Introduction to Poverty and Who are the Poor?

Introduction: The Challenge of Poverty in India

Since independence, providing minimum basic needs to the people and the reduction of poverty have been major aims of India's developmental strategy. The successive Five Year Plans emphasized the upliftment of the poorest of the poor (Antyodaya) and achieving a minimum standard of living for all. As Jawaharlal Nehru stated in 1947, a key goal for the newly independent nation was “the ending of poverty and ignorance and disease and inequality of opportunity”.

Poverty is a significant challenge not just for India, where more than one-fifth of the world’s poor live, but for the entire world. It is a multi-dimensional issue that varies across time and place. Essentially, poverty is a situation people want to escape. It is a call to action to change the world so that more people may have enough to eat, adequate shelter, access to education and health, and a voice in their communities. To tackle it effectively, poverty must be defined, measured, and studied through various indicators like income, consumption, social indicators, and vulnerability to risks.

Who Are the Poor?

In any society, there is a spectrum from the rich to the poor. The poor in India are visible in both rural and urban areas. They include push-cart vendors, street cobblers, rag pickers, and beggars in cities, and landless agricultural labourers and marginal farmers in villages.

Characteristics of Poor Households

• Assets and Dwellings: The poor possess few assets and often reside in kutcha hutments with walls made of baked mud and roofs of grass, thatch, or bamboo. The poorest may not even have these.
• Hunger and Starvation: Many poor households do not get even two meals a day. Starvation and hunger are key features of the poorest households.
• Employment: They face unstable employment, often working as casual labourers. They lack basic literacy and skills, limiting their economic opportunities.
• Health and Nutrition: Malnutrition is alarmingly high among the poor. Ill health and disability make them physically weak. Poor women receive less care during motherhood, and their children are less likely to survive or be born healthy.
• Indebtedness: To meet their needs, they often borrow from moneylenders who charge high rates of interest, leading them into chronic indebtedness.
• Basic Amenities: Most poor households have no access to electricity, safe drinking water, or sanitation. Their primary cooking fuel is firewood and cow dung cake.
• Social Disadvantage: The poor are highly vulnerable and often exploited. There is extreme gender inequality in employment, education, and decision-making within the family.

Identification by Occupation and Assets

Economists identify the poor based on their occupation and ownership of assets.

• The Rural Poor: This group mainly consists of landless agricultural labourers, cultivators with very small landholdings, landless labourers in non-agricultural jobs, and tenant cultivators with small land holdings.
• The Urban Poor: This group is largely an overflow of the rural poor who migrate to cities in search of work. They are either unemployed or intermittently employed as casual labourers and self-employed individuals selling goods on roadsides.

Identifying the Poor: The Poverty Line

The Concept of a Poverty Line

To implement poverty alleviation schemes, the government needs to identify who the poor are. For this, a scale to measure poverty is required. This scale is commonly known as the Poverty Line. It is a cut-off point that divides the population into two groups: the poor and the non-poor.

Early Attempts at Measurement

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 prevailing prices to calculate the ‘jail cost of living’. To adjust this for the general population, which includes children, he made an assumption: one-third of the population consisted of children, with half of them consuming very little and the other half consuming half of the adult diet. This led to an average consumption of three-fourths of the adult jail cost of living.

Derivation: $(1/6)(\text{Nil consumption}) $$ + (1/6)(\text{Half consumption}) $$ + (2/3)(\text{Full consumption}) $$ = (3/4)(\text{Full consumption})$

In post-independent India, several attempts were made to create a mechanism for identifying the poor, including Study Groups and Expert Groups formed by the Planning Commission (now NITI Aayog) in 1962, 1979, 1989, and 2005.

Categorising Poverty

The poverty line provides a clear demarcation, but poverty itself is not uniform. People can be categorised based on the duration and severity of their poverty.

Determining the Poverty Line in India

The official method for determining the poverty line is based on the monetary value (per capita expenditure) required to meet a minimum calorie intake.

• Calorie Norm: The estimated minimum calorie intake is 2,400 calories for a person in a rural area and 2,100 calories for a person in an urban area.
• Monetary Value (2011-12): Based on this, the poverty line was defined as a monthly per capita consumption expenditure of $\text{₹} \ 816$ for rural areas and $\text{₹} \ 1,000$ for urban areas. The government uses Monthly Per Capita Expenditure (MPCE) as a proxy for income.

Limitations of the Official Poverty Line

Economists and scholars have pointed out several major problems with this mechanism:

1. It groups all the poor together, failing to differentiate between the very poor and other poor.
2. It uses expenditure on food and a few select items as a proxy for income, which is a narrow basis.
3. It does not account for other crucial factors associated with poverty, such as access to education, healthcare, drinking water, and sanitation.
4. It ignores social factors that perpetuate poverty, such as illiteracy, discrimination, or lack of civil and political freedoms.

Due to these limitations, scholars like Nobel Laureate Amartya Sen have developed alternative measures like the Sen Index. Other tools include the Poverty Gap Index and Squared Poverty Gap Index.

Poverty Estimation and Causes in India

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 the ‘Head Count Ratio’. The official data on poverty is made available by NITI Aayog, based on consumption expenditure data collected by the National Statistical Office (formerly NSSO).

Trends in Poverty (1973-2012)

The trends show a decline in both the absolute number and the proportion of the poor.

A significant observation is that more than three-fourths of the poor in India still reside in villages. While the absolute number of rural poor has declined since the 1990s, the number of urban poor increased marginally. The poverty ratio has declined continuously in both rural and urban areas, but the decline in the absolute number of poor has been slower.

State-Level Trends in Poverty

The national poverty level declined from 55% in 1973-74 to 22% in 2011-12. However, the performance across states has been uneven. In 1973-74, states like Tamil Nadu, Uttar Pradesh, Bihar, Madhya Pradesh, West Bengal, and Orissa had a large concentration of the poor. By 2011-12, states like West Bengal and Tamil Nadu had reduced poverty significantly. However, the poverty levels in Odisha, Madhya Pradesh, Bihar, and Uttar Pradesh remain far above the national average.

What Causes Poverty?

The causes of poverty in India are multi-faceted, rooted in institutional, social, and historical factors.

Social, Economic, and Political Factors

• Lack of Human Capital: The poor are deprived of quality education and are unable to acquire skills that fetch better incomes. Lack of access to healthcare perpetuates a cycle of poor health and low productivity.
• Social Exclusion and Discrimination: Caste, religious, and other discriminatory practices often prevent the poor, particularly Scheduled Castes and Scheduled Tribes, from accessing emerging employment opportunities.
• Unequal Distribution of Wealth: The unequal distribution of income and assets has led to the persistence of poverty, creating a society of 'haves' and 'have-nots'.
• Indebtedness: Unable to secure loans from formal sources, the poor borrow from moneylenders at exorbitant rates, leading to chronic indebtedness.

Historical Factors: The British Legacy

• The British Raj systematically plundered India's natural resources and implemented policies that led to de-industrialisation.
• Rural taxes were sharply raised, enabling merchants and moneylenders to become large landowners.
• India was forced to export food grains, which resulted in devastating famines that killed millions between 1875 and 1900.

Post-Independence Challenges

• Land Distribution: Although land redistribution was attempted, it was successful only to a limited extent. Many landless labourers received small, unviable plots of land without the necessary capital or skills to make them productive.
• Agricultural Dependence: A large section of the rural poor are small farmers with infertile, rain-dependent land. Population growth has led to declining per-head availability of land and fragmentation of holdings.
• Unemployment and Underemployment: Industrialisation has not been able to absorb the surplus labour migrating from rural to urban areas. The urban poor are often unemployed or intermittently employed as casual labourers with no job security or assets.

Government Policies and Programmes for Poverty Alleviation

The Three-Dimensional Approach to Poverty Reduction

The Indian Constitution and the Five Year Plans have always stated social justice as a primary objective. The government’s approach to poverty reduction has evolved over three dimensions.

1. Growth-Oriented Approach

This was the major focus in the 1950s and early 1960s. It was based on the expectation that the benefits of economic growth (rapid increase in GDP and per capita income) would "trickle down" to the poor sections of society. It was believed that rapid industrial development and the Green Revolution would benefit all. However, the benefits did not fully trickle down; the gap between the rich and poor widened, and regional disparities increased.

2. Specific Poverty Alleviation Programmes

Initiated from the Third Five Year Plan (1961-66), this approach focused on creating additional assets and generating employment for the poor. The programmes are broadly divided into two types:

(a) Self-Employment Programmes:

• Programmes like the Rural Employment Generation Programme (REGP), Prime Minister’s Rozgar Yojana (PMRY), and Swarna Jayanti Shahari Rozgar Yojana (SJSRY) were aimed at providing financial assistance (bank loans) to individuals and families to set up small enterprises.
• Since the 1990s, the approach shifted to promoting Self-Help Groups (SHGs). Programmes like Swarnajayanti Gram Swarozgar Yojana (SGSY), now restructured as National Rural Livelihoods Mission (NRLM) or Deendayal Upadhyay Antyodaya Yojana, encourage the poor to form SHGs, save money, and access bank credit for self-employment.

(b) Wage Employment Programmes:

• These programmes aim to generate wage employment for the poor and unskilled. An early example was the 'Food for Work' programme in the 1970s.
• The most significant recent programme is the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), passed in 2005. This Act legally guarantees at least 100 days of unskilled manual wage employment to every rural household whose adult members volunteer to work.

3. Providing Minimum Basic Amenities

This approach aims to improve the living standards of the poor through public expenditure on social consumption needs. It is expected to supplement the consumption of the poor, create employment, and improve health and education. Key programmes under this approach include:

• Food and Nutrition: Public Distribution System (PDS), Integrated Child Development Scheme (ICDS), and Midday Meal Scheme.
• Infrastructure and Housing: Pradhan Mantri Gram Sadak Yojana (for rural roads) and Valmiki Ambedkar Awas Yojana (for housing).
• Social Security: The National Social Assistance Programme (NSAP) provides pensions to the destitute elderly and widows.
• Financial Inclusion: The Pradhan Mantri Jan-Dhan Yojana (2014) encourages people to open bank accounts to facilitate direct benefit transfers and provides access to accident and life insurance.

Critical Assessment of Poverty Alleviation Programmes and Conclusion

A Critical Assessment

Efforts at poverty alleviation have shown some results; for the first time since independence, the percentage of absolute poor in some states is now well below the national average. Despite this, hunger, malnourishment, illiteracy, and lack of basic amenities remain common in many parts of India. Scholars have identified three major areas of concern that prevent the successful implementation of these programmes:

1. Appropriation by the Non-Poor: Due to the unequal distribution of land and other assets, the benefits from direct poverty alleviation programmes have often been appropriated by the non-poor.
2. Insufficient Resources: Compared to the magnitude of poverty, the amount of resources allocated for these programmes is not sufficient.
3. Poor Implementation: The programmes depend heavily on government and bank officials who are often ill-motivated, inadequately trained, and prone to corruption. The resources are inefficiently used and wasted. There is also a lack of participation from local-level institutions.

Furthermore, government policies have failed to address the vast majority of vulnerable people living just above the poverty line. High growth alone has not been sufficient to reduce poverty. Without the active participation and empowerment of the poor through a process of social mobilisation, the successful implementation of any programme is not possible.

Conclusion

Over seven decades since independence, poverty alleviation has been a central challenge for Indian policymakers. While the absolute number of poor has declined and there has been an improvement in per capita income and average standards of living, India's performance has not been as impressive when compared to many other countries.

The fruits of development have not reached all sections of the population. While some sectors and regions of the country can compete with developed nations, a large part of the population has not been able to escape the vicious circle of poverty. The challenge remains to effectively eradicate poverty by ensuring the poor can contribute to and benefit from the growth process through active involvement, skill development, and access to essential infrastructure and services.

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