Poverty Introduction

Some of the most challenging issues facing India today are poverty, development of rural India and building infrastructure. We are a billion-strong country today and our human capital is the biggest asset.

In the last six decades, India has taken a number of economic policies. Providing minimum basic needs to the people and reduction of poverty have been the major aims of the economic policies in independent India. The pattern of development that the successive five-year plans envisaged laid emphasis on uplifting the poorest of the poor (Antyodaya), integrating the poor into the mainstream and achieving a minimum standard of living for all.

While addressing the Constituent Assembly in 1947, Jawaharlal Nehru had said, “This achievement (Independence) is but a step, an opening of opportunity, to the great triumphs and achievements that await us… the ending of poverty and ignorance and disease and inequality of opportunity.”

However we need to know where we stand today. Poverty is not only a challenge for India, as more than one-fifth of the world’s poor live in India alone; but also for the world, where more than 260 million people are not able to meet their basic needs.

Poverty has many faces, which have been changing from place to place and across time, and has been described in many ways. Most often, poverty is a situation that people want to escape. So poverty is a call to action — for the poor and the wealthy alike — a call to change the world so that many more may have enough to eat, adequate shelter, access to education and health, protection from violence, and a voice in what happens in their communities.

To know what helps to reduce poverty, what works and what does not, what changes over time, poverty has to be defined, measured and studied — and even experienced. As poverty has many dimensions, it has to be looked at through a variety of indicators — levels of income and consumption, social indicators, and indicators of vulnerability to risks and of social/political access.

What is Poverty?

Two scholars, Shaheen Rafi Khan and Damian Killen, put the conditions of the poor in a nutshell –

  • Poverty is hunger.
  • Poverty is being sick and not being able to see a doctor.
  • Poverty is not being able to go to school and not knowing how to read.
  • Poverty is not having a job.
  • Poverty is fear for the future, having food once in a day.
  • Poverty is losing a child to illness, brought about by unclear water.
  • Poverty is powerlessness, lack of representation and freedom.

What do you think?


Who Are The Poor?

In all localities and neighbourhoods, both in rural and urban areas, there are some of us who are poor and some who are rich.

Anu & Sudha

Anu and Sudha were both born on the same day. Anu’s mother and father were construction labourers and Sudha’s father was a businessman and her mother a designer.

Anu’s mother worked by carrying head loads of bricks until she went into labour. She then went behind the tool shed on the construction site and delivered her baby alone. She fed her child and then wrapped her in an old sari, made a cradle with a gunny sack, put little Anu in it and hung it from a tree. She hurried back to work as she was afraid she would lose her job. She hoped that Anu would sleep until evening.

Sudha was born in one of the best nursing homes in the city. She was thoroughly checked by doctors, she was bathed and dressed in clean soft clothes and placed in a crib next to her mother. Her mother fed her whenever she was hungry, hugged and kissed her and sang her to sleep. Her family and friends celebrated her arrival.

Anu and Sudha had very different childhoods. Anu learnt to look after herself at a very early age. She knew what hunger and deprivation were. She discovered how to pick food from the dustbin, how to keep warm during the winter, to find shelter in the monsoon and how to play with a piece of string, stones and twigs. Anu could not go to school as her parents were migrant workers who kept moving from city to city in search of work.

Anu loved to dance. Whenever she heard music she would improve. She was very beautiful and her movements were graceful and evocative. Her dream was to dance on a stage some day. Anu could have become a great dancer but she had to begin work at the age of 12. She had to earn a living with her mother and father, building houses for the rich. Houses, she would never live in.

Sudha went to a very good play school where she learnt how to read, write and count. She went on excursions to the planetarium, museum and national parks. She later went to a very good school. She loved painting and started getting private lessons from a famous artist. She later joined a design school and became a well-known painter.


Read the story (above) of Anu and Sudha. Their lives are examples of the two extremes.

There are also people who belong to the many stages in between. Push cart vendors, street cobblers, women who string flowers, rag pickers, vendors and beggars are some examples of poor and vulnerable groups in urban areas. They possess few assets. They reside in kutcha huts with walls made of baked mud and roofs made of grass, thatch, bamboo and wood. The poorest of them do not even have such dwellings. In rural areas many of them are landless. Even if some of them possess land, it is only dry or waste land. Many do not get to have even two meals a day. Starvation and hunger are the key features of the poorest households. The poor lack basic literacy and skills and hence have very limited economic opportunities. Poor people also face unstable employment.

Malnutrition is alarmingly high among the poor –

  • Ill-health, disability or serious illness makes them physically weak.
  • They borrow from money lenders who charge high rates of interest that lead them into chronic indebtedness.
  • The poor are highly vulnerable. They are not able to negotiate their legal wages from employers and are exploited.
  • Most poor households have no access to electricity. Their primary cooking fuel is firewood and cow dung cake.
  • A large section of poor people do not even have access to safe drinking water.
  • There is evidence of extreme gender inequality in the participation of gainful employment, education and in decision-making within the family.
  • Poor women receive less care on their way to motherhood. Their children are less likely to survive or be born healthy.

Scholars identify the poor on the basis of their occupation and ownership of assets –

  • They state that the rural poor work mainly as landless agricultural labourers, cultivators with very small landholdings, landless labourers who are engaged in a variety of non-agricultural jobs and tenant cultivators with small land holdings.
  • The urban poor are largely the overflow of the rural poor who had migrated to urban areas in search of alternative employment and livelihood, labourers who do a variety of casual jobs and the self-employed who sell a variety of things on roadsides and are engaged in various activities.


What is Poverty?

Two scholars, Shaheen Rafi Khan and Damian Killen, put the conditions of the poor in a nutshell –

  • Poverty is hunger.
  • Poverty is being sick and not being able to see a doctor.
  • Poverty is not being able to go to school and not knowing how to read.
  • Poverty is not having a job.
  • Poverty is fear for the future, having food once in a day.
  • Poverty is losing a child to illness, brought about by unclear water.
  • Poverty is powerlessness, lack of representation and freedom.

What do you think?


How Are Poor People Identified?

If India is to solve the problem of poverty, it has to find viable and sustainable strategies to address the causes of poverty and design schemes to help the poor out of their situation. However, for these schemes to be implemented, the government needs to be able to identify who the poor are. For this there is need to develop a scale to measure poverty, and the factors that make up the criteria for this measurement or mechanism need to be carefully chosen.

In pre-independent India, Dadabhai Naoroji was the first to discuss the concept of a Poverty Line. He used the menu for a prisoner and used appropriate prevailing prices to arrive at what may be called ‘jail cost of living’. However, only adults stay in jail whereas, in an actual society, there are children too. He, therefore, appropriately adjusted this cost of living to arrive at the poverty line. For this adjustment, he assumed that one-third population consisted of children and half of them consumed very little while the other half consumed half of the adult diet. This is how he arrived at the factor of three-fourths; (1/6)(Nil) + (1/6)(Half) + (2/3)(Full) = (¾) (Full). The weighted average of consumption of the three segments gives the average poverty line, which comes out to be three-fourth of the adult jail cost of living.

In post-independent India, there have been several attempts to work out a mechanism to identify the number of poor in the country. For instance –

  • in 1962, the Planning Commission formed a Study Group.
  • In 1979, another body called the ‘Task Force on Projections of Minimum Needs and Effective Consumption Demand’ was formed.
  • In 1989, an ‘Expert Group’ was constituted for the same purpose.

Besides these bodies, many individual economists have also attempted to develop such a mechanism.


For the purpose of defining poverty we divide people into two categories; the poor and the non-poor and the poverty line separates the two.

  • However, there are many kinds of poor; the absolutely poor, the very poor and the poor.
  • Similarly there are various kinds of non-poor; the middle class, the upper middle class, the rich, the very rich and the absolutely rich.

Think of this as a line or continuum from the very poor to the absolutely rich with the poverty line dividing the poor from the non-poor.


Categorising Poverty

There are many ways to categorise poverty. In one such way people who are always poor and those who are usually poor but who may sometimes have a little more money (example: casual workers) are grouped together as the chronic poor. Another group are the churning poor who regularly move in and out of poverty (example: small farmers and seasonal workers) and the occasionally poor who are rich most of the time but may sometimes have a patch of bad luck. They are called the transient poor. And then there are those who are never poor and they are the non-poor.


The Poverty Line

How to determine the poverty line?

There are many ways of measuring poverty. One way is to determine it by the monetary value (per capita expenditure) of the minimum calorie intake that was estimated at 2,400 calories for a rural person and 2,100 for a person in the urban area. Based on this, in 1999-2000, the poverty line was defined for rural areas as consumption worth Rs 328 per person a month and for urban areas it was Rs 454.

Though the government uses Monthly Per Capita Expenditure (MPCE) as proxy for income of households to identify the poor, do you think this mechanism satisfactorily identifies the poor households in our country?

Scholars state that a major problem with this mechanism is that it groups all the poor together and does not differentiate between the very poor and the other poor. Though this mechanism takes consumption expenditure on food and a few select items as proxy for income, economists question its basis. This mechanism is helpful in identifying the poor as a group to be taken care of by the government, but it would be difficult to identify who among the poor need help the most.

There are many factors, other than income and assets, which are associated with poverty; for instance, the accessibility to basic education, health care, drinking water and sanitation. The mechanism for determining the Poverty Line also does not take into consideration social factors that trigger and perpetuate poverty such as illiteracy, ill-health, lack of access to resources, discrimination or lack of civil and political freedoms.

The aim of poverty alleviation schemes should be to improve human lives by expanding the range of things that a person could be and could do, such as to be healthy and well-nourished, to be knowledgeable and participate in the life of a community. From this point of view, development is about removing the obstacles to the things that a person can do in life, such as illiteracy, ill-health, lack of access to resources, or lack of civil and political freedoms.

Though the government claims that higher rate of growth, increase in agricultural production, providing employment in rural areas and economic reform packages introduced in the 1990s have resulted in a decline in poverty levels, economists raise doubts about the government’s claim. They point out that the way the data are collected, items that are included in the consumption basket, methodology followed to estimate the poverty line and the number of poor are manipulated to arrive at the reduced figures of the number of poor in India.

Due to various limitations in the official estimation of poverty, scholars have attempted to find alternative methods. For instance, Amartya Sen, noted Nobel Laureate, has developed an index known as Sen Index. There are other tools such as Poverty Gap Index and Squared Poverty Gap.


The Number Of Poor In India

When the number of poor is estimated as the proportion of people below the poverty line, it is known as ‘Head Count Ratio’.

What are the total number of poor persons residing in India?
Where do they reside and has their number or proportion declined over the years or not?

When such a comparative analysis of poor people is made in terms of ratios and percentages, we will have an idea of different levels of poverty of people and their distribution; between states and over time.


The official data on poverty is made available to the public by the Planning Commission. It is estimated on the basis of consumption expenditure data collected by the National Sample Survey Organisation (NSSO).

Above chart shows the number of poor and their proportion to the population in India for the years 1973-2000. In 1973-74, more than 321 million people were below the poverty line. In 1999-2000, this number has come down to about 260 million. In terms of proportion, in 1973-74, about 55 per cent of the total population was below the poverty line. In 1999-2000, it has fallen to 26 per cent. In 1973-74, more than 80 per cent of the poor resided in rural areas and in 1999-2000, this has come down to about 75 per cent. This means that more than three-fourth of the poor in India reside in villages. Also poverty, which was prevailing predominantly in rural areas, has shifted to urban areas.

In the 1990s, the absolute number of poor in rural areas had declined whereas the number of their urban counterparts increased marginally. The poverty ratio declined continuously for both urban and rural areas. From above Chart, you will notice that during 1973-2000, there has been a decline in the number of poor and their proportion but the nature of decline in the two parameters is not encouraging. The ratio is declining much slower than the absolute number of poor in the country. You will also notice that the gap between the absolute number of poor in rural and urban areas did not narrow down until the early 1990s whereas in the case of ratio the gap has remained the same until 1999-2000.

The state level trends in poverty are shown in below Chart. It reveals that five states — Uttar Pradesh, Bihar, Madhya Pradesh, West Bengal and Orissa — account for about 70 per cent of India’s poor. You will also notice that during 1973-74, about half the population in most of these large states was living below the poverty line. In 1999-2000, only two states — Bihar and Orissa — were left near that same level. Though they also reduced their share of poor, compared to other states, their success is marginal. If we look at Gujarat, it reduced its people below the poverty line from 48 per cent to 15 per cent during 1973-2000. During this period, West Bengal has been just as successful; from nearly two-third, i.e. 63 per cent of the population below the poverty line the same was reduced to about 27 per cent.



Poverty Line

In general, poverty can be defined as a situation when people are unable to satisfy the basic needs of life. The definition and methods of measuring poverty differs from country to country. The extent of poverty in India is measured by the number of people living below the Poverty Line.

The Poverty Line defines a threshold income. Households earning below this threshold are considered poor. Different countries have different methods of defining the threshold income depending on local socio-economic needs. The Planning Commission releases the poverty estimates in India.

Poverty is measured based on consumer expenditure surveys of the National Sample Survey Organisation (NSSO). A poor household is defined as the one with an expenditure level below a specific poverty line.

Earlier, India used to define the poverty line based on a method defined by a task force in 1979. It was based on expenditure for buying food worth 2,400 calories in rural areas and 2,100 calories in urban areas. In 2009, the Suresh Tendulkar Committee defined the poverty line on the basis of monthly spending on food, education, health, electricity and transport.

The Planning Commission has updated the poverty lines and poverty ratios for the year 2009-10 as per the recommendations of the Tendulkar Committee. It has estimated the poverty lines at all India level as an MPCE (monthly per capita consumption expenditure) of ₹673 for rural areas and ₹860 for urban areas in 2009-10. So a person who spends ₹673 in rural areas and ₹860 in urban area per month is defined as living below the poverty line.

Based on these cut-offs, the percentage of people living below the poverty line in the country has declined from 37.2 per cent in 2004-5 to 29.8 per cent in 2009-10. Even in absolute terms, the number of poor people has fallen by 52.4 million during this period. Of this, 48.1 million are rural poor and 4.3 million are urban poor. Thus poverty has declined on an average by 1.5 percentage points per year between 2004-5 and 2009-10. The annual average rate of decline during the period 2004-5 to 2009-10 is twice the rate of decline during the period 1993-4 to 2004-5.



What Causes Poverty?

Poverty is explained by individual circumstances and/or characteristics of poor people. Some examples are –

  • (i)low levels of education and skills
  • (ii) infirmity, ill-health, sickness
  • (iii) discrimination

These can be caused as a result of –

  • (i) social, economic and political inequality
  • (ii) social exclusion
  • (iii) unemployment
  • (iv) indebtedness
  • (v) unequal distribution of wealth

Aggregate poverty is just the sum of individual poverty.

Poverty is also explained by general, economy-wide problems, such as –

  • (i) low capital formation
  • (ii) lack of infrastructure
  • (iii) lack of demand
  • (iv) pressure of population
  • (v) lack of social/welfare nets

Although the final impact of the British rule on Indian living standards is still being debated, there is no doubt that there was a substantial negative impact on the Indian economy and standard of living of the people. There was substantial de-industrialisation in India under the British rule. Imports of manufactured cotton cloth from Lancashire in England displaced much local production, and India reverted to being an exporter of cotton yarn, not cloth.

As over 70 per cent of Indians were engaged in agriculture throughout the British Raj period, the impact on that sector was more important on living standards than anything else. British policies involved sharply raising rural taxes that enabled merchants and moneylenders to become large landowners. Under the British, India began to export food grains and, as a result, as many as 26 million people died in famines between 1875 and 1900.

Britain’s main goals from the Raj were to provide a market for British exports, to have India service its debt payments to Britain, and for India to provide manpower for the British imperial armies.

The British Raj impoverished millions of people in India. Our natural resources were plundered, our industries worked to produce goods at low prices for the British and our food grains were exported. Many died due to famine and hunger. In 1857-58, anger at the overthrow of many local leaders, extremely high taxes imposed on peasants, and other resentments boiled over in a revolt against British rule by the sepoys, Indian troops commanded by the British.

Even today agriculture is the principal means of livelihood and land is the primary asset of rural people; ownership of land is an important determinant of material well-being and those who own some land have a better chance to improve their living conditions.

Since independence, the government has attempted to redistribute land and has taken land from those who have large amounts to distribute it to those who do not have any land, but work on the land as wage labourers. However, this move was successful only to a limited extent as large sections of agricultural workers were not able to farm the small holdings that they now possessed as they did not have either money (assets) or skills to make the land productive and the land holdings were too small to be viable.

A large section of the rural poor in India are the small farmers. The land that they have is, in general, less fertile and dependent on rains. Their survival depends on subsistence crops and sometimes on livestock. With the rapid growth of population and without alternative sources of employment, the per-head availability of land for cultivation has steadily declined leading to fragmentation of land holdings. The income from these small land holdings is not sufficient to meet the family’s basic requirements.

You must have heard about farmers committing suicide due to their inability to pay back the loans that they have taken for cultivation and other domestic needs as their crops have failed due to drought or other natural calamities (see Box ‘Distress Among Cotton Farmers’ below).

The scheduled castes and scheduled tribes are not able to participate in the emerging employment opportunities in different sectors of the urban and rural economy as they do not have the necessary knowledge and skills to do so.

The urban poor in India are largely the overflow of the rural poor who migrate to urban areas in search of employment and a livelihood. Industrialisation has not been able to absorb all these people. Most of the urban poor are either unemployed or intermittently employed as casual labourers. Casual labourers are among the most vulnerable in society as they have no job security, no assets, limited skills, sparse opportunities and no surplus to sustain them.

Poverty is, therefore, also closely related to nature of employment. Unemployment or under employment and the casual and intermittent nature of work in both rural and urban areas that compels indebtedness, in turn, reinforces poverty. Indebtedness is one of the significant factors of poverty.

A steep rise in the price of food grains and other essential goods, at a rate higher than the price of luxury goods, further intensifies the hardship and deprivation of lower-income groups. The unequal distribution of income and assets has also led to the persistence of poverty in India.

All this has created two distinct groups in society: those who posses the means of production and earn good incomes and those who have only their labour to trade for survival. Over the years, the gap between the rich and the poor in India has widened. Poverty is a multi-dimensional challenge for India that needs to be addressed on a war footing.

Distress Among Cotton Farmers

Many small land owning farmers and farming households and weavers are descending into poverty due to globalisation related shock and lack of perceived income earning opportunities in relatively well performing states in India. Where households have been able to sell assets, or borrow, or generate income from alternative employment opportunities, the impact of such shocks may be transient. However, if the household has no assets to sell or no access to credit, or is able to borrow only at exploitative rates of interest and gets into a severe debt trap, the shocks can have long duration ramification in terms of pushing households below the poverty line. The worst form of this crisis is suicides. The count reached 3,000 in Andhra Pradesh alone and is rising. In December 2005, the Maharashtra government admitted that over 1,000 farmers have committed suicides in the state since 2001.

India has the largest area under cotton cultivation in the world covering 8,300 hectares in 2002–03. The low yield of 300 kg per hectare pushes it into third position in production. High production costs, low and unstable yields, decline in world prices, global glut in production due to subsidies by the U.S.A. and other countries, and opening up of the domestic market due to globalisation have increased the exposure of farmers and led to agrarian distress and suicides especially in the cotton belt of Andhra Pradesh and Maharashtra. The issue is not one of profits and higher returns but that of the livelihood and survival of millions of small and marginal farmers who are dependent on agriculture.

Scholars cite several factors that have led farmers to commit suicides –

  • (i) the shift from traditional farming to the farming of high yielding commercial crops without adequate technical support combined with withdrawal of the state in the area of agricultural extension services in providing counselling on farm technologies, problems faced, immediate remedial steps and lack of timely advice to farmers
  • (ii) decline in public investment in agriculture in the last two decades
  • (iii) low rates of germination of seeds provided by large global firms, spurious seeds and pesticides by private agents
  • (iv) crop failure, pest attack and drought
  • (v) debt at very high interest rate of 36 per cent to 120 per cent from private money lenders
  • (vi) cheap imports leading to decline in pricing and profits
  • (vii) lack of access to water for crops which forced the farmers to borrow money at exorbitant rates of interest to sink bore-wells that failed.

Sources: Excerpted from A.K. Mehta and Sourabh Ghosh assited by Ritu Elwadhi, “Globalisation, Loss of Livelihoods and Entry into Poverty,” Alternative Economic Survey, India 2004-2005, Alternative Survey Group, Daanish Books, Delhi 2005 and P. Sainath, The swelling ‘Register of Deaths’, The Hindu, 29 December 2005.


Causes Of Poverty

  1. Vicious Circle of Poverty
  2. Low Resources Endowment
  3. Inequality in the Distribution of Income and Assets
  4. Lack of Access to Social Services
  5. Lack of access to Institutional Credit
  6. Price Rise
  7. Lack of Productive Employment
  8. Rapid Population Growth
  9. Low Productivity in Agriculture
  10. Social Causes


Vicious Circle of Poverty

It is said that “a country is poor because it is poor.” This idea has come down from Ragnar Nurkse who pinpointed the problem of the vicious circle of poverty. Low level of saving reduces the scope for investment; low-level of investment yields low-income and thus the circle of poverty goes on indefinitely.

Low Resources Endowment

A household is poor if the sum total of income earning assets which it commands, including land, capital and labour of various levels of skills, cannot provide an income above the poverty line. The poor mainly consists of unskilled labour, which typically does not command a high enough level of wage income.

Inequality in the Distribution of Income and Assets

The distribution of income and assets also determine the level of income. The economic inequalities are the major cause of poverty in India. It means the benefits of the growth have been concentrated and have not “trickled down” sufficiently to ensure improved consumption among the lower-income groups.

Lack of Access to Social Services

The lack of access to social services such as health and education compound the problems arising from inequality in the ownership of physical and human assets. These services directly affect household welfare. The poor typically get much less than a fair share of such services. This is partly because governments do not invest enough to ensure an adequate supply of these services and the limited supply is mainly availed by non-poor households. Further, the poor may not have adequate access for a variety of other reasons like lack access to information about the existence of such services, lack of knowledge and corruption.

Lack of access to Institutional Credit

The banks and other financial institutions are biased in the provision of loans to the poor for the fear of default in the repayment of loans. Further, the rules regarding collateral security, documentary evidences etc. present constraints for the poor to avail loan facility from banks. The inaccessibility to institutional credit may force poor to take credit from the landlord or other informal sources at a very high interest rate and which in turn may weaken their position in other areas, leading, for example, to the payment of abnormally high rental shares for land, or acceptance of abnormally low wages in various types of “bonded labour” arrangements or selling their crop at a very low price. In some cases poor people cannot make themselves free from the clutches of moneylenders. Their poverty is further accentuated because of indebtedness. Such indebted families continue to remain under the poverty line for generations because of this debt-trap.

Price Rise

The rising prices have reduced the purchasing power of money and thus have reduced the real value of money income. The people belonging to low-income group are compelled to reduce their consumption and thus move below the poverty line.

Lack of Productive Employment

The magnitude of poverty is directly linked to unemployment situation. The present employment conditions don’t permit a reasonable level of living causing poverty. The lack of productive employment is mainly due to problems of infrastructure, inputs, credit, technology and marketing support. The gainful employment opportunities are lacking in the system.

Rapid Population Growth

The faster population growth obviously means a slower growth in per capita incomes for any given rate of growth of gross domestic product (GDP), and therefore a slower rate of improvement in average living standards. Further the increased population growth increase consumption and reduces national savings and adversely affects the capital formation thereby limiting the growth in the national income.

Low Productivity in Agriculture

The level of productivity in agriculture is low due to subdivided and fragmented holdings, lack of capital, use of traditional methods of cultivation, illiteracy etc. This is the main cause of poverty in the rural India.

Social Causes

  1. Education : Education is an agent of social change. Poverty is also said to be closely related to the levels of schooling and these two have a circular relationship. The earning power is affected by investment in individual’s education and training. However, poor people do not have the funds for human capital investment and thus it limits their income.
  2. Caste system : Caste system in India has always been responsible for rural poverty. The subordination of the low-caste people by the high caste people caused the poverty of the former. Due to rigid caste system, the low caste people could not participate in various economic activities and so remain poor.
  3. Social customs : The rural people generally spend a large percentage of annual earnings on social ceremonies like marriage, death feast etc. and borrow largely to meet these requirements. As a result, they remain in debt and poverty.


Policies And Programmes Towards Poverty Alleviation

The Indian Constitution and five-year plans state social justice as the primary objective of the developmental strategies of the government.

  • To quote the First Five Year Plan (1951-56), “the urge to bring economic and social change under present conditions comes from the fact of poverty and inequalities in income, wealth and opportunity”.
  • The Second Five Year Plan (1956-61) also pointed out that “the benefits of economic development must accrue more and more to the relatively less privileged classes of society”.
  • One can find, in all policy documents, emphasis being laid on poverty alleviation and that various strategies need to be adopted by the government for the same.

The government’s approach to poverty reduction was of three dimensions –

1. The first one is growth-oriented approach. It is based on the expectation that the effects of economic growth — rapid increase in gross domestic product and per capita income — would spread to all sections of society and will trickle down to the poor sections also. This was the major focus of planning in the 1950s and early 1960s. It was felt that rapid industrial development and transformation of agriculture through green revolution in select regions would benefit the underdeveloped regions and the more backward sections of the community. Though the overall growth and growth of agriculture and industry have not been impressive. Population growth has resulted in a very low growth in per capita incomes. The gap between poor and rich has actually widened. The Green Revolution exacerbated the disparities regionally and between large and small farmers. There was unwillingness and inability to redistribute land. Economists state that the benefits of economic growth have not trickled down to the poor.

2. While looking for alternatives to specifically address the poor, policy makers started thinking that incomes and employment for the poor could be raised through the creation of incremental assets and by means of work generation. This could be achieved through specific poverty alleviation programmes. This second approach has been initiated from the Third Five Year Plan (1961-66) and progressively enlarged since then. One of the noted programmes initiated in the 1970s was Food for Work.

The programmes that are being implemented now are based on the perspective of the Tenth Five Year Plan (2002-2007) Expanding self-employment programmes and wage employment programmes are being considered as the major ways of addressing poverty. Examples of self-employment programmes are Rural Employment Generation Programme (REGP), Prime Minister’s Rozgar Yojana (PMRY) and Swarna Jayanti Shahari Rozgar Yojana (SJSRY).

REGP aims at creating self-employment opportunities in rural areas and small towns. The Khadi and Village Industries Commission is implementing it. Under this programme, one can get financial assistance in the form of bank loans to set up small industries. The educated unemployed from low-income families in rural and urban areas can get financial help to set up any kind of enterprise that generates employment under PMRY. SJSRY mainly aims at creating employment opportunities — both self-employment and wage employment — in urban areas.

Earlier, under self-employment programmes, financial assistance was given to families or individuals. Since the 1990s, this approach has been changed. Now those who wish to benefit from these programmes are encouraged to form self-help groups. 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 SHGs which then decide whom the loan is to be given for self-employment activities. Swarnajayanti Gram Swarozgar Yojana (SGSY) is one such programme.

The government has a variety of programmes to generate wage employment for the poor unskilled people living in rural areas. Some of them are National Food for Work Programme (NFWP) and Sampoorna Grameen Rozgar Yojana (SGRY). In August 2005, the Parliament has passed a new Act to provide guaranteed wage employment to every household whose adult volunteer is to do unskilled manual work for a minimum of 100 days in a year. This Act is known as National Rural Employment Guarantee Act–2005. Under this Act all those among the poor who are ready to work at the minimum wage can report for work in areas where this programme is implemented.

3. The third approach to addressing poverty is to provide minimum basic amenities to the people.

India was among the pioneers in the world to envisage that through public expenditure on social consumption needs — provision of food grains at subsidised rates, education, health, water supply and sanitation—people’s living standard could be improved. Programmes under this approach are expected to supplement the consumption of the poor, create employment opportunities and bring about improvements in health and education.

One can trace this approach from the Fifth Five Year Plan, “even with expanded employment opportunities, the poor will not be able to buy for themselves all the essential goods and services. They 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, communications and electricity.”

Three major programmes that aim at improving the food and nutritional status of the poor are –

  • Public Distribution System,
  • Integrated Child Development Scheme and
  • Midday Meal Scheme.

Pradhan Mantri Gram Sadak Yojana, Pradhan Mantri Gramodaya Yojana, Valmiki Ambedkar Awas Yojana are also attempts in the same direction. It may be essential to briefly state that India has achieved satisfactory progress in many aspects.

The government also has a variety of other social security programmes to help a few specific groups. National Social Assistance Programme is one such programme initiated by the central government. Under this programme, 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.</p


Poverty Alleviation And Employment Generation Programmes In India

The government is following a focused approach through various flagship schemes in the areas of poverty alleviation and employment generation to achieve inclusive development.

  1. Mahatma Gandhi National Rural Employment Guarantee Work (MGNREGA)
  2. National Rural Livelihood Mission (NRLM) – Aajeevika
  3. Swarna Jayanti Shahari Rozgar Yojana (SJSRY)

Mahatma Gandhi National Rural Employment Guarantee Work (MGNREGA)

This flagship programme of the government aims at enhancing livelihood security of households in rural areas by providing at least one hundred days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work with the stipulation of one-third participation of women. The MGNREGA provides wage employment while also focusing on strengthening natural resource management through works that address causes of chronic poverty like drought, deforestation, and soil erosion and thus encourage sustainable development.

National Rural Livelihood Mission (NRLM) – Aajeevika

The Swarnjayanti Gram Swarozgar Yojana (SGSY) / NRLM a self-employment programme implemented since April 1999 aims at lifting the assisted rural poor families (swarozgaris) above the poverty line by providing them income-generating assets through a mix of bank credit and government subsidy. The rural poor are organized into self-help groups (SHGs) and their capacities are built through training and skill development.

Swarna Jayanti Shahari Rozgar Yojana (SJSRY)

The SJSRY launched on 1 December 1997 aims at providing gainful employment to the urban unemployed and underemployed, by encouraging them to set up self-employment ventures or creating wage employment opportunities.


Poverty Alleviation Programmes – A Critical Assessment

Efforts at poverty alleviation have borne fruit in that for the first time since independence, the percentage of absolute poor in some states is now well below the national average.

Despite a variety of approaches, programmes and schemes to alleviate poverty; hunger, malnourished, illiteracy and lack of basic amenities continue to be a common feature in many parts of India.

Though the policy towards poverty alleviation has evolved in a progressive manner, over the last six decades, it has not undergone any radical transformation. You can find change in nomenclature, integration or mutations of programmes. However, none resulted in any radical change in the ownership of assets, process of production and improvement of basic amenities to the needy.

Scholars, while assessing these programmes, state three major areas of concern which prevent their successful implementation. Due to unequal distribution of land and other assets, the benefits from direct poverty alleviation programmes have been appropriated by the non-poor. Compared to the magnitude of poverty, the amount of resources allocated for these programmes is not sufficient. Moreover, these programmes depend mainly on government and bank officials for their implementation. Since such officials are ill motivated, inadequately trained, corruption prone and vulnerable to pressure from a variety of local elites, the resources are inefficiently used and wasted. There is also non-participation of local level institutions in programme implementation.

Government policies have also failed to address the vast majority of vulnerable people who are living on or just above the poverty line. It also reveals that high growth alone is not sufficient to reduce poverty. Without the active participation of the poor, successful implementation of any programme is not possible. Poverty can effectively be eradicated only when the poor start contributing to growth by their active involvement in the growth process. This is possible through a process of social mobilisation, encouraging poor people to participate and get them empowered. This will also help create employment opportunities which may lead to increase in levels of income, skill development, health and literacy. Moreover, it is necessary to identify poverty-stricken areas and provide infrastructure such as schools, roads, power, telecom, IT services, training institutions etc.

Ramdas Korwa’s Road To Nowhere

Somehow, Ramdas Korwa of Rachketha village was not overjoyed to learn that he was worth Rs 17.44 lakh to the government. Late in 1993, the authorities decided to lay a three km road leading to Rachketha village in the name of tribal development by allocating Rs 17.44 lakh towards the project.

Tribals constitute a 55 per cent majority in Surguja, one of India’s poorest districts. And the Pahadi or Hill Korwas, who have been listed as a primitive tribe by the government, fall in the bottom 5 per cent. Special efforts are underway for their development which often involves large sums of money. Just one centrally funded scheme, the Pahadi Korwa project, is worth Rs 42 crores over a five-year period.

There are around 15,000 Pahadi Korwas, the largest number of these in Surguja. However, for political reasons, the main base of the project is in Raigad district. There was just one small problem about building the Pahadi Korwa Marg in Rachketha—the village is almost completely devoid of Pahadi Korwas. Ramdas’s family is the only real exception.

‘It doesn’t matter if these don’t benefit the Pahadi Korwas in the least and are completely useless. Out here, even if you put up a swimming pool and a bungalow, you do it in the name of tribal development,’ says an NGO activist. ‘Nobody bothered to check whether there were really any Pahadi Korwas living in Rachketha village’ and ‘there was already a kutcha road here,’ says Ramavatar Korwa, son of Ramdas. ‘They just added lal mitti (red earth) to it. Even today, after spending Rs 17.44 lakh, it is not a pucca road.’

Ramdas’s own demands are touchingly simple. ‘All I want is a little water,’ he says. ‘How can we have agriculture without water?’ When repeatedly pressed, he adds: ‘Instead of spending Rs 17.44 lakh on that road, if they had spent a few thousand on improving that damaged well on my land, wouldn’t that have been better? Some improvement in the land is also necessary, but let them start by giving us a little water.’

Ramdas’s problems were ignored. The government’s problem was ‘fulfilling a target’. ‘If the money were simply put into bank fixed deposits, none of these Pahadi Korwa families would ever have to work again. The interest alone would make them very well off by Surguja’s standards’, says an official mockingly.

Nobody thought of asking Ramdas what he really needed, what his problems were, or involving him in their solution. Instead, in his name, they built a road he does not use, at a cost of Rs17.44 lakh. ‘Please do something about my water problem, sir,’ says Ramdas Korwa as we set off across the plain, journeying two km to reach his road to nowhere.

Source: Excerpted from P. Sainath, 1996, Everybody Loves a Good Drought: Stories from India’s Poorest Districts, Penguin Books, New Delhi.


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