Poverty in India: Policy Frameworks, Statistics, and Alleviation Programs

Introduction

• Poverty is “pronounced deprivation in well-being”.  The poor are those who do not have enough income or consumption to put them above some adequate minimum threshold. 
• Poverty may also be tied to a specific type of consumption; for example, people could be house-poor or food-poor or health-poor. These dimensions of poverty often can be measured directly, for instance, by measuring malnutrition or literacy. 
• The broadest approach to well-being (and poverty) focuses on the capability of the individual to function in society. Poor people often lack key capabilities; they may have inadequate income or education, or be in poor health, or feel powerless, or lack political freedoms.  (World Bank)

Policy Frameworks Addressing Poverty in India

• Constitutional/Other Provisions to Tackle  Poverty in India
  • Fundamental Rights: Article 16; Article 17; Article 21 and Article 24.
  • DPSP: Article 39; Article 39 (a); Article 41; Article 42 and Article 45.
• SDG: Goal 1 i.e. to end poverty in all its forms, everywhere.
• Poverty Line (Defined by World Bank):  A person is extremely poor if she is living on less than 1.90 international dollars a day, (updated in 2015) which are adjusted for inflation as well as price.
• Poverty Statistics according to Census 2011: The proportion of people living Below Poverty Line (BPL) has come down from 37.2 per cent in 2004-05 to 21.9 per cent in 2011-12 — a decline of 15.3 percentage points.

Committees on Poverty in India

• Alagh Committee (1979): First to come up with an official poverty line, based on calorie intake. (2100 calories in Urban areas, 2400 calories in rural areas)
• Lakdawala Committee (1993): Defined the poverty line on the basis of household per capita consumption expenditure; 
  • Used CPI-IL (Consumer Price Index for Industrial Laborers) and CPI- AL (Consumer Price Index for Agricultural Laborers) for estimation of the poverty line. 
• Tendulkar Committee (2009): Changed calorie-based estimation to expenditure based;
  • Introduce a new term Poverty Line Basket (basket of all goods selected to determine Poverty in India) 
  • Consumption quantity is fixed the same for both rural and urban people but price differs. 
  • Daily per capita expenditure for Rural– Rs 27, Urban– Rs 33; Estimated that 21.5% of the Indian population was poor
• Rangarajan Committee: Adopted the calorie-based approach
  • Daily per capita expenditure for Rural– Rs. 33 and Urban– Rs. 47 
  • Overall Poverty in India: 29.5 Percent (in the year 2011-12) ; Rural: 30.9 Percent (in the year 2011-12) ; Urban: 26.4 Percent (in the year 2011-12).
• Multidimensional Poverty in India: Includes poor health, lack of education, inadequate living standards, disempowerment, poor quality of work, the threat of violence, and living in areas that are environmentally hazardous, among others.

Terminologies Related to Poverty

• Absolute Poverty: Condition where household income is below a necessary level to maintain basic living standards (food, shelter, housing). 
• Relative Poverty: A condition where household income is a certain percentage below median income. 
• The World Bank adopted $2.15 as the international poverty line using the 2017 PPP in September 2022. (Before that, the 2015 update set the international poverty line at $1.90 using the 2011 PPP). 

• Poverty Gap Ratio: Gap by which means consumption of the poor below the poverty line falls short of the poverty line;
• • The number of poor people indicates the spread of poverty, 
  • PGR indicates the depth; 
  • The more the PGR, the worse the condition of the poor. 
• Head Count Ratio: When the number of poor is estimated as the proportion of people below the poverty line. 
• Poverty Trap/ Unemployment Trap: A situation where an unemployed person getting an unemployment allowance is not encouraged to seek work/employment because his/her after-tax earnings as employed is less than the benefits as unemployed.
• Poverty Line Basket: The basket of goods and services necessary to satisfy basic human needs.
• Palma Ratio: Measure of inequality It is the ratio of the richest 10% of the population’s share of gross national income (GNI) divided by the poorest 40% ‘s share. 
• Kuznets Curve: Graphs the hypothesis that as an economy develops, market forces first increase and then decrease economic inequality.
• Gini Coefficient: Inequality indicator; The coefficient varies from zero to one; 
  • 0 Indicates absolute equality, 
  • 1 Indicates absolute inequality.
• Lorenz Curve: Graph shows the degree of inequality in income and wealth in a given population or an economy.

Categorizing Poverty

• Chronic Poor: Two subcategories.
  • Always Poor
  • Usually Poor: Those who are usually poor but who may sometimes have a little more money, Example: Casual workers.
• Transient Poor: Two subcategories.
  • Churning Poor: Who regularly move in and out of poverty 
    • Example: Small farmers and seasonal workers.
  • Occasionally Poor: Those who are rich most of the time but may sometimes have a patch of bad luck.
• Never Poor: Also known as nonpoor.

Socio-Economic Caste Census

• To estimate the BPL population, SECC followed a three-step process: 
  • Automatic exclusion
  • Automatic inclusion
  • Neither automatically included nor automatically excluded

Poverty Alleviation Programmes 

• Rural Employment Generation Programme (REGP): Implemented by The Khadi and Village Industries Commission; 
  • One can get financial assistance in the form of bank loans to set up small industries.
• Prime Minister Rozgar Yojana (PMRY): 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.
• Swarna Jayanti Shahari Rozgar Yojana: Aims at creating employment opportunities—both self-employment and wage employment—in urban areas. 
• Swarnajayanti Gram Swarozgar Yojana (SGSY): Now has been restructured as National Rural Livelihoods Mission (NRLM); 
  • The Government provides partial financial assistance to SHGs which then decide whom the loan is to be given to for self-employment activities. [UPSC 2012]
• Mahatma Gandhi National Rural Employment Guarantee Act: Adult volunteers can do  unskilled manual work for a minimum of 100 days in a year.

Conclusion

• Poverty in India remains a significant challenge in India, affecting millions of people across the country. 
• While various alleviation methods have been implemented, including social welfare programs and economic initiatives, the complexity of poverty necessitates comprehensive and targeted approaches. 
• Efforts must focus on addressing root causes such as inequality, lack of access to education and healthcare, and structural barriers to economic opportunity.