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Poverty in India: Calclation, Causes and Solutions

Poverty refers to the socio-economic condition in which a section of society is unable to raise the minimum consumption requirements for life, health, and efficiency. When a large section of the society is deprived of the minimum standard of living and survives only at the subsistence level, it is called mass poverty. Similar poverty is found in third world countries including India. 

Poverty Calculation in India

Poverty is calculated in both relative and absolute forms. In relative forms, poverty is measured by comparing the subsistence levels of different classes/countries. Sustainability level means – Income/consumption expenditure is the absolute minimum poverty requirement – food, clothing, calories, housing, etc. are kept in poverty measurement. Those who do not have even these minimum things are called poor. Absolute measurement is adopted for poverty measurement in India.

Poverty Line

Poverty Line – Planning Commission has made calories the basis for determining the poverty line. According to this, 2400 calories per day per person in rural areas and 2100 in urban areas should be available in food. People receiving less nutrition than this limit are considered below the poverty line. 

On the basis of these minimum nutritional requirements, the Planning Commission fixed poverty lines of Rs 49.09 (in rural areas) and Rs 56.64 (in urban areas) per month on the values ​​of 1973-74, which have been revised at current prices. This process is done state-wise and state-level values ​​are taken into consideration.

Limitation of the concept of Poverty Line

  • The major limitation of the concept of the poverty line is that it does not know the actual condition of the different sections passing under it.
  • It cannot be estimated from the horrific situation of people standing at the lowest rung below the poverty line. 
  • In this context, the famous economist Amartya Sen has said that it is more important than knowing how many poor people are below the poverty line.

Poverty Estimates

Poverty Estimates – NSSO (National sample survey organization) has been estimating poverty in India. Its data is used by many economists and institutions including the Planning Commission. Their estimates are somewhat different, but the basis of all estimates is the nutritious dietary value equal to 2250 calories. The World Bank has also made the basis of the Planning Commission method for estimating poverty in India.

In 1989, the Planning Commission appointed a working group headed by Prof. Lakdabala to assess the number and proportion of the poor. The Working Group submitted its report in 1993 and made the following recommendations:

  1. Calorie norm is insufficient to estimate poverty. The calorie-based poverty line means that the person is receiving less nutrition than needed, while it should be related to the minimum subsistence needs. Calorie is a part of minimum subsistence. Therefore, Commodity Basket should be made the basis for determination.
  2. Calorie norm should be applied equally in all states.
  3. The base year of 1973-74 should be continued to estimate the poverty line.
  4. In order to estimate the state-wise poverty line, at the national level, the humanized commodity group should get the value according to the current values ​​in the base year (1973-74) in every state i.e. the different poverty line for all the states.
  5. The basis of rural poverty line should be the consumer price index of agricultural workers and the basis of urban poverty line should be industrial labor consumer price index. The Planning Commission accepted the recommendations of Lakdawala Committee in 1991 and set the number of BPL people at 35.97% in 1993-94.

Based on the data surveyed by NSSO regarding consumer expenditure, the Planning Commission often estimates national and state level poverty at an interval of 5 years. The poverty ratio in the country was 27.5% (30.17% crore) based on the Uniform Recall Period (consumer expenditure for all items from 30-day revaluation) as per the last data of the 61st cycle of the latest National Sample Survey for the year 2004-05. Whereas on the basis of the Mixed Recall Period (in which the data of 5 items – shoes, slippers, clothing, durables, education and founding hospital – has been collected from the 365-day count of consumer expenditure and the 30-day data for consumer items) the poverty ratio was 21.8% (23.85% crore).

At the state level, Bihar had the highest poverty and Uttar Pradesh in second place.

Reason of Poverty

Economic Reason of Poverty

  1. Mass unemployment and low unemployment.
  2. Lack of productive employment.
  3. Lack of assets.
  4. Less increase in income than increase in price.
  5. Lack of capital and skills resulting from poverty and vicious cycle of poverty.
  6. Low income per person.
  7. Lack of vocational and technical education and lack of undertakings.
  8. Low productivity levels in agriculture and industries.
  9. Engagement in low-level economic activities.
  10. Low wage rate
  11. Adoption of capital intensive techniques / ventures in place of labor intensive techniques / undertakings
  12. The burden on agriculture is high in the absence of alternative business

Historical Reason of Poverty

  1. Industrialization
  2. Decline of rural and urban handicrafts and cottage industries.
  3. Expulsion of Money

Social Reasons of Poverty

  1. Illiteracy
  2. Regional Inequality in Different States
  3. Social and religious parochialism
  4. Tendency to show social evils like dowry, marriage and marriage
  5. Child Labor
  6. Joint family system and caste system
  7. Gender inequality – a large section of human labor ie limited in the boundary of the female home
  8. Indians to be complacent and conciliatory.

Demographic Reasons of Poverty

  1. Rapid population growth
  2. High Infant Mortality Rate

Specific reasons – The plans implemented in Western countries did not change and adopted according to their circumstances. As a result, the results are not good.

Solutions for Poverty Reduction:

In the Fifth Five year plan, efforts were started to eradicate poverty and in the Sixth Plan, an attempt was made to attack it directly. FOllowing are the key plan:

  1. Integrated Village Development Work (IRDP), which has now become Swarna Jayanti Gram Yojana Self-Employment Scheme.
  2. Wage Employment Scheme
  3. National Employment Guarantee Program has three major schemes for food security.
    • Public distribution system
    • Integrated Child Development Scheme
    • Mid-day meal scheme in schools.
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