Understanding Poverty in India: Causes, Consequences, and Solutions

PWOnlyIAS October 14, 2023 03:23 11590 0

Recently, Prime Minister Narendra Modi said more than 13.5 crore Indians had escaped poverty in India in the last five years.

Understanding Poverty in India: Causes, Consequences, and Solutions

Context: Recently, Prime Minister Narendra Modi said more than 13.5 crore Indians had escaped poverty in India in the last five years.

Ending Poverty in India: A Goal for the 21st Century

The United Nations defines poverty as the “denial of opportunities and choices for the realisation of a sustainable and decent standard of living.”
What is Poverty in India?
- It is a complex issue that is influenced by a variety of factors, including economic inequality, lack of access to education and healthcare, and social exclusion.
Types of Poverty:
- Absolute poverty: condition where household income is below a necessary level to maintain basic living standards (food, shelter, housing).
- Relative poverty: condition where household income is a certain percentage below median income.

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Poverty Measurement in India: A Multidimensional Approach toward poverty in India

Poverty Line: The poverty in India is measured on the basis of poverty line quantified in terms of per capita consumption expenditure.
- Data is obtained from the large sample survey of consumer expenditure data of the National Sample Survey Office (NSSO).
- Households with consumption expenditures below the poverty line are said to be “Below the Poverty Line (BPL)” and deemed to be poor.
Pre-Independence Poverty Estimation: Poverty In India
- Poverty and Unbritish Rule in India (1901): In his book, Dadabhai Naoroji made the earliest estimate of the poverty line at 1867-68 prices (₹16 to ₹35 per capita per year) based on the cost of a subsistence diet and tried to define poverty in India.
- National Planning Committee (1938): Set up under the chairmanship of Jawaharlal Nehru, suggested a poverty line (₹15 to ₹20 per capita per month) based on a minimum standard of living, a different approach to measure poverty in India.
- The Bombay Plan (1944): It suggested a poverty line of ₹75 per capita per year.
Post- Independence Poverty Estimation: A New approach to Poverty in India
- Planning Commission Expert Group (1962): It formulated the separate poverty lines for rural and urban areas at ₹20 and ₹25 per capita per year respectively.
- VM Dandekar and N Rath (1971): They made the first systematic assessment, based on National Sample Survey (NSS) data to measure poverty in India.
  - They suggested providing 2250 calories per day in both rural and urban areas. This was the first time that calories intake was taken into consideration to measure poverty in India.

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Poverty in india

- YK Alagh Committee (1979): It constructed a poverty line for rural and urban areas on the basis of nutritional requirements and related consumption expenditure.
- Lakdawala Committee (1993): It suggested that consumption expenditure should be calculated based on calorie consumption as earlier. State specific poverty lines should be constructed.
  - It asked for discontinuation of scaling of poverty estimates based on National Accounts Statistics to measure poverty in India.
- Tendulkar Committee (2009): The current official measures of poverty in India are based on the Tendulkar poverty line, fixed at daily expenditure of ₹27.2 in rural areas and ₹33.3 in urban areas is criticised by many for being too low.

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Current Levels of Poverty in India

Niti Aayog: According to NITI Aayog’s National Multidimensional Poverty Index (MPI), India’s population living in multidimensional poverty in India was 14.96%.
- The rural areas of India experienced multidimensional poverty of 19.28%.
- In urban areas, the poverty rate was 5.27%.
- The poorest states in India are Bihar, Jharkhand, and Uttar Pradesh.
According to the data from the World Bank, about 10% of the Indian population lives on less than USD 2.15 a day, which is the international poverty line for lower-middle income countries.

Causes of Poverty in India

Factors	Description
Historical Factors For poverty in India	Colonial Exploitation: The British colonisation de-industrialised India by ruining traditional handicrafts and textile industries is the major cause of poverty in India. Population Explosion: Increases the demand for consumption goods tremendously lead to poverty in India
Economic Factors	Lack of Employment Opportunities: High unemployment rates can make it difficult for individuals and families to make ends meet. Income Inequality: Income inequalities can exacerbate poverty in India by limiting opportunities for those with fewer resources. According to Oxfam, India’s richest 1% own more than 40% of total wealth. Inefficient Resource utilisation: Eg. underemployment and disguised unemployment in the country, particularly in the farming sector. Economic Shocks: Eg. The COVID-19 pandemic has pushed an estimated 150 million people into poverty in India, according to the UNDP.
Social Factors	Caste system: The hierarchical caste system limited the education, employment, and social opportunities for those born into lower castes, making it challenging to escape poverty in India.
Political Factors	Policy Decisions: Government policies can either alleviate or exacerbate poverty, depending on how they address issues like taxation, social safety nets, and labour laws. Corruption: Widespread corruption in government institutions can lead to misallocation of resources, deepening poverty in India. Warfare/conflict: Eg. Poverty in Iraq, Syria, Afghanistan, etc. Lack of Access to Basic Services: Poor access to education, healthcare, and clean water, due to inadequate infrastructure or lack of government investment.
Climatic Factors	Extreme weather events: Droughts, floods, and storms can destroy crops, livestock, and infrastructure, pushing people into poverty in India. According to the UN, climate change is expected to push up to 130 million people into poverty by 2030. Sea level rise: Sea level rise is displacing coastal communities and inundating agricultural land, forcing people to abandon their homes and livelihoods. Water scarcity: Climate change is leading to water scarcity in many parts of the world. This is making it difficult for people to grow food, access clean water, and maintain good hygiene. Heatwaves: Heatwaves can lead to health problems, reduced productivity, and crop failure.

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Consequences of Poverty in India

Poverty affects every sphere of life. By linking poverty with the Sustainable Development Goals (SDGs), we can better understand the effects of poverty in India.

Here are some of the ways in which poverty impacts the SDGs:

Goal 1: No Poverty: Without addressing poverty, it will be difficult to achieve the other SDGs.
Goal 2: Zero Hunger: Poverty is a major cause of food insecurity, hunger and malnutrition.
Goal 3: Good Health and Well-being: Poverty is associated with inadequate access to healthcare, leading to health disparities, higher disease prevalence, and reduced life expectancy.
Goal 4: Quality Education: Poverty can hinder access to quality education, making it difficult for children to attend school, and complete their education.
Goal 5: Gender Equality: Women and girls living in poverty are more likely to experience violence, discrimination, and exploitation.
Goal 6: Clean Water and Sanitation: Poverty often limits access to clean water and sanitation facilities, contributing to waterborne diseases and health issues.
Goal 7: Affordable and Clean Energy: Poor communities often lack access to affordable and clean energy sources, which negatively impacts environmental sustainability.
Goal 8: Decent Work and Economic Growth: Reducing poverty is essential for promoting decent work and sustainable economic growth
Goal 10: Reduced Inequalities: People living in poverty are more likely to be discriminated against and to have limited access to opportunities.
Goal 11: Sustainable Cities and Communities: Urban poverty is a major problem in urban areas.
Goal 13: Climate Action: Poverty makes it more difficult for people to adapt to the impacts of climate change.
Goal 16: Peace, Justice and Strong Institutions: Poverty is linked to social unrest and conflict, making it difficult to achieve peaceful, just, and inclusive societies.
Goal 17: Partnerships for the Goals: Countries with high levels of poverty have fewer resources to invest in sustainable development.

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Poverty Alleviation Programs in India: A step to reduce poverty in India

Initiatives	Description
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)	Guarantees 100 days of employment per year to rural households at a minimum wage.
National Rural Livelihood Mission (NRLM)	Provides financial and technical support to self-help groups, enabling them to start and manage businesses.
Pradhan Mantri Jan Dhan Yojana (PMJDY)	Provides universal access to banking services, including savings accounts, credit, and insurance.
Pradhan Mantri Ujjwala Yojana (PMUY)	Provides free LPG connections to poor families.
Pradhan Mantri Awas Yojana (PMAY)	Provides financial assistance to poor families to build or purchase houses.
Pradhan Mantri Mudra Yojana (PMMY)	Provides loans to micro and small businesses.
Skill India Mission	Provides skill training to youth to improve their employability.
Stand Up India	Provides loans to women entrepreneurs.

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International Case Studies on Poverty Alleviation: Best learning to reduce poverty in India

China: China has lifted over 800 million people out of poverty since 1978.
- Factors responsible for success: rapid economic growth, investment in education and healthcare, and social safety nets.
Brazil: Brazil has lifted over 30 million people out of poverty since 2003.
- Factors responsible for success: economic growth, investment in education and healthcare, and social safety nets such as the Bolsa Família program.
Bangladesh: Bangladesh has lifted over 100 million people out of poverty since 1990.
- Factors responsible for success: economic growth, investment in education and healthcare, and social safety nets such as the Grameen Bank.

International Day for the Eradication of Poverty

It is celebrated annually on October 17.
Origin: Through resolution 47/196 adopted on 22 December 1992, the UN General Assembly declared 17 October as the International Day for the Eradication of Poverty.
Aim: To promote understanding and dialogue between people living in poverty and the wider society.
Theme of International Day for the Eradication of Poverty 2023: Decent Work and Social Protection: Putting dignity in practice for all.
Significance of International Day for the Eradication of Poverty 2023: According to the United Nations, 8.4% of the world’s population, or as many as 670 million people, were living in extreme poverty at the end of 2022.
- An estimated 7% of the global population – around 575 million people – could still find themselves trapped in extreme poverty by 2030.

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Poverty in India FAQs

The official poverty line in India is based on the Tendulkar Committee's recommendations and is set at ₹27.2 per day in rural areas and ₹33.3 per day in urban areas.

Challenges include high population growth, income inequality, inadequate access to education and healthcare, and the need for sustainable job creation.

Historical factors like colonial exploitation, economic issues such as income inequality and unemployment, social factors like the caste system, and climatic factors like droughts and floods contribute to poverty.

Education is a key tool for poverty reduction as it empowers individuals with skills and knowledge, improving their employability and income-earning potential.

The COVID-19 pandemic has had a severe impact on poverty, pushing millions of people into poverty due to job loss and economic disruptions.

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Understanding Poverty in India: Causes, Consequences, and Solutions

Ending Poverty in India: A Goal for the 21st Century

Poverty Measurement in India: A Multidimensional Approach toward poverty in India

Current Levels of Poverty in India

Causes of Poverty in India

Consequences of Poverty in India

Here are some of the ways in which poverty impacts the SDGs:

Poverty Alleviation Programs in India: A step to reduce poverty in India

International Case Studies on Poverty Alleviation: Best learning to reduce poverty in India

Poverty in India FAQs

What is the poverty line in India?

What are the main challenges in poverty alleviation?

What are the root causes of poverty in India?

What role does education play in breaking the cycle of poverty?

What is the impact of COVID-19 on poverty in India?

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