POVERTY

     POVERTY

        Poverty refers to a state in which an individual is unable to fulfill even the basic necessities of life. The minimum requirement includes food, clothing, shelter & health facilities. Poverty has multifaceted dimensions. As it poses a challenge it is a call to action. Our economy accepts it and to remove it from the face of India many policies and programs were implemented and appreciated. Poverty has multi-dimensions

Characteristics of poor

·        Hunger,  starvation and malnutrition

·        Poor health – physically weak due to illness, disability

·        Lack of clean water, electricity, and sanitation

·        Limited economic opportunities due to lack of literacy and skills

·        Leads to a debt trap as they have to borrow from money lenders at high-interest rates

·        Bigger families

Poverty line

The poverty line is a cutoff point on the line of distribution which distinguishes people as poor and non-poor.

People having income below the poverty line are called Poor.

Determination of the poverty line

            In India, the monthly per capita expenditure method is used to determine the poverty line. According to this method, per capita expenditure of the minimum calorie intake is calculated.

(a) Consumption Criteria (Minimum Calorie Criterion):

According to this criterion, the poverty line is fixed on the basis of the average calorie intake.

According to the Planning Commission the average calorie intake to determine poverty is 2400 calorie and 2100 calorie per person per day in rural and urban areas respectively.

(b) Income Criteria (Minimum Consumption Expenditure Criterion)

According to this criterion based on the consumption criteria how much income is required will determine the poverty line.

According to the planning commission (Tendulkar methodology) 20110-12 is worked out to be Rs.816 per person in rural areas and 1000 per urban areas

Poverty has two variants

Absolute poverty:

It refers to the total number of people living below the poverty line. In the poverty line a standard is fixed in terms of the minimum level of consumption. The person whose income is below the poverty line are considered as poor

Absolute poverty refers to a situation when a person fails to reach this minimum consumption.

The concepts of Monthly Per capita Expenditure and Consumption of Average Calorie Intake are used to measure Absolute Poverty

Relative poverty:-

When we compare the incomes of different people, & we find that some people are poorer than others, it is called relative poverty. It refers to the poverty of people in relation to other people, regions or nations

Relative poverty does not consider, how poor the poor persons are or whether he is deprived of the basic minimum requirement of life or not.  It is interpreted in terms of inequality of income

It compares the inequality of income & assets ownership. It helps in understanding the relative position of different segments of the populations.

The concepts of Lorenz Curve and Gini’s coefficient are used to measure relative poverty.

            When the number of poor is estimated as the proportion of people below the poverty line, it is known as the Headcount ratio. The official data on poverty is made available to the public by the Planning commission

Categorizing Poverty

            Poverty can be categorized

1. Chronic poor: - includes the people who are always poor and those who are usually poor

2. Transient poor: - transient poor may be classified as churning poor (who regularly move in & out of poverty, like small farmer) & occasionally poor (who are rich most of the time & poor sometimes)

Non-poor:- they are never poor

Causes of Poverty

Underdevelopment of the Indian economy: is the root cause of poverty. The underdevelopment is manifested by the relative backwardness of agriculture & industrial sector

The rapid growth of population, particularly among the poor

High level of unemployment: - poverty is caused by unemployment or unemployment coupled with low rates of wages.

The existence of large inequalities in the distribution of national income & concentration of economic power, both in rural & urban sectors: The benefits of growth have been appropriated by the rich section & have not reached the poorest of the poor. So the rich become richer as their income rise & assets expanded.

Social factors: - Joint family system, laws of inheritance, a strong belief in destiny & fate are some social factors that have presented individuals from taking initiative & risk.

Political factors:-Before Independence, India was exploited under British rule. After Independence, other political factors have adversely affected economic progress. Economic policies are formulated to promote the interest of the richer section of the society & poor people are suffering in the process.

Inflation: - The steep & continuous rise in price, particularly of essential commodities has added to the miseries of the poor.

The poor state of agriculture:-Labor & land productivity continues to be low in India. Consequently, most of the farmers live in a state of poverty

Three Dimensional Approach of Government to reduce Poverty

1. Growth-oriented approach:-

This approach was implemented on the assumption of the “Trickle-down Theory of Development”. It was expected that the effect of economic growth would spread to all sections of the society and also to the poor section.

 It was felt that rapid industrial development and transformation of agriculture through the green revolution in select regions would benefit the underdeveloped regions and the more backward sections of the community. While looking for alternatives to specifically address the poor, policymakers started thinking that incomes and employment for the poor could be raised through the creation of additional assets and by means of work generation

2. Poverty alleviation programs

Most poverty alleviation programs implemented are based on the perspective of the Five Year Plans. This is the second approach has been initiated from the third five-year plan & progressively enlarged since then the government has introduced a variety of programs for the reduction of poverty.

Expanding self-employment programs and wage employment programs are being considered as the major ways of addressing poverty.

Earlier, under self-employment programs, financial assistance was given to families or individuals. Since1990s this approach has been changed. Now those who wish to benefit from these programs are encouraged to form self-help groups (SHGs)

Initially, they are encouraged to save some money and lend among themselves as small loans. Later, through banks, the government provides

Partial financial assistance to SHG which then decides whom the loan is to be given for self-employment activities.

3. Minimum Needs programs

The third approach to poverty reduction is the provision of basic minimum amenities to the poor people. Even with expanded employment opportunities, the poor couldn’t meet the basic minimum requirements. Therefore from the fifth plan onwards programs to provide basic minimum needs were taken up.  The poor have to be supplemented up to at least certain minimum standards by social consumption and investment in the form of essential food grains, education, health, nutrition drinking water, housing, communication, and electricity. 

To provide food security, the following programs are implemented:

1. Public Distribution System (PDS) –

Under PDS food grains are distributed at subsidized rates through ration shops.

2.  Integrated Child Development Scheme –

Under ICDS, mothers and children are given food assistance

3.  Day Meals at Schools (MDMS) –

 Under MDMS children are given free cooked meals in schools.

4. Annapurna  Scheme (AS)-

This scheme covers poor senior citizens not getting old-age pension. Poor senior citizens are given 10 kilograms of food grains free of cost under this scheme.

5. Antyodaya Anna Yojana (AAY)

AAY targets very poor families. Foodgrains are given at highly subsidized rates under this scheme.

Programs like Pradhan Mantri Pradhan Gram Sadak Yojna (PMGSY), Pradhan Mantri Gramodaya Yojana PMGY), Valmiki Ambedkar Avas Yojana, etc. Were also implemented to provide nutritious food for the people of India.

Social security programs

Social security projects for those in the informal employment sector are given below:

1. Am Admi Bhima Yojana

It gives insurance protection to the workmen employed in informal occupations. 

2. Indira Gandhi National Old Age Pension Scheme

It gives Rs. 500 to each member aged 65 and above belonging to BPL families.  This program was started in 2007 under the ministry for rural development. 

3. Rashtriya Swasthika Bhima Yojana

This provides health insurance to members of the BPL category.  It was started in 2008. It is also known as National Health Insurance Program. 

4. Atal Pension Yojana

This program was intended to provide pension in unorganized sector for the age group 18 to 40

5. Janasree Bhima Yojana

This is an insurance program providing insurance cover for BPL families. 

6. Pradhan Mantri Jeevan Jyoti Bhima Yojana

This is a life insurance program with a very low cost.  Rupees 2 lakh life cover will be provided under the scheme at a premium of only 330 a year. The person with bank accounts in the age group 18 to 50 is eligible.

7. Pradhan Mantri Suraksha Bhima Yojana

            This scheme provides accidental death cum disability cover of Rs. 2 lakh for a premium of only Rs.12 a year

The government also has a variety of other social security programs to help a few specific groups.

National Social Assistance Programme is one such program initiated by the central government. Under this program, elderly people who do not have anyone to take care of them are given pension to sustain themselves. Poor women who are destitute and widows are also covered under this scheme. The government has also introduced a few schemes to provide health insurance to poor people.

From 2014, a scheme called Pradhan Mantri Jan-Dhan Yojana is available in which people in India are encouraged to open bank accounts.

 Poverty alleviation programs in India

The government has specifically designed anti-poverty programs for the generation of both self – employment and wage employment

Self-Employment Programs

1. Prime minister’s Rozgar Yojana (PMRY):- This program aims at creating self-employment opportunities in rural areas & small towns. Under this program, educated unemployed from low-income families in rural & urban areas can get financial assistance in the form of bank loans, to set up any kind of enterprise that generates employment.

2. Swarna Jayanthi Shahri Rozgar Yojana (SJSRY):- initiated in December 1997 which replaced various programs operated earlier, for urban poverty alleviation. SJRY mainly aims at creating employment opportunities for both self-employment & wage-employment in urban areas.

3. Swarna Jayanthi Gram Swarozgar Yojana (SGSY):- it combined the earlier poverty eradication programs like Integrated rural development program (IRDP), development of women & children in rural areas (DWCRA), etc. It aims at promoting micro-enterprises & to bring the assisted poor families (Swarozagaris) above the poverty line, by organizing them into Self-Help Groups (SHGs). Under this program, people who wish to benefit from this scheme are encouraged to form self-help groups (SHG).

Initially, they are encouraged to save some money & land among themselves as small loans. Later, through banks, the govt. provides partial financial assistance to SHGs which then decide whom the loan is to be given for self-employment activities.

Wage Employment Programs

1. Sampoorna Grameen Rozgar Yojana (SGRY):- The scheme was launched with effect from September 2001. The schemes of Jawahar Gram Samridhi Yojana (JGSY) & employment assurance scheme (EAS) has been fully integrated with SGRY. The scheme aims at providing wage employment in rural areas & food security, along with the creation of durable community social & economic assets.

2. National Food for Work Programme (NFFWP) – this program was launched to intensify the generation of supplementary wage employment. It was incorporated in Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in 2005

3. National Rural Employment Guarantee Act 2005:- The act was passed in 2005 & the scheme, i.e. National rural employment guarantee schemes or NREGS was launched in February 2006. The aim of the act is to provide guaranteed wage employment to every household. Under this program, volunteer adults will be provided unskilled manual work for a minimum of 100 days in a year. Those who cannot be employed employers under this scheme were given wages for those 100 days.

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