per capita expenditure. Lakdawala committee used the same method used by the Alagh committee. However, it included certain criteria that were missing in the latter. Health and education were considered during the estimation. This committee used CPI-IL (Consumer price index for Industrial Labourers) and CPI-AL (Consumer price index for Agricultural labourers to determine the poverty line. In this method, the average of the minimum necessary per capita household expenditure is calculated to estimate the poor. The obtained value is the base for the poverty line and anyone who lives in a household with per capita expenditure lesser than the obtained average belongs to the BPL. Through this method, it was estimated that 36% of the population were BPL in 2004-2005 and 22% of the population under BPL in 2011. Poverty in India was estimated using this method until 2011.
• Suresh Tendulkar Committee: This committee was set up by the Planning commission in 2005. The methods recommended by this committee are used in the current times. It urged the shift from a calorie-based model and inclusion of monthly expenditure on education, health, electricity, and transport. It introduced the new term “Poverty Line Basket” to determine and estimate poverty. It called for the uniformity of the poverty line basket for both urban and rural areas. If a person does not have access to any of the goods mentioned under the poverty basket then he/she is suffering from poverty. This method uses the cost of living as the basis for identifying poverty. However, the resulted estimation was very low and resulting in public outcry. This lead to the formation of the Rangarajan Committee.
• Rangarajan Committee: Formed in the year 2012, this committee was chaired by Rangarajan. This too adopted calorie-based calculation of the poverty level. This had limitations as it calculated only the absolute minimum necessities. This did not include comfortable living standards as a necessity.
• Current status of poverty line estimation: The above cases show the complexity and difficulty in the determination of the poverty line. Currently, the Indian government still hasn’t found a solid solution to estimate the poverty level of the country. The task was given a 14 member task force headed by NITI Aayog vice-chairman, Aravind Panagaria. They too have failed and have recommended setting up of a new specialised panel to debate the issue.

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What are the causes of poverty (Indian perspective)?

• Colonial exploitation: India under the colonial hegemony was forced to de-industrialize resulting in increased raw material production and a decrease in the export of value-added goods like traditional handicrafts and textiles. The natives were forced to buy British goods, thus discouraging them from manufacturing indigenously. This led to massive unemployment. The droughts, diseases, and others increased the plight of the Indians during that time.
• Increase in the population : the rapid increase in the population due to a decrease in the mortality rate and an increase in the birth rate can be an asset for the Indian economy. However, in the present scenario, this is turning out to be a liability due to massive unemployment and an increase in the dependence on those working populations. The massive population must be converted to human capital to promote the growth of the economy.
• Natural Calamities : In India, the maximum of the population who belong to BPL is from states of Bihar, Jharkhand, Odisha, Madhya Pradesh, Chattisgarh, Uttar Pradesh, and Uttarakhand. The reason behind this is that these states are prone to natural disasters and also most of the population in these states are from SC/STs thus making them unrepresented. The natural calamities in these states hamper the agricultural progress and economic development of these states.
• The rise of unorganised sectors : many sectors in the Indian economy are unorganised. This brings in the problem of labour exploitation. The increase in demand for work also causes job insecurities.
• Failing Agricultural sector : the agricultural sector is one of the most vulnerable sectors of the Indian economy. Farmer suicides and protests are on the rise due to the increasing debt and decrease in production. This, in the long run, would result in them suffering from poverty. This sector employs a maximum of the Indian population but provides little profit.
• Lack of investment : The investment provides more job opportunities. For this, the Indian economy must be favourable for foreign investment. However, some parts of India remain unfavourable due to corruption , political instability, militancy etc.
• Social factors : Illiteracy, unrepresented minorities, social norms, caste systems are still prevalent in certain parts of India.
• Lack of skilled labour : the population can be an asset to the economy if it is utilized efficiently. This can be done through human capitalization. Measures to improve the literacy of the population are very slow. Some, due to the lack of sufficient skills are not accepted in the workforce. This results in unemployment and poverty.
• Corruption: Many measures have been taken by the government to eliminate poverty. However, there is still a lack of political will. The corruption by those in power also contributes to poverty.
• Inefficient use of resources : India is a country that has abundant natural resources which, if utilized efficiently, without wastage, can be turned into an asset.
• Lack of entrepreneurship : There are many activities in India that can be of asset to the economy. For example, some tribes have rich art and culture which can be utilized for the tribes’ growth and development through proper entrepreneurship. However, due to a lack of leadership and entrepreneurial skills, they go to waste. The tribes remain one of the most vulnerable sections of Indian society.
• Lack of infrastructure : Many parts of India still remain isolated despite the rapid economic growth. There are several villages in India that still don’t have access to basic commodities like electricity, thus resulting in poor standards of living. They don’t even have proper roads or railways. Their contribution to the economy goes to waste due to inaccessibility.
• Recession induced by coronavirus pandemic .

What is the current status?

• The 2019 Global Multidimensional Poverty Index published by the UN Development Program has estimated that multidimensional poverty in India has fallen by 27.5% between 2005-06 and 2015-16. Multidimensional poverty means the estimation of poor not only based on income but also several factors such as poor health, poor working conditions, etc.
• According to World Poverty Clock , close to 44 Indians are escaping from extreme poverty each minute.
• As of 2011, 21.9% of the Indian population belongs below the poverty line.
• The unemployment rate as of April 2021 is 7.1%. This is a huge problem as unemployment is the direct cause of poverty in the country. The recent years saw a rapid increase in infrastructural developments like roads and housing projects for the alleviation of the poor. This might help boost investments in the country increasing job opportunities.
• According to a World Bank working paper, extreme poverty in India dropped to 10.2%  in the  pre-Covid year of 2019  from as much as  22.5% in 2011  .

Covid induced poverty according to Pew report

• The poverty rate in India likely increases to 9.7% in 2020, up sharply from the January 2020 forecast of 4.3%.
• From 2011 to 2019, the number of poor in India was estimated to have decreased to 78 million from 340 million.
• Poor: People with incomes of USD 2 or less a day.
• Increase in India accounts for nearly 60% of the global increase in poverty.
• Record increase in  Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)  participants as proof that the poor were struggling to find work.
• Middle Class: people with incomes of around Rs. 700-1,500 or USD 10-20 per day.
• The middle-income group is likely to have decreased from almost 10 crores to just 6.6 crores.
• The huge majority of India’s population falls into the low-income group.
• Low Income Group: people earning about Rs.150 to 700 per day.
• Rich: Includes the people who earn more than Rs.1,500 a day.
• The lockdown triggered by the pandemic resulted in shut businesses, lost jobs, and falling incomes, plunging the Indian economy into a deep recession.

What are the measures taken by the government to alleviate poverty?

• Swarnajayanti Gram Swarozgar Yojana :
• It was launched on April 1, 1999.
• This program merged Integrated Rural Development Program, Training of Rural Youth for Self Employment (TRYSEM), Development of Women and Children in Rural Areas (DWCRA), Million Wells Scheme (MWS), Supply of Improved Toolkits to Rural Artisans (SITRA) and Ganga Kalyan Yojana.
• Its objective is to alleviate the beneficiaries from BPL.
• It helps promote the self-employment of the rural poor.
• The fund sharing between the Centre and the State is at the ratio of 75:25.
• This scheme aims at working in clusters to provide inclusive and effective aid to the rural poor.
• The rural poor are organized into SHGs to provide training, capacity building and providing assets to generate income.
• This scheme was renamed as National Rural Livelihood Mission in 2011.
• This was finally merged to Deen Dayal Upadhyaya Antyodyaya Yojana to provide skills training for the poor. This scheme also provides subsidies and shelters for the homeless. The vendor markets are developed to promote job in the rural areas.
• Jawahar Gram Samriddhi Yojana:
• This scheme replaced the erstwhile Jawahar Rozgar Scheme.
• It was launched in April 1999 to generate employment in rural areas through infrastructure development.
• Pradhan Mantri Awaas Yojana:
• It has two components: Pradhan Mantri Awaas Yojana (Grameen) and Pradhan Mantri Awaas Yojana (Urban)
• It was launched in 2015.
• It unites schemes like Ujjwala yojana (provides LPG to BPL), access to toilets, water, drinking water facilities and Saubhagya Yojana (electricity).
• Mahatma Gandhi National Rural Employment Guarantee Act,2005:
• Launched on February 2, 2005
• It provides 100 days of guaranteed employment to rural households.
• 1/3 rd of the jobs reserved for women.
• If the jobs are not available for the applicants, and they were without jobs within 15 days, then they will be given unemployment allowance.
• This guarantees employment opportunities to the rural population and accountability of the government.
• Under this, National Food for Work, which was launched in 2004 was subsumed in 2006.
• The National Food for Work provided additional resources and assistance that are absent under Sampoorna Grameen Rozgar Yojana. Under this program, 150 districts were identified as backward by the Planning Commission. They were the beneficiaries of this program. Food security , employment through need-based social, economic, and community assets
• Pradhan Mantri Kaushal Vikas Yojana :
• Launched by the Ministry of Skills Development and Entrepreneurship in 2015.
• It is a scheme aimed at the enhancement of skills based on the demand of the economy.
• This scheme is implemented through Nation Skill Development Corporation (NSBC).
• Training and assessment fees are paid by the government.
• The training provided under this scheme is based on National Skill Qualification Framework and industry-level standards.
• The beneficiaries include college graduates and school/ college dropouts.
• Rythu Bandhu Scheme: This was a scheme implemented in Telangana to provide financial assistance of Rs.4000 per acre per season to all land-owning farmers.
• Pradhan Mantri Kisan Samman Nidhi : This scheme aims to provide financial assistance to provide working capital support to all the landholding farmers. This brings in the idea of universal basic income for the farmers in India. Read more
• Social security schemes
• Atmanirbhar bharat abhiyan
• Production linked incentive scheme
• Garib kalyan rojgar abhiyaan

Way Forward:

• The government must provide transparency and accountability to various organizations that are responsible for the implementation of the Welfare Schemes.
• Infrastructure development and skills development must be made a top priority.
• More govt expenditure in health, nutrition, and education.
• The problem of the inability to determine the poverty line must be resolved to help the target population.
• Direct income transfer to the needy is an immediate solution. Universal Basic Income should also be considered.
• Investment in Agriculture by the government is necessary to decrease rural poverty. Subsidies address only short-term issues. Also, there is a need to develop technologies, with the help of which farmers can practice all-weather agriculture.
• Employment-oriented growth:  create jobs in modern sectors and promote labour-intensive industries.
• Reduce corruption for efficient service delivery.
• Resilience for poor households to withstand major shocks: through holistic, multi-faceted intervention designed to help people lift themselves from extreme poverty by providing them with the tools, skills, and resources required to deal with the challenges that keep them trapped in a state of destitution. In addition to providing assets such as livestock, the government should also provide livelihood and financial skills training to make these assets productive; personal coaching to instill confidence and hope; basic health care for families, and more.

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Poverty and Developmental Issues

Last updated on February 25, 2024 by ClearIAS Team

Persistent and unchecked poverty and developmental issues associated with it are one of the ironies of the technologically progressing world. Why does poverty still exist? What are the types of poverty existing in the world? How is poverty estimated in India? What are the measures to tackle it? Read on to know more.

Poverty is a complex phenomenon in which an individual or group lacks the means of subsistence and other basic necessities.

The World Bank defines poverty as a severe lack of well-being that has several dimensions.

Low salaries and the inability to obtain the fundamental goods and services required for humane survival are examples of this. Low levels of health and education, poor access to sanitary facilities, insufficient physical security, lack of voice, and lack of resources are all included in the definition of poverty.

Table of Contents

Types of Poverty

Poverty can be categorised in the following ways based on social, economic, and political factors:

1. Absolute poverty

It describes a state in which a person consistently falls short of earning enough money to cover at least one or more essential expenses for a long time. It can be calculated in terms of money, calories, or nutritional attainment.

For example, Families that are unable to feed their children and themselves, as well as homeless persons living on the streets, are examples of absolute poverty.

2. Relative poverty

It happens when people do not have the minimal level of living standards that are set by the government and are enjoyed by the majority of the population and vary from country to country. It is thought to be on the rise and may never completely disappear.

For example, A person living in a wealthy culture may have a regular income and all of the essentials of life, but because they do not have as many luxuries as other members of the community, relative poverty is defined in the UK as income that is 50% below average salaries.

3. Situational Poverty

It is a form of temporary poverty predicated by the occurrence of a negative event like an environmental catastrophe, a job loss, or a serious health issue.

People are capable of helping themselves even with modest assistance because poverty is the result of unfavourable circumstances.

Also read: Economic and Social Development – Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc.

4. Generational Poverty

It is passed down from one generation to the next to individuals and families.

This is more challenging because there is no way out because everyone is caught up in the root of the problem and lacks access to the necessary resources.

5. Rural Poverty

This happens in rural locations where there are fewer job prospects, services to access, support for people with impairments, and opportunities for a good education.

Most of the locals depend on farming and other clerical labour that is available in the area to make a living.

6. Urban Poverty

The main difficulties urban residents confront as a result of poverty include:

Having trouble accessing health care and education

Poor housing and services

Due to congestion, the environment is violent and unpleasant a weak or nonexistent social safety net.

Also read: Urban Poverty

Poverty Estimation

Pre-independence poverty estimation.

The oldest calculation of the poverty line was done by Dadabhai Naoroji in his book “Poverty and unBritish Rule in India.”

This estimate was made based on the price of subsistence or minimally adequate food.

National Planning Committee (1938)

This committee, which was established under the leadership of Jawaharlal Nehru, proposed a poverty line based on a minimal quality of living, ranging from $15 to $20 per person per month.

The Bombay Plan (1944)

Supporters of the Bombay Plan1 proposed a poverty limit of $75 per person per year, which was far lower than the National Planning Committee’s estimate.

Post-Independence Poverty Estimation

Planning Commission (1962)

The Planning Commission formed the Planning Commission Expert Group in 1962, and it was this group that developed the distinct poverty lines for rural and urban areas Rs.20 and Rs.25 per capita per year respectively.

Y. K. Alagh Committee (1979)

The accurate measurement of poverty based on starvation was decided.

A committee made a suggestion based on the fact that impoverished people are those who consume less than 2,100 calories in urban regions and less than 2,400 calories in rural areas, respectively.

Lakdawala Committee (1993)

The following recommendations were made by an expert group, led by D.T. Lakdawala, which was formed to assess the technique for estimating poverty: As in the past, calorie consumption should serve as the basis for calculating consumption expenditure;

Poverty lines should be created for each state and updated using the Consumer Price Index of Agricultural Labor (CPI-AL) in rural regions and the Consumer Price Index of Industrial Workers (CPI-IW) in urban areas;

The stoppage of “scaling” poverty statistics based on National Accounts Statistics

Suresh Tendulkar Committee (2005)

The recommendations made by this committee serve as the foundation for the current poverty estimates.

This committee suggested abandoning the calorie-based approach and broadening the definition of poverty by taking into account monthly expenditures on power, transportation, health care, and education.

It advocated for nutrient intake as opposed to calorie intake. A line based on the cost of living was also drawn by the committee. In rural and urban areas, the Tendulkar panel set a baseline daily per capita spending of Rs. 27 and Rs. 33, respectively.

C. Rangarajan Committee (2012-14)

The committee increased the cost of living per day for rural and urban areas, respectively, to Rs. 32 and Rs. 47. As a result, India’s poverty rate was close to 30% and its total population was near to 40 crores.

Arvind Panagariya Task Force (2015)

A committee to identify people “Below Poverty Line (BPL)” was suggested by the task group.    The study discusses four methods for tracking the impoverished, starting with maintaining the Tendulkar poverty line.

Next, move to the Rangarajan or other higher rural and urban poverty levels.

Third, follow-up data on the bottom 30% of the population over time

Fourth, keeping track of the bottom 30%’s performance on particular metrics like housing, sanitization, electricity, dietary intake, etc.

NITI Aayog Task Force

NITI Aayog has emphasised that the poverty level will only be used to assess progress in addressing poverty rather than identifying the poor for entitlements in order to allay concerns that many poor people would be left behind if the Tendulkar Committee’s poverty line is adopted.

Multidimensional Poverty Index by Niti Ayog

A Multidimensional Poverty Index Coordination Committee (MPICC) has been established by NITI Aayog with representatives from pertinent Line Ministries and Departments.

The competition between states is intended to compel states to adopt drastic measures to reduce poverty.

The UNDP’s Multidimensional Poverty Index is also anticipated to be influenced by the findings (MPI).

Why does poverty still exist?

The heavy pressure on the population.

India has 84.63 billion people in 1991 and 102.87 billion in 2001.

The excessive subdivision and holdings fragmentation that results from rapid population increase. As a result, there is significantly less land available per person, and households lack access to enough land to meet their needs for productivity and revenue.

Since 1951, India’s population has been expanding quickly, which has resulted in a slower increase in per capita income and decreased living standards for the populace.

Unemployment and underemployment

In India, there is persistent unemployment and underemployment as a result of the country’s ongoing population growth.

Poverty is merely a reflection of this element, and there is educated unemployment as well as concealed unemployment.

Lack of Inclusive Economic Growth

The lack of adequate economic growth in India is the primary factor contributing to the country’s widespread poverty.

Since India gained independence, the national income and savings rate has increased, but poverty has not decreased as much as it could have because industrial expansion has not produced enough job possibilities.

Growth strategies benefited the wealthy more than they did the poor.

Failure to enact land reforms

Fair access to land is a crucial component of the fight against poverty.

The majority of rural poor people work as agricultural labourers (who typically lack land) and are independent small farmers with less than 2 acres of land.

Additionally, they are unable to find work all year long. As a result, they work too little and are unemployed for a lot of days each year.

Inflation and Food Prices

The cost of the minimal consumer expenditure necessary to meet basic necessities increases due to inflation , notably given the increase in food costs. As a result, many households are forced below the poverty line by inflation.

Shortage of Capital and Able Entrepreneurship

The ability to start your own business and have money both play a big part in driving growth. However, compared to other developing countries, these are scarce, making a large rise in output difficult.

Social Factors

The social structure is still outdated and does not encourage rapid development.

Inheritance laws, the caste system, traditions, and conventions are impeding rapid progress and making the poverty issue worse.

Climatic variables

India’s hot climate makes it harder for individuals, particularly rural residents, to work, which has a negative impact on productivity.

Frequent floods, famines, earthquakes, and cyclone harm agriculture severely; as a result, food prices rise and access becomes increasingly difficult, increasing the risk of poverty for many.

Moreover, the agricultural production of the nation is adversely impacted by the lack of timely rain, heavy rain, or insufficient rain.

Political elements

The process of granting concessions and eradicating poverty is disrupted by ethnic issues and conflict between two regional parties. The main reason for concern about India’s poverty is that various development programmes are being driven by political interests. As a result, efforts to address the issues of unemployment and poverty have been ineffective.

Actions to address issues of Poverty and developmental issues

More citizen participation.

Any programme cannot be implemented successfully without the poor’s engaged participation.

Only until the impoverished begin actively participating in the growth process and contributing to growth can poverty be truly erased.

This is made feasible by a social mobilisation approach that empowers the underprivileged by promoting their participation.

Accelerating Economic Growth

While attempts should be made to hasten economic growth, it is best to avoid importing capital-intensive technologies from Western nations.

Instead, we should pursue a path of economic growth that requires lots of labour.

Adopting monetary and fiscal measures that encourage the use of labour-intensive methods is necessary.

Growth of Non-Farm Employment

The growth of non-farm employment in rural areas is particularly important for reducing poverty.

It is possible to generate non-farm jobs in marketing, transportation, handicrafts, dairying, forestry, food processing, other agricultural product processing, repair businesses, etc.

Providing access to more assets to vulnerable sections

Reduce rural poverty through redistributing land through practical means, such as the implementation of tenancy reforms to provide security of tenure and the determination of reasonable rent.

Institutional Credit Access

The conditions enabling small farmers to acquire access to productive resources, such as HYV seeds fertilisers, and installation of minor irrigation, such as wells and tube wells, can be created through the availability of loans to the poor on easy terms.

Small farmers will be able to employ high-yielding technologies as a result, increasing their productivity.

Poverty Alleviation Schemes

National urban livelihoods mission: deen dayal antyodaya yojana (day-nulm).

• Housing and Urban Affairs Ministry
• Provide skill development and loans for self-employment to urban disadvantaged people Government interest subsidies are made through the PAISA Portal.
• Create markets for vendors in cities.
• shelters for the homeless

National Rural Livelihoods Mission: Deen Dayal Antidaya Yojana (DAY-NRLM)

• Rural Development Ministry
• Bring at least one woman from each low-income household, and provide them with training and funding for businesses making candles, soap, crafts, etc.
• They’ll work for themselves or for a skilled wage, which will bring in more money than working as farm labourers.

Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDUGKY-2014)

• Provides rural youth aged 15 to 35 with FREE skill training.
• At least 75% of trained candidates will be guaranteed a job.
• Cover Left-Wing Extremist (LWE) districts and youth in North Eastern States.

Aajeevika Grameen Express Yojana (AGEY-2017)

Interest-free loans are provided to SHGs and Community Based Organizations (CBOs) to purchase public transportation vehicles so they can make money transporting passengers.

Disha Committee (2016)

• For effective and timely development, the Ministry of Rural Development has established the District Development Coordination and Monitoring Committee (DISHA), which is made up of elected representatives from the local governments (PRI, ULB, State Assembly, and Parliament).
• They will check on the progress of the plans at a quarterly meeting.
• The senior-most Lok Sabha member from the designated district will serve as head of the DISHA Committee. To carry out the Committee’s instructions, DM/Collector(IAS) will serve as the member secretary.

Mission Antyodaya (2017)

• Ministry of Rural Development
• Here, the government will use the assistance of the Gram Panchayat, NGOs, SHGs, ASHA workers, etc. to more vigilantly and accountable implement the other ongoing programmes.
• By 2020, at least 50,000 Gram Panchayats will be free of poverty.

The major goal of all of our development programmes had been to encourage quick, balanced economic growth that was both equitable and socially just. However, not all groups of individuals have benefited from our policies and actions. The constitution’s promise and our ancestors’ hopes for an equitable society have not been realised. It’s time to consider unconventional approaches to ending poverty because while some regions and certain economic sectors have reached a level of social and economic growth that allows them to compete with industrialised nations, many others have been unable to escape the cycle of poverty.

Article Written By: Aryadevi

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Poverty in India: Poverty and Poverty Estimation In India

Table of Contents

Poverty in India: Indices

Poverty in India is calculated through various indices. Prominent of these indices are the Global Hunger Index (GHI) and Multidimensional Poverty Index (MPI), which are discussed below:

Calculation of Poverty in India through MPI and GHI:

1. multidimensional index : (by amartya sen).

• It was started in 1997. • It is published by the United Nation Development Programme (UNDP).

Dimensions-

• Health- Infant mortality rate,  Malnutrition
• Education- Enrollment Ratio, Year of passing
• Living standard- Flooring, Fuel, Electricity, Water, Toilets, Cooking fuel

• United Nations adopted this index in 2010 under the HDR report.

2. Global Hunger Index:-

Published by the International Food Policy Research Institute (IFPRI).

• % of Undernourished in total population
• Child Wasting
• Child Stunting
• Children mortality rate under 5

Poverty in India: Poverty Measurement in India :

1. The first step was taken by Dadabhai Naoroji in his book “Poverty and Un-British Rule in India” in 1901.

2. In Independent India, the concept of poverty was first introduced by the working group of the Planning Commission in 1962.

3. Taskforce considered the income of households as a basis to measure poverty in India.

4. Dandekar Rath Committee- Set up in 1971 • Recommended 2250 calorie/day energy intake as BPL line of India.

5. Y. K Alagh Committee-

• Committee was set up in 1979. • For 1st-time the committee adopted the approach of calorie intake as the basis of poverty measurement. • For urban area limit was fixed at 2100 cal. and for the rural area, it was fixed at 2400 cal.

6. Lakadawala Committee-

• Committee was set up in 1993-94. • Apart from energy intake (as per the recommendation of the Alagh Committee) this committee also considered consumption expenditure. • For urban area limit was fixed at 2100 cal. and for the rural area, it was fixed at 2400 cal.

7. Suresh Tendulkar Committee-

• As per the Tendulkar Committee report , 22% population of India is poor.

• It was Constituted by Planning Commission in 2005.

• Committee adopted the cost of living as the basis for identifying poverty. The committee considered the monthly expenditure of Education, Health, Electricity, and transport to measure the cost of living.

• Committee fixed daily per capita expenditure @ Rs. 27 for Rural and @ Rs. 33 for the urban areas. However, all-around criticism led to the constitution of the C. Rangarajan Panel for poverty measurement in 2012.

The income of Rs. 972/month in Rural areas and Rs. 1407/month for Urban areas was estimated as the poverty line. As per the recommendation of this committee, 30% population of India is poor.

8. Arvind Pangariya Task Force

a) Set up in 2015 to determine the poverty line in a realistic manner. b) Taskforce submitted reports in 2016 without any concrete decision. c) Informally task force accepted recommendations of the Suresh Tendulkar Committee.

Poverty in India: POVERTY ALLEVIATION AND EMPLOYMENT RELATED SCHEMES:

• Integrated Rural Development Programme-
• First Introduced in 1978-79.
• The main objective of programme was to raise the income of targeted BPL families by creating opportunities for self-employment in rural India.
• Pradhan Mantri Gramin Awas Yojana- • It is another form of erstwhile Indira Awas Yojana. • In November 2016, P.M. Gramin Awas Yojana was launched from Agra city of U.P. • Objective of the scheme is to provide a house for every rural household living BPL by 2022.
• Jawahar Gram Samriddhi Yojana- • It is a restructured version of Jawahar Rojgar Yojana • Launched in 1999.

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Multidimensional Poverty discussion Paper by NITI Aayog

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Source -This post is based on the article “ India’s multidimensional poverty rate down to 11.28% in 2022-23 from 29.17% in 2013-14 ” published in “ The Indian Express ” on 16th January 2024.

Why in the News?

Recently, NITI Aayog has released a discussion paper ‘Multidimensional Poverty in India since 2005-06’.

What are the key findings of the NITI Aayog discussion paper?

Note: The discussion paper utilizes MPI data (MPI, 2023, released in July 2023) derived from the National Family Health Surveys (NFHS) conducted in 2015-16 and 2019-21, along with NFHS-3 data from 2005-06, to analyze long-term poverty trends . You can also say that it is an updated version of previously released Multi-Dimensional Poverty Index 2023 .

1) India has registered a significant decline in multidimensional poverty in India from 29.17% in 2013-14 to 11.28% in 2022-23 (a reduction of 17.89 percentage points). – In numbers about 24.82 crore people escaped multidimensional Poverty in last 9 years.

2) Uttar Pradesh topped the list with 5.94 crore people escaping poverty followed by Bihar and Madhya Pradesh.

3) The paper reveals a faster decline in the poverty headcount ratio from 2015-16 to 2019-21 (10.66% annual rate) compared to the period 2005-06 to 2015-16 (7.69% annual rate).

4) All 12 indicators of MPI have recorded significant improvement during the entire study period.

5) India is poised to achieve single-digit poverty rates by the year 2024 .

6) India is likely to achieve Sustainable Development Goals (SDGs) 1.2 (reducing multidimensional poverty by at least half) much ahead of 2030.

What is National Multidimensional Poverty Index(MPI)?

1) The National MPI is a metric used to evaluate poverty in a country by considering multiple dimensions beyond income or consumption expenditure.

2) Indicators- The index is based on three equally weighted dimensions – health, education and standard of living – which in turn are represented by 12 indicators . – However, the National MPI covers 12 indicators while global MPI covers 10 indicators .

3) Methodology – The National MPI by Niti Aayog uses the Alkire Foster methodology to assess the decline in poverty rates.

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International Day for the Eradication of Poverty 2023

October 17 , is celebrated as International Day for the Eradication of Poverty as designated by United Nations. This article deals with the relevance of the day and India’s status on the poverty.

• The International Day for the Eradication of Poverty is observed every year on October 17th . Its purpose is to foster understanding and dialog between individuals experiencing poverty and the broader society.
• It promotes dialogue and understanding between people living in poverty and their communities, and society at large. “It represents an opportunity to acknowledge the efforts and struggles of people living in poverty, a chance for them to make their concerns heard and a moment to recognise that poor people are in the forefront in the fight against poverty.”

Theme of the Day

“Decent Work and Social Protection: Putting Dignity in Practice for All.”

• This year’s theme highlights the personal experiences of individuals who are trapped in extreme poverty and are forced to work long and exhausting hours in hazardous and unregulated environments. Despite their efforts, they are unable to earn sufficient income to adequately support themselves and their families.
• Additionally, the theme also advocates for the universal availability of fair employment opportunities and social safeguards in order to uphold the dignity of all individuals.
• It emphasizes that decent work should empower people, offer equitable wages and safe working conditions , and fundamentally acknowledge the intrinsic value and humanity of all workers.
• The International Day for the Eradication of Poverty first commemoration, “World Day to Overcome Poverty” took place in Paris, France, in 1987 .
• When lakhs of people gathered on the Human Rights and Liberties Plaza to honour the victims of poverty, hunger, violence , and fear .
• In 1992, the United Nations designated October 17 as the International Day for the Eradication of Poverty.

Why do we mark International Days?

• International Day for the Eradication of Poverty celebrate to educate the public on issues of concern, to mobilize political will and resources to address global poverty, and to celebrate and reinforce achievements of humanity.

Facts & Figures

Global scenario.

The global poverty lines estimates for early 2022 were determined based on the poverty line of US$1.90 per person per day. In September 2022, the World Bank revised the global poverty lines to US$2.5 per person per day .

Indian Scenario

• In September 2023, the unemployment rate in India decreased to 7. 1% from 8.1 % in August, as reported by the Centre for Monitoring of Indian Economy (CMIE).
• According to the Periodic Labor Force Survey Annual Report 2022-2023 released by the National Sample Survey Office , India’s unemployment rate for individuals aged 15 years and older reached a six-year low of 3.2 % from July 2022 to June 2023 .
• The Worker Population Ratio (WPR) throughout urban areas in India increased from 43.9 % in April-June 2022 to 45.5% in April-June 2023 for individuals aged 15 years and older.
• During this period, the WPR for males rose from 68.3 % to 69. 2%, while for females , it increased from 18.9 % to 21.1%.

Poverty and Related Issues

• In today’s world, marked by remarkable economic progress, advanced technology , and abundant financial resources , it is morally unacceptable that millions of individuals are trapped in extreme poverty.
• Poverty is not just an economic problem ; it is a complex issue that involves not only a lack of income but also a deprivation of the fundamental capabilities necessary for a life of dignity.
• Dangerous work conditions
• Unsafe housing
• Lack of nutritious food
• Unequal access to justice
• Lack of political power
• Limited access to health care

United Nations: – Accelerating global actions for a world without poverty

• In resolution 72/233 , the General Assembly officially declared the start of the Third United Nations Decade for the Eradication of Poverty (2018–2027).
• The Assembly also acknowledged that the theme of the Third Decade, should focus on “ Accelerating global actions for a world without poverty ,” aligning with the goals outlined in the 2030 Agenda for Sustainable Development.
• This report primarily presents a comprehensive plan of action to effectively eradicate poverty .

Goal 1: End poverty in all its forms everywhere

Poverty elevation schemes in India

• It was introduced in 1978-79 and was made universally available from 2nd October, 1980.
• Its objective was to assist the rural poor by providing subsidies and bank credit for productive employment opportunities during successive plan periods.
• It aimed to create meaningful employment opportunities for unemployed and underemployed individuals in rural areas.
• This was achieved by developing economic infrastructure and community and social assets.
• It had the goal of providing free housing to families below the poverty line (BPL) in rural areas, with a particular focus on households belonging to SC/ST communities.
• It ensures that every rural household is guaranteed 100 days of employment each year. One-third of the available jobs will be set aside for women.
• In the event that an applicant is not provided with employment within 15 days, they will be eligible to receive a daily unemployment allowance.
• It was launched by the Ministry of Rural Development (MoRD), Government of India, in June 2011. With support from the World Bank, the mission’s goal is to establish reliable and productive institutional platforms for the rural poor .
• This will enable them to enhance their household income through sustainable livelihood opportunities and better access to financial services.
• This program concentrates on mobilizing urban individuals with limited resources into Self Help Groups. It also provides opportunities for skill development, leading to employment in the market.
• Additionally, it supports the establishment of self-employment ventures by ensuring convenient access to credit.
• This initiative was introduced to provide 50 million LPG (liquefied petroleum gas) connections to women belonging to Below Poverty Line (BPL) families.
• It was established on March 16, 2015, under NITI Aayog. The main focus of the Task Force’s report is on addressing the measurement of poverty and developing strategies to combat it.
• Additionally, the Task Force has provided recommendations on achieving faster poverty reduction through employment-intensive sustained rapid growth and the effective implementation of anti-poverty programs.
• As per NITI Aayog’s Report ‘National Multidimensional Poverty Index: A Progress Review 2023’, A record 13.5 crore people moved out of multidimensional poverty between 2015-16 and 2019-21
• Between 2005-06 and 2015-16, approximately 271 million individuals have successfully escaped poverty. This positive trend has led to a notable decline in the poverty rate, which has almost halved from 55% to 28% over the span of ten years.
• However, it is important to acknowledge that a considerable portion of the Indian population still resides below the Poverty Line .

Thus, Initiatives such as Saubhagya, Pradhan Mantri Awas Yojana (PMAY), Pradhan Mantri Jan Dhan Yojana (PMJDY) , and Samagra Shiksha have played a significant role in reducing multidimensional poverty in the country. The government’s commitment to improving citizens’ lives and creating a better future for all is evident in the remarkable progress made in achieving low deprivation rates for electricity, access to bank accounts , and drinking water .

The successful implementation of various programs and initiatives, which are interconnected, has led to a substantial decrease in deprivations across multiple indicators.

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• How Are Poor People Identified

How Are Poor People Identified?

Poverty is a contentious issue that affects the Indian population to this day. Even more, so is that fact in the identification and estimation of those afflicted by poverty. Different countries have their own definition of poverty, and since poverty is a broad concept, some of these definitions will vary from nation to nation.

Keeping the Indian context in mind, this article will elaborate upon how are poor people identified when it comes to poverty identification and estimation.

The information from this article will be useful for candidates writing the civil services examination this year.

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Poverty Estimation in India

In India, the most commonly used method to estimate poverty is through the measurement of income and consumption levels. A person is considered poor if his/her income level falls below a minimum level that fails to meet his/her basic needs. This minimum level is known as the ‘poverty line’. When the income or consumption of an individual or the household he/she belongs to fall below minimum level then they are designated to be  Below the Poverty Line

The Poverty Line calculation is now carried out by the NITI Aayog (the successor to the erstwhile Planning Commission of India) through the calculation of the poverty line based on the data collected by the National Sample Survey Office (NSSO).

Know the difference between NITI Aayog and the Planning Commission

It should also be noted that even though both income and consumption levels are measured while identifying the poor in India, its consumption expenditure that is taken primarily into account because of the following reasons:

Fluctuation in income:  Income of those who are daily wage labourers, contract workers etc, vary factoring in the availability of work and the income offered although the consumption pattern is comparatively much stable

Additional Income:  It’s not always necessary that daily wage labourers or contract employees will have a single source of income. There will be other avenues from which they can earn their wages and this will be difficult to take into account

Collection of Data:  Sample-based surveys use a reference period of 30 days when estimating a consumption level of a household and are taken as the representation of a general consumption pattern as tracing the income pattern is not possible.

Candidates can know the difference between absolute poverty and relative poverty by visiting the linked article

Why is it important to identify the poor in India?

Poverty estimation in India is important for the following reasons:

To Measure the Impact of Welfare Schemes:  It is important to estimate poverty as it helps to keep track of the impact and success of various government schemes that have been introduced to eliminate poverty. In addition, these schemes can be tweaked to address any shortcomings if any.

Its a part of a Poverty Elimination of Plan:  The poverty estimates are used to formulate new plans that will ensure the elimination of poverty from the society.

It’s a Constitutional Requirement:  As the Constitution of India promises a just and equitable society, estimation of poverty paves the way for such a society as it helps in identifying the vulnerable sections of society an easy task.

To know what are the main causes of poverty in India , visit the linked article.

Data Collection Methods for Poverty Estimation

The following are the data collection methods used to identify the poor in India

Uniform Resource Period (URP) : From 1993 -1994, the poverty line was based on a Uniform Resource Period, which involved asking people about their consumption expenditure across a period of over 30-days

Mixed Reference Period  (MRP):  From 2000 onwards, the NSSO relied on an MRP method which measured consumption of five-low frequency items over a period of 30 days. These items are clothing, durables, education and institutional health expenditure.

Pre-Independence Estimation of Poverty

It was Dadbhai Naoroji who took concrete steps in identifying the poor in India. He formulated a poverty line that ranged from Rs 16 to Rs 35 per capita per year based on 1867-1868 prices of subsistence diet such as rice, flour, dhal, mutton, vegetable, ghee, vegetable oil and salt

In 1938, the National Planning Committee devised a poverty line ranging from Rs 15 to Rs 20 per capita per month. It was based on a minimum standard of living where nutritional requirements were important.

In 1944, the Bombay Plan suggested a poverty line of Rs 75 per capita per year.

Know more about the various poverty alleviation schemes in India, by visiting the linked article.

Post-Independence Estimation of Poverty in India

Poverty Line Estimation or calculating the number of poor in India was done by several committees on basis of calorific consumption or per capita expenditure.

VM Dandekar and N Rath

Based on the data from the National Sample Survey (NSS) data VM Dandekar and N Rath made a systematic assessment of poverty in 1971. While the previous estimations had stressed on subsistence living or basic minimum needs as a criterion for the poverty line, VM Dandekar and N Rath suggested that the poverty line’s criteria must be based on the expenditure that would provide 2250 calories per day both in rural and urban areas.

Alagh Committee (1979)

The Taskforce constituted by the Planning Commission under the direction of YK Alagh, constructed a poverty line for rural and urban areas on the basis of nutritional requirements and related consumption expenditure. The estimates in the ensuing years would be adjusted taking into account the price level for inflation.

Lakdawala Committee (1993)

  The Lakdawala committee based their findings on the assumption that the basket used to calculate Consumer Price Index-Industrial Workers (CPI-IW) and Consumer Price Index-Agricultural Labourers (CPI-AL) reflected the consumption pattern of the poor

Expert Group on ‘Estimation of Proportion and Number of Poor’ – Chaired by Prof DT Lakdawala (former Deputy Chairman Planning Commission)

The Lakdawala Committee submitted the report in 1993 and recommended:

• Poverty Line approach can be continued based on calorie consumption (fixed consumption basket)
• State-specific poverty lines should be constructed and these should be updated using the CPI-IW in urban areas and CPI-AL in rural areas
• Scaling of poverty estimates should not be based on National Accounts Statistics. The Expert Group recommended only NSS data should be relied upon.

The Indian Government accepted the Lakdawala Committee recommendations with minor modifications in 1997.

To know more about CPI (Consumer Price Index) , visit the linked article.

Tendulkar Committee (2009)

  This committee chaired by Suresh Tendulkar gave the following recommendations

• A shift away from calorie consumption-based poverty estimation
• A uniform poverty line basket (PLB) across rural and urban India
• A change in the price adjustment procedure to correct spatial and temporal issues with price adjustment
• Incorporation of private expenditure on health and education while estimating poverty

The committee used the Mixed Reference Period as opposed to Universal Reference Period used by earlier committees. Using this method the committee arrived at a conclusion that the poverty line was at Rs. 446.68 per capita per month in rural areas and Rs. 578.80 per capita per month in urban areas from 2004-2005. In 2009-2010 it was  Rs. 859.6 in urban areas while it was Rs.672.8 in rural areas. In 2010-2011 it was Rs. 1000 for urban and Rs. 816 for rural areas.

C Rangarajan Committee (2012)

The Planning commission created a new panel on poverty estimation that would

• Provide an alternate method to identify poverty levels
• Examine divergences between the consumption data provided by the NSSO and the National Accounts aggregates
• Review of international poverty estimation methods
• Recommend how these methods can be linked to eligibility for various poverty elimination schemes created by the government of India

The committee submitted its final report on 2014. The report dismissed the Tendulkar Committees estimation of the poverty level in India. The report said that was much higher in 2011-2012 at 29.5% of the population, which means that three out of 10 people in India were poor.

To know more in detail about the UPSC Syllabus , candidates can visit the linked article. Candidates can find more links related to UPSC exam preparation in the table given below:

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